Pollution Liability Insurance covering
Contractor’s or appropriate subcontractor’s liability for bodily injury,
property damage and environmental damage resulting from sudden accidental and
gradual pollution and related cleanup costs incurred by Contractor, all arising
out of the Goods delivered or Services (including transportation risk)
performed under this Contract is required.
Combined single limit per occurrence shall not be less than
$__________________. Annual aggregate
limit shall not be less than $_________________.
An endorsement to the
Commercial General Liability or Automobile Liability policy, covering
Contractor’s or subcontractor’ liability for bodily injury, property damage and
environmental damage resulting from sudden accidental and gradual pollution and
related clean-up cost incurred by the Contractor that arise from the Goods
delivered or Services (including transportation risk) performed by Contractor
under this Contract is also acceptable.
When do they apply?
- Use when a Contractor will be using, removing, hauling, storing, or
disposing of hazardous materials, including lead and asbestos. Normally used to
clean up pollution excluded by other policies. Sudden and Accidental Pollution
coverage is usually required when contracts specify using, removing, or hauling
hazardous materials. Gradual pollution coverage is usually required for contracts
involving storing, or disposing of hazardous materials (in addition to Sudden
and Accidental coverage).
Hazardous material defined
hazardous material is any item or agent (biological, chemical, radiological,
and/or physical), which has the potential to cause harm to humans, animals, or
the environment, either by itself or through interaction with other factors.
Hazardous Material includes lead and asbestos, such as when a contractor
is involved in lead and/or asbestos removal/abatement.
OSHA's definition includes any substance or chemical which is a
"health hazard" or "physical hazard," including: chemicals
which are carcinogens, toxic agents, irritants, corrosives, sensitizers; agents
which act on the hematopoietic system; agents which damage the lungs, skin,
eyes, or mucous membranes; chemicals which are combustible, explosive,
flammable, oxidizers, pyrophorics, unstable-reactive or water-reactive; and
chemicals which in the course of normal handling, use, or storage may produce
or release dusts, gases, fumes, vapors, mists or smoke which may have any of
the previously mentioned characteristics. (Full definitions can be found at 29
Code of Federal Regulations (29 CFR 1910-1200.)
EPA incorporates the OSHA definition, and adds any item or chemical which
can cause harm to people, plants, or animals when released by spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing into the environment. (40 CFR 355
contains a list of over 350 hazardous and extremely hazardous substances.)
DOT defines a hazardous material as any item or chemical which, when
being transported or moved in commerce, is a risk to public safety or the
environment, and is regulated as such under its Pipeline and Hazardous Materials
Safety Administration regulations (49 CFR 100-199), which includes the
Hazardous Materials Regulations (49 CFR 171-180).
- Covers bodily injury and property damage liability caused by pollution
incident and reasonable and necessary clean-up costs for an actual or potential
incident. The policy can cover sudden and accidental, or gradual pollution, or
- Pollution Liability Coverage insurance policies are usually issued on a
“claims made” basis. Require "Tail" Coverage for all "claims
made" coverage. Note: "Tail" Coverage should be required for a
minimum time period of ten years for this type of exposure. May be endorsed
onto Commercial General Liability and/or Automobile Liability coverage (with
separate limits). Blanket or project-specific pollution liability coverage is
- Note: Although there are standard endorsement extensions and policies
that enable insurers to provide pollution liability coverage, most pollution
liability forms are manuscript policies designed by individual insurers
interested in writing pollution liability coverage.
- For Asbestos removal contracts, if possible, get a policy endorsement
for Asbestos liability (with separate limits.) If the pollution liability
policy cannot be endorsed for Asbestos liability, have the Contractor or
appropriate sub-contractor get a separate policy. Asbestos abatement liability
policies cover third party bodily injury or property damage arising out of the
removal of asbestos by the Contractor or appropriate sub-contractor from
specified locations during the policy period.
- Use the Risk Assessment tool to assess the risks of the particular contract to determine appropriate
insurance limits and risk control measures. Ask questions such as, but not
limited to: What is the potential loss exposure if something goes wrong when
handling the hazardous materials? Probable costs associated with this exposure
include bodily injury, property damage, clean-up and defense costs.