This is the first in a series of posts authored by Anne Marie O’Brien, a partner in LDM’s litigation department. Ms. O’Brien has agreed to draw upon her experiences with insurance coverage disputes to provide information about growing insurance issues for construction companies. This article addresses your risks associated with Polution Exposure and whether you have coverage for this type of problem.
By Anne Marie O’Brien
All builders have a potential pollution exposure on every job. Some of the largest risks can arise when digging foundation, moving dirt or operating heavy equipment. Also fires can erupt that release potential harmful gases. Digging can accidently break a utility pipe or line. Smaller risks arise from spilled chemicals or fumes. Vandalism also can cause a pollution loss.
What you think might be covered probably is not. Make sure you find out from your agent if you are protected from these risks. All standard CGL policies contain a pollution exclusion clause. Most recent policies do not cover any environmental losses at all. Others cover only very limited losses, such as fumes from faulty heating and cooling units, hostile fires (one that you did not create) and escape of operating fluids from your mobile equipment.
What has Nebraska case law deemed to be covered? It depends upon the language of your insurance policy – which always controls. However in certain cases the courts have denied coverage to the policyholder for such unexpected claims as:
• Carbon Monoxide fumes from faulty gas furnace.
• Mercury leaching from interior construction in apartments.
• Xylene fumes emanating from a floor sealant.
Construction Takeaway Tip: Check with your agent to see if you have comprehensive pollution coverage. If not, consider purchasing an endorsement or Contractors Pollution Liability policy – which is available to all types of construction and building entities.