By Stephen Holcombe, Assistant Vice President
One thing most agents can agree on is that understanding the pollution coverage that is given to a client can be tough to navigate. Your standard General Liability policy almost always includes a total pollution exclusion. And some carriers have determined that they are willing to provide pollution coverage, but only on a sudden and accidental basis. While this is considered an added benefit, the coverage can be limited. Many contractors may encounter a spill, release, or other pollution event at a job site, but not know when the event originated or how long it took place.
Importance of the Time Element in S&A Endorsements
Understanding sudden and accidental pollution starts with determining the time element aspect of the coverage extension. The insured will have a set period of time to identify and notify the carrier of a potential pollution event/release. The pollution event/release itself must also begin and end in a designated time period; the time period allowed for identifying and reporting begins at the start of the actual event/release. As you can see, the coverage provided is limited, but still serves the purpose of providing coverage for pollution events that are quickly discovered and reported by the insured. However, it can be very difficult for an insured to really know when a pollution event/release really began. For example, if a sudden and accidental contractor pollution endorsement had a 72-hour identification period and 7-day reporting period., a contractor who had a spill would need to identify the spill within 72 hours of the start of the occurrence and notify the carrier within 7 days of the commencement of the spill. That is a very small window of coverage available.
Additional Aspects of Sudden and Accidental Pollution Endorsements
There are some other areas to review in a sudden and accidental pollution endorsement. Agents should be sure to check to see if the form does in fact provide coverage for Bodily Injury, Property Damage, and Clean-up Costs. The definition of a pollutant that is defined on the policy should also be reviewed to see if the main pollution exposures of the insured would be covered if the loss did qualify as sudden and accidental.
Coverage Gap Solutions
Solutions are available to address the coverage gaps associated with sudden and accidental pollution coverage for contractors, such as offering gradual Contractors Pollution Liability coverage for your contracting clients. These forms take out the grey area when it comes to defining “sudden and accidental.” They do not have a defined difference in the policy between sudden and accidental pollution compared to gradual pollution and also have broader coverage terms and conditions for your clients.
In addition to these solutions, many environmental insurance carriers can provide broad coverage terms for contracting clients. This coverage can include Transportation Pollution Liability (TPL), Non-Owned Disposal Site (NODS) coverage, Mold/Fungus coverage, and other enhancements. If needed, these carriers can also write a combined form for Contractors Pollution Liability and Professional coverage to address both the pollution and professional exposure that contractors face.