Not all insurance policies are created equal, and this is especially true for pollution policies, which lack standard wording like general liability policies. Contractors often face problems when they choose a pollution policy based solely on its cost, as the cheapest option isn’t always the best. During a policy review for a new client, McConkey uncovered significant coverage gaps where the client believed they were adequately protected by their previous broker.
Here are three critical issues we identified:
1) Coverage for Owned Locations Only for Gradual Events: The policy covered owned and leased locations but was limited to claims occurring over a 10-day period and reported shortly after. This excluded coverage for gradual leaks from fuel tanks, one of the client’s biggest exposures.
2) Contractual Liability Limited to Vicarious Liability: The policy’s contractual liability coverage only extended to vicarious liability. Given the trend of pushing liability down the contract chain, it is crucial for agents and brokers to understand the specific liabilities their clients assume and what their insurance policies cover. This policy’s wording meant that typical contractual phrases like “for any and all claims caused in whole or in part” were only partially covered.
3) Limited Additional Insured Coverage: Additional insured coverage is often required on pollution policies for contractors, with contracts specifying the extent of coverage. The reviewed policy only applied additional insured coverage to the subcontractor’s own negligence and vicarious liability of the higher tier, potentially leaving the contractor to cover a portion of large construction claims.
McConkey was able to replace this inadequate policy with broader coverage that met the client’s contractual obligations, with only a negligible impact on the policy premium.
For a coverage analysis, please contact a member of your McConkey Construction team.
