The Seven Deadly Endorsements - Part 5

General Liability Endorsements That Are Bad For Contractors

Deadly Endorsement #5 - CG 21 49 - Total Pollution Liability Exclusion

To understand the Total Pollution Exclusion, you must first know about the standard Pollution Exclusion that already exists in most general liability policies.   Specifically, the standard ISO Commercial General Liability policy excludes bodily injury or property damage arising out of the release of a pollutant.  There are, however, several exceptions to this exclusion. Below is an example of the first page of the Pollution Exclusion:

Here’s a breakdown of the exceptions to the first half of the pollutionexclusion:

Your Premises

• Building Heating Equipment - Coverage will still be provided for bodily injury resulting from the release of smoke or toxins caused by equipment used to heat your building.
• Owner as Additional Insured – Provides coverage for bodily injury and property damage resulting from the release of pollutants if the insured is a contractor working at his client’s premises.  But, only if the client is named as an additional insured on the contractor’s policy.
• Hostile Fire – There is still coverage for bodily or property damage from smoke or fumes arising out of a hostile fire. 

Away From Your Premises

• Mobile Equipment – Provides coverage for the discharge of chemicals from your mobile equipment such as fuel and motor oil. 
• Operations Within Building – If a contractor brings materials into a building that release toxins or fumes that cause bodily injury or property damage, there is coverage as long as the damage or injury happened inside the building. 
• Hostile Fire - There is still coverage for bodily or property damage from smoke or fumes arising out of a hostile fire.

The first half of the Pollution Exclusion deals with bodily injury and property damage that arises from the release of pollutants.  The second half of the exclusion deals with the cleanup of such pollutants.

The second half of the Pollution Exclusion excludes all costs related to cleanup.  There is, however, one key exception.  It will cover cleanup for damages because of property damage, but not cleanup at the request of a government agency. 

So, after reviewing the Pollution Exclusion, we find that there is actually a lot of coverage for pollution under a standard general liability policy.  Look at all that yellow.  That’s all coverage. 

Now that you understand how the standard Pollution Exclusion works, the Total Pollution Exclusion is really simple.  All those exceptions are deleted.  It replaces the original Pollution Exclusion.

So why is this important to you?  Pollution Losses can be very costly.  This is one of the most overlooked types of coverage in contractors insurance.  A major pollution loss could put you out of business if you don’t have the right coverage.  

If your general liability policy has a Total Pollution Exclusion, you have two options to get yourself properly covered.  One, ask your broker to have the exclusion removed.  This might add a little bit of premium, but usually can be done.  If they insurance carrier you are with is unable to remove the exclusion, you can buy a Pollution Liability Policy.  The experts at Orr & Associates can review your currently policy and address any needs you may have to be covered for pollutant related losses.  For more information contact Tarah Gruber at 619-487-0376 or Tarah@redhotinsurance.net.  Or visitwww.redhotinsurance.net.

Check back later to read about Deadly Endorsement #6.