Pollution and environmental claims remain a significant threat to contractors of all types. These claims can lead to substantial costs for cleanup, remediation, and legal liabilities.
Pollution claims against contractors often involve:
- Surface water contamination
- Chemical spills
- Improper disposal of hazardous materials
- Asbestos exposure
- Mold and bacteria resulting from poorly installed HVAC systems
Any of these scenarios can trigger lawsuits and liability exposure that could severely impact small to mid-sized construction firms.
With the increasing risk of such incidents, it’s vital that contractors take proactive steps to minimize exposure and secure proper insurance coverage. Most standard general liability insurance policies exclude pollution-related claims.
Common Pollution Risks for Contractors
Many contractors underestimate their pollution exposure—even those not directly handling hazardous substances. For example, a road contractor might unintentionally block a sewer line, causing sewage backups into buildings. While general liability coverage may apply, a pollution exclusion could leave the contractor financially exposed.
Here are the most common types of pollution claims:
- Storage Tank Leaks: Excavation work may strike underground fuel or waste tanks, contaminating the soil.
- Struck Natural Gas Lines: Digging near unmarked lines can cause explosions or evacuations.
- Transport Spills: Spills during transit (e.g., fuel, concrete) can lead to environmental damage.
- Machinery Fuel Leaks: Undetected fuel or oil leaks can contaminate soil or water.
- Asphalt and Tack Coat Runoff: Rain can wash these materials into storm drains, triggering cleanup requirements.
- Asbestos Exposure: Improper demolition practices in older buildings may release asbestos fibers.
- Dust Pollution: Silica or mineral-based construction dust can lead to respiratory issues and liability.
- Construction Runoff: Paint, fuel, or cement runoff into nearby waterways can harm ecosystems.
- Mold Growth: Plumbing, roofing, or waterproofing work that fails may cause mold infestations.
- Legionella Contamination: HVAC and plumbing systems can foster Legionella bacteria, which pose serious health risks.
Insurance Coverage Gaps
If a pollution event causes harm or environmental damage, a standard commercial general liability policy likely will not cover the associated costs. These can include:
- Environmental cleanup
- Legal defense fees
- Court judgments and settlements
- Third-party bodily injury or property damage
To fill this gap, contractors should carry contractors environmental liability insurance. This specialized policy can cover:
- Third-party bodily injury and property damage
- Cleanup and remediation expenses
- Legal defense costs (including attorneys’ fees, settlements, and court judgments)
It also provides protection for both sudden and gradual pollution events:
- Sudden Pollution: Immediate incidents like spills, leaks, or explosions
- Gradual Pollution: Long-term issues like mold, Legionella growth, or ongoing site runoff
Action Steps for Contractors
- Identify Exposures: Determine if your work involves asbestos, mold, PFAS, or soil/water disturbance.
- Purchase Proper Insurance: Secure contractors environmental liability insurance in addition to general liability coverage.
- Train Staff: Provide certification and safety training for asbestos, mold, or hazardous chemical handling.
- Implement Safe Practices: Follow all hazardous material laws and use proper disposal methods.
- Use Contract Clauses: Require subcontractors to carry their own environmental liability insurance.
About BGES Group
BGES Group is one of the Tri-State Area’s leading Construction Insurance Specialists. Serving New York, New Jersey, and Connecticut, we represent 50+ companies, including the top general and umbrella liability programs. We offer comprehensive insurance solutions including:
- General Liability & Umbrella
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- Inland Marine
- Auto Insurance
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Our Commitment: We’re always just a call, text, or email away—even on weekends. We help you navigate insurance challenges so your business stays protected.
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We specialize in helping Tri-State business owners solve difficult workers’ comp issues:
- High premiums or cancellations
- Claims or losses affecting coverage
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We offer exclusive programs for:
- Auto Services
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If we can qualify you for our preferred program, you’ll enjoy:
- Competitive pricing
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Gary Wallach
📞 914-806-5853
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BGES Group
216A Larchmont Acres West
Larchmont, NY 10538