Is pollution liability insurance worth the cost?

by David M. Wolfenden, CPA, CVA, MS, Managing Director

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I’ve been reading some scary stories lately. The tales all begin with an innocent construction company going along its merry way and end with a knock on the door from an attorney suing the business for jobsite-related pollution. But is pollution insurance really worth the cost or should I spend those dollars elsewhere?

As you might have already guessed, there’s no one-size-fits-all answer. Whether you should invest in a pollution liability policy depends on the type of work you do and the fine print of your existing insurance. Nonetheless, it’s a good idea to familiarize yourself with this type of coverage.

What it covers
Pollution liability insurance protects you from third-party claims against your construction company for bodily injuries and property damage attributable to hazardous waste created during a project. Most policies cover you while you’re working and after you’ve “completed operations.”

You can buy blanket coverage that will offer ongoing protection, or you can purchase project-specific policies. Insurers also offer coverage options for transporting waste and materials to and from disposal facilities, as well as for mitigating your liability while disposing of waste at those facilities.

When you need it
You might assume your construction company is already covered for pollution under its general liability policy. Decades ago, such coverage was typically packaged with standard commercial general liability policies. But, with litigation so common and as interest continues in green building, this is generally no longer the case.

So, getting back to the question at hand: Is pollution liability coverage worth the investment? That all depends on your specialty and the nature of your projects. Obviously, any contractor who regularly works in areas such as environmental mediation, site restoration and abatement (asbestos removal, lead control and so forth) needs one of these policies. If your construction business already has one in place, don’t hesitate to regularly review its terms and costs, and shop around for a better deal.

If you don’t typically work in a pollution-related field (so to speak), you may not need blanket coverage. But don’t ignore the risk either. For example, let’s say you work with HVAC systems and a high volume of carbon monoxide accidentally escapes into a public space, causing people to become sick and dizzy. A pollution liability policy could help cover your losses.

Who can help
A strong backbone of insurance is a critical risk management measure for every contractor. Work with your advisors, namely your insurance agent or risk advisor, to determine whether pollution liability coverage would be cost-effective for you.

We welcome the opportunity to put our construction industry expertise to work for you. To learn more about how our firm can help advance your success, please contact Dave Wolfenden at (302) 254-8240.

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