General Contractors manage building projects through the daily oversight of construction activities, vendors, and subcontractors. A construction project does not have to involve building on contaminated land in order to be subjected to potential environmental claims. Most environmental exposures stem from routine construction activities and often are not visible until they become costly problems. It is the responsibility of the general contractor to have an all-inclusive vision of the entire building project and prepare for any environmental concerns that could affect their employees, the public, and the environment. Below we have provided some general contractor insurance claims scenarios that illustrate the need for environmental coverage for this class of business.
- A general contractor installed new carpeting in an office building. One week after the installation, the owner of the office building informed the contractor that employees were complaining of headaches and dizziness. The contractor could not prove that the manufacturers of the carpet or the carpet adhesive were responsible. The contractor filed an insurance claim with their general liability carrier. The claim was denied because the contractor brought the hazardous materials, such as formaldehyde and volatile organic compounds, onto the site.
- While performing building renovations, a general contractor used gas powered generators and equipment. The contractor failed to properly vent or contain the emissions from the equipment during operations. Employees working in a nearby area of the building complained of headaches, nausea and respiratory problems. The results of an air quality study concluded that the increased carbon dioxide levels in the building resulted from the construction equipment. The contractor was liable for causing building-related illnesses that resulted in 30 bodily injury claims totaling over $100,000.
- A general contractor etching in a commercial building used muratic acid. The highly corrosive fumes from the acid were released into the building. Over $75,000 in property damage to chrome fixtures.
- A general contractor installed a new roof at a 250,000 square foot office building and shopping center. The roofing material decomposed and caused a chemical reaction, emitting fumes into an office building. The contractor faced a $400,000 property damage and loss of use claim.
- A $10 million claim was filed against a general contractor performing renovation of a city building. The insurance claim alleged negligence in creating unsafe air quality conditions in the ventilation and air filtration systems, causing employees on the premises to suffer serious injuries from inhalation of, and exposure to, toxic fumes and airborne contaminants.
- A A general contractor was responsible for overseeing a sewer rehabilitation project. During excavation of a trench, the bucket of a backhoe hit a natural gas line. This forced evacuation of the immediate area, including a small strip mall. Store owners filed loss of business claims against the contractor, exceeding $75,000.
- A general contractor was responsible for overseeing the renovation of a hospital wing. When two patients died in the intensive care unit adjacent to the construction zone, the contractor was sued for inadequate monitoring and containment of the construction zone. The patients’ cause of death was determined to be an organic fungus found in the ventilation system, and traced back to dusts generated during demolition activities in the construction zone. The contractor apparently misinterpreted construction drawings with regard to the connection of the duct system for the renovation zone and the intensive care unit. The general contractor was responsible for $10 million in damages.
- A commercial developer retained a design/build delivery system for the construction of a multi-story office building. The general contractor’s project manager failed to check the adequacy of the safety netting system installed in connection with the project’s roof installation. A worker fell and sustained injuries, and his attorney alleged inadequate safety controls and monitoring on the part of the general contractor. The contractor’s general liability policy contained a professional services exclusion. The general contractor was responsible for damages exceeding $300,000.
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While the coverages we offer are designed to address these general issues, we make no guarantee or warranty that any individual policy we offer will respond to all issues as described herein. Please refer to the actual policy wording in each offered form to determine coverage applicability and acceptability. In the event your client applies for coverage and we offer terms, please review those terms carefully to determine if all of your client’s exposures are being addressed. In some instances, more than one policy or type of coverage may be necessary.