Pollution Incidents Involving General Contractors
Environmental accountability within the construction industry transcends regulatory compliance. As community members, insurance professionals, and business advocates, we are concerned with preventable pollution incidents and their deleterious impact on our communities, ecosystems, and businesses. General contractors are in a powerful position to prevent pollution incidents. However, they are also vulnerable to exposures and liability entanglement even when following regulations.
A few examples of challenges general contractors might face concerning pollution releases:
The Case of Improper Handling
Neglect can extend beyond environmental degradation and result in significant financial penalties. Take the instance where Michigan Attorney General launched a legal action against contractors associated with Oakland County for improper asbestos handling during demolitions. In addition to the environmental toll, the financial repercussions were palpable, with both the construction & excavation company and its owner subject to court-ordered monetary judgments amounting to $125,000 each.
Water Pollution Penalty
A stark reminder of the consequences of non-adherence to the Clean Water Act, a construction company was ordered to pay $2 million in penalties for discharging polluted stormwater into tributaries without the required pollution control measures.
Runoff Generates Litigation
Construction projects in communities, like the expansion at North Central West Virginia Airport, bring inherent risks if vigilance isn’t maintained. Here, a project involving moving dirt resulted in pollution at Maple Lake, including garbage generated by workers, prompting the nearby residents’ association to file a lawsuit citing negligence against the airport authority and the contractors hired for the project.
A Legal Conundrum Linked to Dust
A seminal case of the misapplication of the Absolute Pollution Exclusion in General Liability Policies—a construction activity produced non-toxic dust that seriously harmed an individual living in the building with pre-existing lung conditions. The court supported the contractor’s insurance’s opinion that because the dust was a pollutant to this specific person, it fell under the Absolute Pollution Exclusion. This decision has significant legal and interpretive impacts for contractors faced with similar circumstances, and underlines the unpredictability of legal outcomes when dealing with pollution incidents.
Commercial Boat Owners Sue Over Construction Dust
A group of commercial boat operators filed a lawsuit against a construction business accusing the developer of discharging construction debris and “fugitive dust” from their condo projects, harming boats, and posing risks to public health and the ocean environment. Last reported, the parties were planning to attend a settlement conference.
Other Important Exposures to Consider:
- Job Site – releasing contaminants at a job site or brought to a job
- Transportation of waste or materials to or from a job site
- Disposal of waste at non-owned facilities
- The insured’s owned premises
Environmental Insurance is an Important Risk Management Tool
While in-depth knowledge in environmental measures and regulations are indispensable, it is important to consider their limitations, as highlighted in the above court decisions. One way to address this issue is by obtaining environmental coverage. Here are lines of coverages this class of business should carry:
Contractors Pollution & Professional
A combined Pollution and Professional coverage form, providing CPL and E&O coverage to contractors who could potentially have both pollution and professional claims.
Transportation Pollution Liability
This coverage provides protection for Bodily Injury and Property Damage arising from the sudden upset and overturn of a vehicle on the road.
Environmental Impairment Liability
This catch-all phrase generally refers to coverage for the owned or operated premises of the Insured. It can provide coverage for Bodily Injury, Property Damage and Clean Up costs, both on and off site, first and third party.
NonOwned Disposal Site Coverage
This coverage provides coverage for Bodily Injury, Property Damage & Clean Up expense at or emanating from a nonowned disposal site where the Insured would have sent their wastes. This coverage is usually offered via endorsement to the Environmental Impairment Liability policy but can be added to some Contractors policies.
To avoid environmental liabilities, general contractors need a comprehensive approach that includes the best management practices, training, and proactive strategies. Environmental insurance is crucial to protect businesses from financial and reputational damages. By doing so, contractors can reduce their exposure to environmental liabilities and ensure sustainability and success. Contact us today for more information.
