Choosing The Right Pollution Insurance
BY : DYLAN NAKANO ATLAS INSURANCE
You ’ ve probably read countless headlines about the havoc wreaked on property owners by toxic mold and other contaminants . These harmful agents range from molds to fungi to invasive bacteria and can lead to serious symptoms including headaches , eye irritation , cough , asthma and other respiratory problems . When a harmful pollutant is found , the damage can be considerable and costs can add up quickly . Here ’ s a quick look at how far-reaching the impact of building toxins can be :
• Illness . While employee illness would be covered by workers ’ compensation insurance , surrounding residents and communities could be subject to negative health effects from toxins unearthed or introduced during construction .
• Clean-up costs . If an environmental problem is identified , the contractor or developer may have to assume responsibility for clean up and restoration .
• Defense costs . Building developers and contractors may find themselves at the center of an expensive lawsuit due to alleged contamination .
• Reputation damage . The reputation of the company can suffer from negative publicity , leading to increased difficulty in attracting employees and loss of future revenue .
To protect against these expensive exposures , Pollution Liability Insurance should be explored by both developers and contractors . Finding and vetting these types of policies can be difficult , so it ’ s best to work with a broker or agent with experience in this area . Unlike other types of insurance that are required — for example , workers ’ compensation ( required by law ), general liability insurance ( required by licensing boards ), or property insurance ( required by lenders )— pollution insurance is generally not mandatory . Therefore , remembering to carry this important coverage can slip through the cracks . If you are in the construction business , it is essential to find the right coverage and to avoid some of these possible pitfalls along the way :
• Beware of exclusions . Some policies may have exclusions for things like mold , mycotoxins , or Legionella . Be sure the coverage you choose is as broad as possible to cover the unexpected .
• Include pre-existing conditions . Just like the old story with health insurance , pollution policies are usually written to only cover new problems , not pre-existing ones . If appropriate , your policy can be applied to both .
• Check length of coverage . The statute of repose for construction defects in Hawaii is 10 years , so developers and contractors can be held accountable for problems a full decade after project completion . Your coverage should therefore be written with a 10-year tail .
• Review covered parties . It is critical to ensure that every portion of the job is covered . Although the developer may have pollution insurance , coverage may not specifically include contractors , who may also have uninsured exposures .
• Get the right coverage . There is a big difference between site pollution and construction liability . Be sure you know what you are purchasing and that it is relevant and complete for your situation .
Despite all these caveats , the good news is that the market for pollution insurance has been relatively soft in recent years . Excess capacity may create some great opportunities for your broker to negotiate a better deal , say , by including ancillary coverage areas like crisis management or a more generous allowance for legal defense costs . It ’ s definitely worth your while to take a deep dive into these areas before committing to a particular carrier or policy . +
Dylan Nakano has over 10 years of experience in the insurance industry working with many of the largest developers and general contractors doing business in the state of Hawaii and California . Prior to joining Atlas in 2016 , he focused on wrap-up programs , brokering and overseeing wrap-up administration ( general liability , workers comp , builder ’ s risk , environmental , professional ) on real estate projects in excess of $ 5 billion in hard construction cost .
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