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Pollution Liability Insurance pays for claims and remediation in the case of contamination of an environment by substances regarded as pollutants. This can include “Contractors Pollution Liability” and “Site-Based” (environmental impairment liability). Liability from pollution is normally excluded to some degree by the general, auto, and umbrella liability policies, which is why a stand-alone Pollution policy is sometimes necessary.
Contractors pollution liability (CPL) is a policy offered on either a claims-made or occurrence basis that provides third-party coverage for bodily injury and property damage, as a result of pollution conditions (sudden/accidental and gradual) arising from operations performed by or on behalf of the insured. Even firms that are not directly involved with pollutants (i.e. mold, asbestos, etc.) can be dragged into a lawsuit.
EXAMPLE: An MEP firm is dragged into a lawsuit due to a leaking HVAC System that was improperly installed and has resulted in mold developing within the walls of a recently constructed building. Since the MEP firm designed the HVAC system, they can be dragged into the lawsuit along with the General Contractor and any other sub-consultant involved in that project.
Site-based environmental impairment liability is an insurance policy created specifically for firms that engage in jobs or operations that have toxic by-products. This coverage is primarily written for property owners and location-based environmental hazards where hazardous waste is carefully contained but sometimes escapes and pollutes the ground, water, air or vegetation. Clean-up costs, fines and penalties associated with pollution incidents can be expensive for firms, and even damage their reputation if not handled properly.
EXAMPLE: An environmental firm provides hazardous waste storage as a part of their service offering. Over the course of 3-years, some storage containers leak hazardous waste into the ground soil, which in turn leaks into nearby water streams. Local water authorities discover this contamination and get the EPA involved. Eventually, legal action is taken against the environmental firm to have them clean-up the contaminated area and pay steep fines and penalties for their negligence.
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