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Environmental Liability Insurance for New Home Builds


Product description

Environmental insurance policies have been designed to address the various financial losses that can occur from a pollution incident. Such losses can include:

  • Compensation to 3rd parties for injury and property damage
  • Clean-up costs including 3rd party claims and statutory clean-up notices
  • Legal defense costs
  • Natural resource damages
  • Emergency response costs


What are my environmental risks/exposures?

Contractors, sub-contractors or their clients can suffer loss as a result of pollution that arises directly or indirectly from contracting operations. Common causes of pollution during contracting and construction activities can include:

  • Damage to underground storage tanks, pipelines or other buried structures
  • Disturbance and mobilisation of existing ground contamination
  • Import of contaminated backfill on to a job site
  • Release of hazardous chemicals & fuels stored/handled at a job site
  • Release of hazardous chemicals, fuels or waste during transport to or from a job site


Risk best suited to / target clients or work that clients undertake

Contractors Pollution Liability (CPL) is the relevant environmental policy for contractors and/or their clients.
Companies who buy Contractors Pollution Liability insurance include, however are not limited to:

  • General contractors/construction companies: Commercial, residential, municipal, road, infrastructure, maintenance, mechanical, grading and excavation
  • Trade contractors/companies: paving, carpentry or concrete
  • Demolition contractors/companies
  • Drilling and piling contractors/companies
  • Industrial cleaning contractors/companies


Cover outlined & any benefits

CPL insurance typically covers/protects companies from liabilities and costs arising from pollution conditions which result from specified contractors’ activities (also known as “Covered Operations”).

Standard cover includes:

  • Sudden and accidental pollution
  • Gradual pollution
  • Exacerbation of pre-existing pollution
  • Clean-up costs (including statutory clean-up notices)
  • Third party bodily injury
  • Third party property damage
  • Natural resource / biodiversity damages
  • Legal & associated defence costs
  • Emergency response costs
  • Asbestos

Optional coverage enhancements include:

  • Completed operations cover
  • Transported cargo
  • Crisis management costs
  • Non-Owned Disposal Site (NODS) (waste disposal sites)


Coverage gaps in traditional liability policies

Traditional insurance products such as general and public liability policies do not provide adequate coverage for the various financial costs that can occur as a result of pollution or contamination. Common coverage gaps include:

  • Coverage is restricted to “compensation” from “sudden and accidental” pollution events. Therefore there is no coverage for injury, damage, clean-up costs or defence expenses associated with gradual pollution events
  • No coverage for natural resource damage
  • No coverage for statutory compliance with investigation and remediation orders (i.e. clean-up of pollution enforced by a regulatory agency such as the EPA)
  • No cover for certain pollutants such as asbestos and PCBs
  • No cover for certain potentially polluting activities such as handling, processing, treatment, storage, disposal or dumping of any waste materials or waste substances

Policy Cover

Typical Public Liability Policy

Environmental Liability Policy

Sudden and accidental pollution

Yes

Yes

Gradual pollution

No

Yes

3rd party claims for clean-up costs

Only from sudden and accidental pollution events

Yes

Statutory clean-up (clean-up required by an regulatory notice)

Unlikely to respond to a statutory notice

Yes

3rd party injury and property damage claims

Only from sudden and accidental pollution events

Yes

Natural resource damage costs

No

Yes

Emergency response costs

No

Yes

Asbestos

No

Yes

Defense costs

Only related to sudden and accidental pollution events

Yes


Frequently asked questions

Which companies buy Contractors Pollution Liability insurance?

  • General Contractors: Commercial, residential, municipal, road, infrastructure, maintenance, mechanical, grading and excavation
  • Trade Contractors: paving, carpentry or concrete
  • Demolition
  • Drilling and piling
  • Industrial cleaning

Why do companies Buy Contractors Pollution Liability insurance?

  • Satisfying contractual requirements
  • Off-setting contractual risk
  • Effective risk management

What underwriting material is required to arrange Contractors Pollution Liability insurance?

Project Specific CPL insurance:

  • Brief project description including job-site location & activities
  • Project timeframe
  • Total contract value + breakdown by activity
  • Name of principal contractor

Blanket CPL insurance:

  • Description of all activities/operations to be covered
  • Total contract value + breakdown by activity
  • Name of principal contractor

Bindable terms require a signed and completed CPL application form (copy available on request).

How much does Contractors Pollution Liability insurance cost?

CPL insurance is rated largely on the project value or, in the case of blanket policies, contractors’ turnover. Premium rates will then depend on, amongst other factors, the:

  • Limit of indemnity and deductible
  • Length of the project / policy term including completed operations / extended reporting period
  • Nature of the work being conducted (high hazard activities attract higher rates than low hazard ones)
  • Type of insurance cover required:
    • Occurrence-worded policies are more expensive than claims-made & reported policies
    • Coverage extensions such as transported cargo are charged at additional premium
  • Quality of the contractors’ risk management program and its track record working on similar projects
  • Claims and loss history


Case studies

Asbestos discovery during development

  • During work at a development site, a construction contractor uncovered and accidentally spread a large amount of unknown asbestos
  • The EPA commissioned an investigation and issued both remediation and management notices
  • The claim is ongoing and is estimated to be $5-10M total consisting of fines, clean-up costs and third party liabilities
  • As liabilities tied to asbestos releases can arise years down the track, there is the potential for third party claims to arise years after the event

Importation of contaminated backfill

  • A contractor working on a demolition and construction project hired a sub-contractor to supply materials to backfill excavations at the site
  • It was later discovered that the fill material was contaminated and had to be removed and disposed of at a landfill, costing $760,000

Rainstorm washes sealant into watercourse

  • A paving contractor hired to finish six roads applied 2,800 gallons of oil-based sealant
  • Before the sealant could dry, heavy rainfall washed it into the roads’ storm drain and it then entered a nearby stream
  • The oil-based sealant was found to be potentially harmful and the regulators ordered the contractor to clean up the pollution
  • Fifty property owners who lived along the stream filed suit for bodily injury and property damage as a result of the washout
  • The contractor paid all costs associated with the clean-up and settlements for approximately $1.62 million

Vandalism

  • Vandals opened an on-site mobile refuelling tank at a construction site
  • Approximately 1,200 gallons of diesel fuel were consequently released into a nearby river
  • Although the contractor was not physically responsible for the fuel release, they were found liable and incurred $2.55 million in clean-up costs

 

Contact
1800 762 852