Pollution & Professional Exposures For HVAC Contractors
While HVAC Contractors are traditional contracting risks, they have become the focus of growing pollution related claims over the last several years. HVAC system installation, maintenance, and repair can create pollution conditions such as poor indoor air quality and mold. Daily jobsite operations could disturb in-place asbestos, lead, or other contaminants. Materials and equipment brought to the jobsite may spill or leak while in transit or in use during contracting activities.
HVAC Contractors also have professional liability exposures which may not be obvious to the insured since contracting is the main focus. E&O claims could arise from: (1) jobsite modifications in which malfunctions may create a direct professional responsibility for the contractor, (2) supervision of subcontractors, and (3) actual design work performed, specifically when the contractor has a perceived responsibility to comment on design aspects that he knows to be poorly developed.
The exposures described above are usually excluded from General Liability policies, so it is important for HVAC contractors to have comprehensive coverage that will protect them from potential claims and thus help secure the future of their businesses. Beacon Hill’s programs division, PartnerOne Environmental, has a number of products that can effectively address the coverage needs of this class of business:
Contractors Pollution Liability
Contractors Pollution Liability insurance (CPL) is coverage designed to protect from third party claims for damages caused by “Pollution Conditions” arising from the insured’s covered operations. This coverage is applicable to all types of tank contractors and is important because these pollution claims may not be covered via the General Liability form.
How does Contractors Pollution Liability coverage work?
· Generally designed to address the coverage gap created by the CGL pollution exclusions.
· Policies usually written to provide coverage for operations performed “by or on behalf” of the insured.
· Coverage is provided for the insured’s operations away from their own premises.
· Base policies can be written on either a Claims Made or an Occurrence basis.
· Mold coverage is usually offered as an endorsement to the CPL insurance policy or coverage part.
· Mold is usually on a Claims Made form.
· Mold coverage may have a sub limit of liability, as well as its own deductible.
Contractors Pollution Liability/E&O
The Contractors Pollution Liability/E&O policy provides coverage to general contractors, construction managers, and various trade contractors who could potentially have both Pollution and Professional claims; Contractors Pollution Liability/E&O provides coverage for Professional exposures for contractors. This coverage is important because these professional exposures are generally excluded from General Liability and monoline Contractors Pollution Liability policies.
Job site modifications made
HVAC contractors are often presented with installations that do not work exactly as planned. In these situations, contractors will often tweak the plan at the site to make the system work. Pollution conditions arising from these changes create a direct professional responsibility for the contractor.
Actual design work performed
Many firms provide true design services as part of their corporate profile. This can range from doing all of the design work for the project, doing some design work relative to an aspect of the HVAC system, or simply having a perceived responsibility to comment on design aspects they know to be poorly thought out. The last element is the most difficult to control and manage for HVAC firms.
Supervision of subs
Proper selection and supervision of subcontractors is a professional exposure most contractors share that is generally excluded from CGL and basic CPL policies. Many HVAC contractors do not use subs at all, so this will not be an issue for them. For those that do however, the exposure can be significant