Does CGL cover pollution incidents

Does CGL Cover Pollution?

Does CGL cover pollution? Unfortunately, as you can read below, the ISO commercial general liability form CG 00 01 04 13 excludes most pollution incidents by default. 

If you are an environmental contractor, this lack of cleanup, defense costs and other coverage may be exacerbated by the presence of absolute, total pollution or other environmental exclusion endorsements hiding in your CGL policy.

ISO CG 00 01 04 13 - Pollution Exclusion

Does CGL cover pollution? 

As you may read in the exclusion below (in italics) the CGL 00 01 04 13 commercial general liability form excludes most claims that arise involving “pollutants”. The exclusion below for “Pollution” is usually found at the top of page 3 of the ISO form under “Exclusions”.

How the exclusion affects your business and situation may hinge on the definition of the word “pollutant1 in your insurance policy.

Exclusions: This insurance does not apply to:

F. Pollution

(1) “Bodily injury” or “property damage” arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of “pollutants“:

(a) At or from any premises, site or location which is or was at any time owned or occupied by, or rented or loaned to, any insured. However, this subparagraph does not apply to:

  1. “Bodily injury” if sustained within a building and caused by smoke, fumes, vapor or soot produced by or originating from equipment that is used to heat, cool or dehumidify the building, or equipment that is used to heat water for personal use, by the building’s occupants or their guests; 
  2. “Bodily injury” or “property damage” for which you may be held liable, if you are a contractor and the owner or lessee of such premises, site or location has been added to your policy as an additional insured with respect to your ongoing operations performed for that additional insured at that premises, site or location and such premises, site or location is not and never was owned or occupied by, or rented or loaned to, any insured, other than that additional insured; or
  3. “Bodily injury” or “property damage” arising out of heat, smoke or fumes from a “hostile fire”; 

(b) At or from any premises, site or location which is or was at any time used by or for any insured or others for the handling, storage, disposal, processing or treatment of waste;

(c) Which are or were at any time transported, handled, stored, treated,
disposed of, or processed as waste by or for:

  1. Any insured; or
  2. Any person or organization for whom you may be legally responsible; or

(d) At or from any premises, site or location on which any insured or any contractors or subcontractors working directly or indirectly on any insured’s behalf are performing operations if the “pollutants” are brought on or to the premises, site or location in connection with such
operations by such insured, contractor or subcontractor. However, this
subparagraph does not apply to: 

  1. “Bodily injury” or “property damage” arising out of the escape of fuels, lubricants or other operating fluids which are needed to perform the normal electrical, hydraulic or mechanical functions necessary for the operation of “mobile equipment” or its parts, if such fuels, lubricants or other operating fluids escape from a vehicle part designed to hold, store or receive them. This exception does not apply if the “bodily injury” or “property damage” arises out of the intentional discharge, dispersal or release of the fuels, lubricants or other operating fluids, or if such fuels, lubricants or other operating fluids are brought on or to the premises, site or location with the intent that they be discharged, dispersed or released as part of the operations being performed by such insured, contractor or subcontractor;
  2. “Bodily injury” or “property damage” sustained within a building and caused by the release of gases, fumes or vapors from materials brought into that building in connection with operations being performed by you or on your behalf by a contractor or subcontractor; or 
  3. “Bodily injury” or “property damage” arising out of heat, smoke or fumes from a “hostile fire”.

(e) At or from any premises, site or location on which any insured or any contractors or subcontractors working directly or indirectly on any insured’s behalf are performing operations if the operations are to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of, “pollutants“.

(2) Any loss, cost or expense arising out of any:

(a) Request, demand, order or statutory or regulatory requirement that any insured or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of, “pollutants“; or 

(b) Claim or suit by or on behalf of a governmental authority for damages
because of testing for, monitoring, cleaning up, removing, containing,
treating, detoxifying or neutralizing, or in any way responding to, or assessing the effects of, “pollutants“. However, this paragraph does not apply to liability for damages because of “property damage” that the insured would have in the absence of such request, demand, order or
statutory or regulatory requirement, or such claim or “suit” by or on behalf of a governmental authority.

As described below, the definition of pollutant doesn’t necessarily mean “hazardous”.

What Is A Pollutant?

The breadth of the CGL pollution exclusion is underpinned by the defined word “pollutant“.

The standard definition of “pollutant” in the CGL policy uses broad language and may be further expanded by endorsement to exclude almost everything pollution-related.

The term “pollutant” doesn’t have to equate to “hazardous”.

You may think of a “pollutant” simply as something that is not where it’s supposed to be – and as a result – creating a liability or causing some sort of damage.

"Pollutants" mean any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed."

Based on the language above, a pollutant is broadly defined as an irritant or contaminant… Again, a pollutant doesn’t have to mean a hazardous substance. 

The CGL excludes almost all pollution related claims for bodily injury and property damage. The CGL also excludes the following:

  • Any cleanup costs related to pollution claims
  • Any claims related to waste storage or disposal for transportation or other related exposures involving waste or pollutants.
  • Any testing, monitoring, or cleanup of pollutants
  • Any requirements, whether they’re regulatory, statutory or governmental or lawsuits requiring cleanup. 

Other Pollution Insurance Red Flags

Your CGL policy environmental coverage may be further restricted by certain language or endorsements you should watch out for, including:

  • Absolute Pollution Exclusion.
  • Total Pollution Exclusion (forms CG 21 49, CG 21 55 or CG 21 65)
  • The words bacteria, mold, pathogens, mildew or concurrently.
  • The phrase “in any sequence” as it pertains to the presence of mold or bacteria in the course of events involving a CGL claim.

Commercial general liability policies may contain other exclusions that restrict coverage for pollution incidents and the items above may not be exhaustive.

What Insurance Addresses My Environmental Exposures?

Environmental liability insurance closes the pollution gaps in the standard commercial general liability policy

Consider the following environmental liability insurance options to protect against the financial and liability costs of a pollution incident.

Contractors Pollution Liability 

Contractors pollution liability (CPL) insurance, also called contractors environmental liability2, is a type of insurance that specifically covers pollution-related claims against contractors. 

CPL insurance can provide coverage for the costs of cleaning up a pollution incident is caused by a contractor’s work, as well as the costs of defending against claims made by third parties who have been harmed by the presence of pollutants.

Contractors pollution liability insurance is important for contractors because it can help to protect them from the potentially significant financial costs of pollution-related accidents or incidents. 

This type of insurance is commonly purchased by contractors who work on environmental projects, such as those involved in cleaning up contaminated sites. However, it applies to many other types of contractors, including the following:

  • Solar installers
  • HVAC contractors
  • Manufacturers
  • Environmental remediation firms
  • Commercial real estate professionals
  • Restaurant owners
  • Trucking and transportation companies
  • Energy and fuel distributors
  • Farmers
  • Roofers
  • Community solar developers
  • Street and road contractors
  • Energy storage project developers

This type of insurance can cover the costs of cleaning up pollution that has already occurred, as well as the costs of defending against claims made by third parties who have been harmed by the pollution. 

Pollution liability insurance can be purchased by companies, as well as by individuals who own property that may be at risk of pollution. 

This type of insurance is important because pollution can be very expensive to clean up, and it can also result in significant legal costs if third parties are harmed by the pollution incident.

Footnotes

  1. The emphasis and bolding is mine.
  2. Or environmental contractors liability insurance
.

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