Lessons Learned: Make Sure This Doesn’t Happen to Your Insureds
Insureds don’t need to be involved in exceptionally risky work to have environmental exposures. Most businesses, contractors, and consultants perform work that could trigger a pollution event – all it takes is one unfortunate incident to result in a claim. Here are some examples of what could go wrong:
A computer error that recorded an open valve as closed caused a paper mill to release thousands of pounds of chlorine gas into the atmosphere. The leak was detected only after several employees and local residents became ill. These same employees and residents later sued the mill for more than $1 million.
What to learn from this: Nearly all businesses rely on complex systems to keep their processes running smoothly. When those systems fail, catastrophic environmental losses can occur.
A pool contractor inadvertently added too much chlorine to a neighborhood pool, causing skin and eye irritations and hair loss in many of the people who were swimming. Several people filed suit against the pool maintenance company to pay for damages and distress.
What to learn from this: Just one mistake from an improperly trained or distracted employee can result in an environmental incident, causing BI and PD.
A residential contractor renovated the interior of a residential house built in the 1950s. The renovation involved paint removal from interior walls, window trim, and door jambs. During the course of renovation, the contractor used a plastic barrier to seal the areas where he was working. The homeowners continued to occupy the house during renovations. Additionally, the wife was six months pregnant. Renovation was finished prior to the birth of the baby; however, upon birth, the child tested positive for blood lead poisoning. After investigating the source of the lead, the couple sued the contractor for bodily injury as well as potential loss of future wage potential, due to a possible decreased IQ level for the baby, in the amount of $500,000.
What to learn from this: Having environmental coverage is crucial, no matter how simple the job seems, or whether it is required by contract or not.
A subcontractor working for a street/road contractor performed abrasive sandblasting on a bridge. The bridge was located near a residential area. Lead paint chips and dust from the sandblasting became airborne and migrated onto residential properties, requiring cleanup. The residents filed property damage claims against the street/road contractor for the dust generated by the subcontractor. The claims totaled $400,000.
What to learn from this: Even a location that is completely unrelated to an area being repaired or remediated may be affected by the activity, causing harm to people or property.
A developer retained a consultant to perform a geologic/geotechnical investigation for a residential subdivision. During final grading of the site, a major landslide occurred which extended off-site and impacted adjacent properties. The developer filed a suit against the consultant for breach of contract and negligence in failing to provide proper design engineering services during excavation of a sloped area. The resulting settlement totaled $300,000.
What to learn from this: Two things; first, we have no control over natural disasters which may lead to damage and costly claims, but businesses can secure coverage to help address these exposures. Second, the professional decisions made by a contractor can result in significant E&O claims.
For more claim scenarios, visit our claim scenario webpage or contact us.
