The creators of the standard Commercial General Liability Insurance Coverage Form did not intend for it to cover many pollution events. Pollution events can be extremely costly; businesses with such risk require specialty insurance policies written by companies with expertise in that area. The CGL form covers more routine events such as slips, falls, accidental property damage, and construction accidents. However, a contractor that has an accident involving the release of harmful liquids, fumes or irritants might still find some coverage in the CGL form.
The CGL form covers a contractor’s liability for the release of pollutants at premises that he does not own, occupy, rent or borrow. For example, a contractor, working at a convenience store, who cracks a pipeline that supplies gasoline from the tanks to the pumps might have coverage because the accident happened at premises he did not own, occupy, rent or borrow. However, if the same contractor knocked over a drum of motor oil at his own premises, the policy would not provide coverage for the clean up.
The contractor also has coverage for the release of pollutants at a job site if he did not bring them there. In the above example, the gasoline flowing through the pipeline was already at the job site. Since he did not bring it to the site, the contractor has coverage for this accident. However, a painting contractor completing a job outdoors on a windy day will not have coverage if paint gets blown into a nearby stream.
The policy also covers the contractor for harm caused by gases, fumes or vapors from materials he brought into a building in connection with the work being performed. A painting contractor working inside a building has coverage if the paint fumes make other people in the building sick. By contrast, the policy would not cover similar claims if the source of the sickness were fumes from diesel fuel used in the contractor’s trucks.
Finally, the policy covers the contractor for pollution resulting from completed operations. A contractor that installed a complicated piping system for moving finishing solvents around a manufacturing plant would have coverage if the system leaked months after the job was finished.
Most construction contracts require a subcontractor to cover the project owner and general contractor as additional insureds under the sub’s CGL policy. Although the policy excludes coverage for pollution incidents taking place at premises that were ever owned, occupied, rented or borrowed by any insured, it makes an exception for premises belonging to an entity named as additional insured and where the contractor is working. Without this exception, the subcontractor would never have pollution coverage at job sites where he named the owner or GC as additional insureds (that is to say, almost all job sites.)
The pollution coverage in the CGL is not complete. The contractor has no coverage for the release of pollutants that he brought to the job site. There is no coverage if a hydraulic line on a front-end loader breaks and pours fluid all over the ground, since the contractor brought the loader and its fluid to the site. Also, the policy does not cover release of pollutants in connection with environmental remediation work done by the contractor or a hired sub. Contractors involved in this type of work need a special Pollution Liability policy.
A contractor would be wise to have a long discussion with an insurance agent about all of his operations and potential risks. The agent can identify what is and isn’t covered. If there are gaps in the coverage, the agent can recommend products to fill them. Construction is hazardous work; contractors need to know in advance what financial protection they have from pollution incidents.