Contractors pollution liability (CPL) insurance is a type of environmental insurance that covers pollution liability risks for contractors and their subcontractors.
Pollution liability coverage provides those in construction management with third-party coverage for pollution incidents that result from the contractor’s work. It’s similar to business environmental liability insurance that insures against environmental risks.
A pollution liability insurance policy covers things like third-party bodily injury, property damage, mediation, and legal defense costs for pollution events that happen as a result of a contractor’s work.
This includes pollution incidents directly caused by a contractor, or from work done on a contractor’s behalf, by subcontractors and others.
Contractors face pollution risks in their work, which may involve working with toxic materials. A construction site can generate high levels of silica dust and particulate matter that can travel considerable distances, leading to public complaints and lawsuits over pollution conditions.
Keep in mind that contractors pollution liability policies can be written as claims-made insurance or occurrence based:
Contractors face all kinds of pollution risks, from dust and debris to unknown contaminants stirred up by renovations and demolitions.
For example, a storage tank might leak dangerous substances without being detected, especially if underground. An underground tank could unexpectedly turn up during excavation and renovation work.
Or, a construction site could be contaminated by any number of unknown pollutants that are discovered during construction or renovation work. A contractor might be asked to sign a hazardous waste manifest, without realizing the full nature of risks at a particular job site.
Also, spills can happen for a number of reasons, such as a collision during transport, faulty equipment, or vandalism.
Here are some of the other types of pollution exposures that contractors face:
On average, environmental liability insurance costs about $223 per month. Your exact cost may vary depending on the type of work you do and your risk of causing environmental damage or pollution.
Many small business owners obtain their contractors insurance or pollution coverage by adding it as an endorsement to an existing general liability policy, which typically excludes this coverage.
Get QuotesYour insurance company will consider several risk factors, starting with your type of business and location, as this has a direct impact on your odds of facing a claim and how expensive it could be.
Working in an area that’s known for pollution risks, such as brownfield sites, increases your chance of filing a claim. If you work in an area with expensive real estate, it could increase any cleanup costs and third-party claims in case of a mishap.
Other factors the insurance company considers include:
Most construction contractors could benefit from a CPL policy. It may be required to qualify for certain contracts, and a customer may ask to see your proof of insurance before hiring you for a job.
For example, an excavator digging a foundation, or demolishing an old one, could unexpectedly damage an old storage tank that wasn’t listed in any of the property records. If any fuel, oil or other contaminants leak during the excavation work, the contractor could face expensive remediation work and lawsuits.
Demolishing an old building could result in dust and debris spreading over a neighborhood. The pollution liability would be considerable. Any claims would be even more substantial if toxic substances were released, or if an emergency response is required by the local authorities.
General contractors could also benefit from pollution liability coverage, as they face multiple risks from their own work and that of subcontractors.
