Category: Commercial General Liability

Water Pollution Insurance

An ominous exclusion to commercial general liability insurance

Water is essential to life and no human can survive without it. However, Water Pollution abounds making clean water a rare commodity throughout the world although America is considered a water rich country compared to many other countries.  Unfortunately, stewardship of this precious resource has not always been successful in the United States. Even though knowledge is gained exponentially as more research is conducted, more people become aware of the issue and more efforts are aimed at protecting water.  Yet Water Pollution still occurs every day in the business world. This is not an exaggeration.

Water Pollution is not limited to major industry and manufacturing.

Even SMB’s  have wastes that eventually reach the water.  Beauty shops use chemicals dyes and bleaches which end up in the sewer system.  Day cares use diapers, bleach, wipes and pharmaceuticals. Schools use bleaches, pesticides and cleaning products, Family farmers, as well as farming conglomerates, use fertilizer, feed, herbicides and pesticide. Farm animals give off waste which result in methane and pollutants in the water. Auto repairs, lawn mowing, painting all use products with pollutants which seep into our land and waters.  Additional pollution comes from bacteria in the water.  The list goes on and on. Essentially “…water and air have become global garbage cans” Jacques Yves Cousteau.

Water Pollution along a beach.

Water Pollution Insurance coverage is  a critically necessary to protect many businesses from liability and loss of their assets.

Water Pollution is a form of environmental pollution, which is often excluded from commercial general liability insurance in present day.  Prior to 1980, comprehensive general liability did include environmental pollution liability in some states.  It is entirely possible to have a claim brought for environmental pollution and find that an older general liability policies may still cover the event where the pollution has been ongoing over a lengthy period of time. (This is a very complex issue under insurance law which is beyond the scope of this article and consultation with a qualified attorney is advisable if you find yourself embroiled in a lawsuit or you have been notified of a claim).

Businesses and government usually want to protect their employees, their clients, their community and ultimately the end consumers of water. But businesses, local governments and the federal government make mistakes which affect everyone in the immediate area.  For instance think of the water pollution issues arising in Flint, Michigan when the city sought a cheaper water resource and did not explore the risks beforehand.

All sorts of circumstances can arise where businesses pollute the water unknowingly, or were unaware of the health consequences; or even polluted knowingly but did not have the information, resources or ability to prevent the pollution.  This scenario is all to plausible when any business is seeking to reign in costs.So what can you do to protect your business and assets from liability for pollution if you are in a precarious position or just want to help?

Businesses should ask the following questions before making business or financial decisions which may negatively affect clean water.

  1. What possible impact does my particular business have on pollution of the waterway? (Assess you specific situation).
  • What products to do you use which contain pollutants?
  • How do you dispose of your pollutants?
  • Is the disposal process environmentally safe?
  • Are any of the byproducts carcinogens, endocrine disputing compounds, heavy metals or toxins?
  • Are my employees adversely affected by exposure to these toxins?
  1. How can I stop pollution or at least reduce my impact? Suggestions are:
  • Recycle office and industrial byproducts when possible
  • Prevent runoff of wastewater contaminated by industrial pollutants
  • Use water efficient processes where possible in the office. For example low flow toilets and automatic sinks for employees
  • Use water efficient processes and water purification in your day to day operations.
  • Do not dump untreated toxic substances produced as a result of your business processes into any water source
  • Prevent chemical leaks and spills
  • Ensure sewage is treated or and sent to the proper facility for  sanitation
  • Work with your agent, carrier and risk management to establish safety plans

These are but a few ideas you can implement.  Research your specific industry for available solutions, filtration systems, less toxic alternatives and products you can use to cleanse and decontaminate waters used in your business processes.  Some online resources are: National Institute of Environmental Health Sciences, www.nies.nih.gov., Water Research Foundation, www.water.org, Water Online, www.wateronline.com and Pollution Online, www.pollutiononline.com.  Also see and ISO 14001: 2004 & 20015.

If environmental pollution is excluded under your policy, which is very likely, your options are standalone policies, supplements and endorsements to your general liability policy or your business owner’s package.  Your agent may have to obtain a policy from a specialty broker, e.g. Lloyd’s. Environmental pollution insurance has many nuances and one type does not fit all.   Business owners need to be sure that you  obtain the insurance you need to cover specific situations;for example, run off of waste water versus pouring chemicals into a river or waterway. Either or both can be excluded depending on the verbiage of your individual policy.

Proactive steps to obtain water pollution insurance may benefit your business

Additionally, you may receive tangible  benefit from taking proactive steps such as receiving discounts and rate decreases from your carrier when you implement Water Pollution controls and safeguards which protect your employees and the public. Positive accolades, public support and recognition often follow proactive actions which can be used for marketing programs.

This blog post is not intended to be or to convey legal advice. All material and information have been created for general insurance informational purposes only, and should not be acted upon or accepted as legal advice and is not a substitute for obtaining legal advice from an attorney of your choosing.

Image Credit.  Google Images: JPEG Image used under an Advance Search license free to share for commercial usage.

Concrete Contractors and Silica:

The field of Concrete Construction is extremely complex. This type of construction is subject to the ASTM International Concrete and Construction Standards (The American Section of the International Association for Testing Materials) as well as the American Concrete Institute Standards for Design and Construction.

Each build differs with the type of cement, sand and aggregates used to mix the concrete.  The contractor must consider the moisture content, the strength of the mixture, the chemical reaction abrasion test result, and numerous other factors which go into planning a build. One of those factors is the use of silica in the process of making concrete and removal of silica. This mineral is about to make the job even more complex and  may affect the bottom line due to increased need and costs for insurance coverage which shields you from liability for it’s use.

All concrete contractors need commercial insurance including commercial general liability and worker’s compensation which are required by law in most states. It is important to remember that general liability does not cover all insurance needs. You will also need Commercial Property, Commercial Auto, Inland Marine for tools and equipment and/ or Goods in Transit and Installation.

Additional recommendations not specific to  the installation of concrete, would be Employee Dishonesty, Employee Benefits Liability, Employee Related Practices, Loss of Business Income with Extra Expense, Stop Gap Liability, Umbrella Insurance and Professional Liability for design and installation. You also need Heavy Equipment Insurance if your commercial auto does not cover large vehicles such as a cement mixer truck, dump trucks and other heavy equipment you use.

Specific Industry related recommended insurances would include Contractors E&O, (This is not the same as Professional Liability insurance) E&O covers you when you make a mistake and are negligent during the building process.  Along with E&O you need a custom combination of the three types of insurance below to protect your business from environmental threats.

  • Products Liability
  • Environmental Impairment Liability
  • Pollution Control

The need for these insurance types has come about with the rise in litigation surrounding the construction industry as a whole and regulations  imposed for each specific industry in the field of construction So you may need all of these separately or combined in a BOP depending on what your carrier offers.

Due to health concerns for workers and the public, OSHA recently adopted new rules in regard to airborne (respirable) silica. Silica is one of the varying components contained within the sand, rock and the cement used in the concrete mixture by contractors.   This rule will significantly impact Concrete Contractors. Crystalline silica (SIo2) is the type used to make concrete as opposed to amorphous silica.  All of the 5 types of crystalline silica are listed as known occupational carcinogens by the CDC.  Crystalline silica is hazardous when it is used in construction processes such as blasting, cutting, chipping, drilling and grinding which make the silica “respirable”.  It works much like asbestos which is not hazardous unless disturbed, and then the substance becomes friable. When silica is disturbed by construction processes it becomes “respirable” and workers breathe silica in and it becomes hazardous and can  cause Silicosis and many severe lung related diseases which can be fatal in addition to cancer.

The Insurance and Risk Management Institute (IRMI) has predicted that the litigation surrounding silica will rise and result in increased environmental litigation much like the issues surrounding toxic mold did and points out that as Silica is a known carcinogen while mold is not. Aside from IRMI’s prediction silica seems to be more akin to asbestos than mold in some ways. According to the Department of Labor Construction Workers as a whole have an anticipated death rate of 1.82 as opposed to metal mining where the rate is the highest a 69.51%.  But that figure could be categorically higher for concrete workers ( the study was not broken down to examine different types of construction workers) as their exposure to respirable silica is frequent, due to contact with the components used to make concrete and resulting concrete dust, while it is being mixed, installed, poured, leveled, troweled edged, brushed finished and cut to specifications.  Workers are also exposed to the dust during the removal of old concrete from a construction or demolition site or during remodeling.

As pointed out by IRMI, the growing numbers of silica litigation could cause an exclusion to be carved out by insurance carriers for silica just as one was created in regard to asbestos. So look for an exclusion specifically for silica in your general liability policy to become a reality in the near future throughout the construction industry but particularly in regard to concrete contractors and workers.  Additionally insurance carriers could deny coverage based on the total pollution exclusion if a court finds that silica is a pollutant. It is very likely that silica would be considered a toxin.

Despite these issues, it does not mean that liability coverage will not be available if silica is used during the construction project. It means:

  • Concrete contractor will need to carefully review their existing policies and question your agent whether coverage for silica exposure is specifically excluded or there is a pollutant exclusion. If so,
  • Concrete contractors will have to purchase an endorsement, rider or supplement  that covers silica  either as an environmental hazard or a pollutant and adds coverage in addition to  any exclusion in  their existing CGL policy; or purchase a new BOP designed to cover environmental pollution and  pollutant liability
  • Insurance carriers will want safety plans that comply with specific OSHA regulations and the new silica rule to prevent silica exposure through the use of safety equipment and limiting time of exposure to be part of your everyday operations.
  • Expect higher workers compensation premiums as awareness arises and workers are diagnosed with silicosis or other related diseases.
  • Compliance with OSHA regulations to prevent or minimize exposure will be critical and will hopefully reduce the amount of your premiums.
  • Products liability will be necessary because the concrete mix you are making is actually a product you made or “manufactured” and you would have liability for it; if it is harmful to the public.  You also have liability during the demolition and removal process for old concrete that you encounter as it will become respirable at that point: and you will have liability for any other toxins uncovered during the removal. If you purchase the concrete from an outside source, you may  also still have some liability for using and installing it and recommending it to the client just as asbestos manufactures and installers were liable.

CNA Insurance offers a Subcontractors Errors and Omissions Policy with Pollution Liability which is endorsed by the America Society of Concrete Contractors.  Their Pollution Liability Coverage includes asbestos, mold and respirable dust or Silica. Travelers also offer Contractor’s Edge policies.  Many other carriers have policies that you can purchase additional supplements and endorsements for which can provide for coverage of these hazards for silica and/or other toxins which have exclusion in your CGL policy.