When the Commercial General Liability policy was formed, the creators did not intend for pollution events to be covered. The effects of these events are very costly, and special policies are required for businesses facing such risks. These special policies are designed by companies that have expertise in pollution events. Routine events are what the CGL form covers. Falls, construction accidents and property damage are some examples of such routine events. Contractors who have accidents that result in irritants, fumes or other harmful substances being released may still receive some coverage from a CGL policy.
It is important for contractors to understand the extent of pollutant coverage. The CGL form extends coverage for pollutants released only on properties not owned, rented or occupied by the general contractor. However, coverage is not extended for personal property. For example, if a contractor accidentally cracks a gas pipeline at a fuel station, coverage may be extended because the contractor does not own, rent or occupy the station. However, if the same contractor knocked over a large oil drum on his own business property, the effects of the incident would not be covered by the policy.
Contractors also have coverage for any pollutants released on a job site that were not provided by them. Consider the previous example. Since the gasoline at the fuel station was brought by a supplier, it was already in the pipelines when the contractor arrived. However, if that same contractor had brought some chemicals to take to the next job site and spilled them while at the station, he would not be covered. Chemicals and pollutants brought by the contractor may only be covered if they were brought for that specific job. If the chemicals were brought for the fuel station job instead of the following one, the spill may be covered. For example, if a contractor is painting inside of a building and others get sick, he is covered. The policy also covers pollution from completed operations. If pipelines carrying damaging chemicals started leaking several months after being installed, the contractor would be covered.
In most construction contracts, the subcontractor’s CGL policy must include the general contractor and project owner as additional insureds. The policy does not include pollution incidents occurring at places that were not owned, rented or occupied by an insured. However, exceptions are made for premises belonging to any entity named as an additional insured. This means that subcontractors would not have pollution coverage on most job sites without naming the general contractor and property owner as additional insureds.
Keep in mind that the CGL’s pollution coverage is not complete. For example, if a contractor brought a front-end loader to a job site and fluid spilled everywhere, the cleanup would not be covered. In addition to this, the policy does not extend coverage for pollutants released in connection with a contractor’s environmental remediation work. It also does not cover such work performed by hired subcontractors. For contractors and subcontractors who do this type of work, a special Pollution Liability policy is required. It is important for all contractors to discuss their operations with an agent. This will help the agent determine whether current coverage is sufficient. If it is not, an agent will be able to recommend insurance products that close any deficiency gaps. Pollution fines and cleanup expenses are very costly, so it is important to be prepared before an incident happens.
