Delivering a construction project completed, on schedule and within the agreed budget is crucial for everyone involved. Delays due to product availability, staffing issues, or equipment malfunction are challenges all projects must overcome. However, unaddressed environmental risks can ultimately derail a project and significantly impact the schedule and budget. Although project impacts due to environmental incidents are less frequent, the resulting cleanup costs associated with these incidents can be significant. Therefore, it is imperative that project owners hire qualified contractors they can trust to execute the project successfully and avoid being left with costly environmental issues.
General and Trade Contractors are required to have the following:
- Pollution Prevention Practices – These are written documents on the best practices to recognize and mitigate environmental risks. They are provided to contractors to train their employees on the best practices to prevent environmental incidents from occurring. Pollution Prevention
- Contractors Pollution Liability (CPL) Insurance Policy – All Commercial General Liability (CGL) insurance policies contain some form of total pollution exclusion. Occasionally insurance carriers are willing to give back limited coverage by endorsement; however, these endorsements do not typically address all risks, leaving a contractor exposed.
General contractors can be held liable for the property damage or bodily injury of others due to their contracting operations. Contractors Pollution Liability provides third-party coverage for bodily injury, property damage, defense expenses and clean-up costs for pollution conditions arising from covered contracting operations performed by or on behalf of the insured.
Not only that, when pollution claims arise due to the work completed by a contractor, the project owner may be held responsible. Projects being completed in commercial and residential areas alike have the potential to affect many different groups of stakeholders which may include:
- Nearby Residents
- Nearby Businesses
- Employees, both of the project owner & contractors
- Customers/Patients + Guests + Lenders/Investors
- Users of natural resources
Those who experience property damage, bodily injury or cleanup costs may seek retribution against the project owner. The following are examples of how a pollution incident can negatively affect a project owner:
- Residents who are required to evacuate the premise due to a pollution incident may seek monetary damages to repair their property and cover medical or living expenses.
- Nearby businesses, which may be forced to close temporarily, may seek compensation for their lost revenue.
- Contractors working on the site of the project owner may opt to sue the project owner for negligence and failure to provide a safe workplace instead of filing a claim on their employer’s Workers Compensation policy.
- Employees of the project owner may be exposed to harmful pollutants which can lead to workers’ compensation claims and reduced employee moral.
- Customers and all other visitors to the site during and after construction can also be adversely affected and may seek compensation. Such events bring negative publicity that can damage the project owner’s image for years.
- Lenders may have collateral impairment, and investors may lose money on their investments. Both may demand retribution in the face of a loss.
- An environmental incident can be a public relations challenge for project owners.
© Copyright 2021. All rights reserved. This content is strictly for informational purposes and although experts have prepared it, the reader should not substitute this information for professional insurance advice. If you have any questions, please consult your insurance professional before acting on any information presented. Read more.
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