The Top 5 Reasons Contractors Need Environmental Insurance

October 20, 2021

Construction contractors understand the importance of having general liability, workers' compensation, and inland marine insurance. Another important consideration is environmental insurance.

As a broker, how do you convince contractors to consider environmental pollution insurance? Here are five reasons.

1. Canada's environmental laws are becoming more stringent

A major overhaul is taking place this year to Canada's most important environmental law — the Canadian Environmental Protection Act (CEPA).

Environment Minister Jonathan Wilkinson introduced a bill in April that, if passed, would update the main law protecting people and the environment from toxic chemicals and dangerous substances. A substance can be listed as "toxic" under CEPA if it threatens human health, the environment, or biodiversity.

For the first time, the new provisions will require the government to monitor the cumulative effects of chemical exposure.

Due to the ever-increasing environmental regulations, it is important for contractors to have environmental insurance in the event that they cause pollution during their works.

2. Almost all construction sectors are involved in pollution incidents

Underwriters at SWG have seen that most, if not all, trades which undertake non-environmental operations, such as electrical, road construction, and water and sewer contractors, are just as likely to cause pollution incidents as the more generally recognized environmental activities, such as asbestos abatement contractors.

Most contractors are working in or around infrastructure every day, no matter what industry they're in - whether it's asbestos disturbed in a building during an electrical fit-out, diesel lost during a road construction project, or sewage lost during a pipe replacement or repair.

3. Construction contractors are especially vulnerable to pollution incidents

Construction projects in urban areas pose the following health risks to people and the environment who are present in close proximity to the works:

Exposure to airborne contaminants i.e. silica mineral dust (a known carcinogen) by cutting into silica-containing materials

Dusts from drilling and or demolition

Losses of containment of diesel, oil or other chemicals from portable storage tanks

4. The pros aren't immune to pollution incidents

From our experience, contractors in all sectors best manage their environmental exposures through the high-class workmanship for which they're known, as well as excellent risk management and health and safety practices.

5. Regular insurance is essential, but leaves gaps in coverage

Contractors must carry Commercial General Liability (CGL) insurance which many think provides the pollution cover they require. However, it is often inadequate and leaves costly gaps in cover such as no cover for gradual pollution, asbestos, mold, civil fines and penalties, contractual liability, emergency costs, etc.

About SWG ENVIRO: Contractor's Environmental Liability

Contractor’s Environmental Liability – Annual & Project Specific policy addresses the risk of pollution arising from annual and project-specific contract work. Coverage is provided on a claims-made and reported basis.

Coverage Highlights:

Contractors Environmental Liability:

Sudden and gradual pollution events

Broad definition of pollutant including asbestos & mould

Clean-up costs

Restoration costs

Emergency response costs

Natural resource damages

Compensation for third party bodily injury and property damage

Civil fines and penalties

Punitive damages, where insurable by law

Legal defense costs

Completed operations

Automatic coverage for contractors’ clients, if cover is required by contract

Coverage Enhancements:

Retroactive cover for historic work

Transported cargo

Waste disposal / Non-owned disposal sites

Separate project-specific limits

We Cover:

Including but not limited to the list below. Contact us if you don’t see what you are looking for.

Asbestos & mould abatement

Construction management

Demolition

Dredging

Drilling

Environmental, including remediation

Haulage

Landscaping

Oil and gas

Plumbing

Restoration

Septic tank installation and maintenance

Utility operation and maintenance

Waste collection, transportation, and treatment

For more details about our coverage, visit our product page at https://swgins.com/article/swg-enviro-contractors-liability.html

Content is current as of the date of broadcast and is subject to change without notice.


Sources:

  1. https://www.nationalobserver.com/2021/04/22/news/breaking-down-canadas-new-environmental-laws-toxic-chemicals
  2. https://practiceguides.chambers.com/practice-guides/environmental-law-2020/canada