Pollution Liability Insurance Explained: What Your GL Policy Won't Cover

You're a site improvement contractor and you're three weeks into a commercial project. Excavation is running fine and then your operator's bucket catches something metal. It's an abandoned underground storage tank that nobody knew was there and it's been leaking for years. Now contaminated soil is spread across your job site. Some of it has moved on to the neighbor's property next door and the work stops. You call your insurance broker only to hear them say that pollution isn't covered and they say it like you're a dummy because you didn't know that. By the time this event is mitigated you're out $175,000 in cleanup costs, six weeks of the project's delayed, $85,000 to settle with the neighbor. All in, call it $260,000 out of pocket. The policy that would have covered all of it runs around $2,800 a year. If that sounds like a nightmare that you'd like to avoid, stay with me. In this video I'm going to show you why your GL policy won't help you here Hi, I'm Gordon Coyle and for over 40 years I have worked with seven, eight, and nine figure business owners helping them navigate the complex world of business insurance. I have seen every problem and costly mistake you can imagine, so here I share the insider strategies and real world solutions that protect your business and save you money. So I think the problem causing this knowledge gap is that the buying public may see liability insurance policy and thinks it covers them if they get sued for just about any reason. Of course nothing could be further from the truth and when it comes to pollution, almost every general liability policy sold today contains an absolute pollution exclusion, meaning if there's a claim or lawsuit alleging damages from pollution, it's not covered. So where does this leave us? Here's the breakdown as I see it. Gap number one, your general liability policy was written to exclude pollution. As I just mentioned there's a provision in almost every general liability policy called the absolute pollution exclusion. The word absolute is doing the real work here. It wipes out coverage for essentially every environmental claim you could have. The only exceptions in most forms leave you are some smoke from hostile fire and fumes from a bad HVAC unit. Everything else is out. Chemical spills, silica dust from cutting concrete, mold, contaminated soil, underground tank leaks, sewage backup, sewer runoff containing sediment from your site, asbestos or lead paint you disturbed during renovation. The fact is that this doesn't just impact big site contractors. This exclusion has consequences for every type of contractor. Now some people may say that their general liability has a pollution endorsement on it and that's fine. Maybe. Because most of those endorsements only cover sudden and accidental pollution and the sublimit is very small. Somewhere between $25,000 and $100,000. A standalone pollution policy covers both sudden and gradual pollution at a million dollar limit or higher. That tank that I mentioned in the beginning of this video wasn't a sudden and accidental loss. It was a gradual claim. It had been leaking for years which is exactly the kind of loss an endorsement is not built to pay. So find out which one you have. An endorsement and a policy are not the same animal and the difference is usually about $150,000 in what's covered. Gap number two. The certificate says you're covered but the policy may not. This one costs contractors jobs not just claims. Your contract requires pollution liability at a specified limit with additional insured status, primary and non-contributory language, and a waiver of subrogation. Your broker sends a certificate that appears to check every one of those boxes and everyone moves on. I see brokers do this all the time that don't actually meet the contract specs even though the certificate says they do. A certificate is just a summary written by an insurance agency. It is not the policy. It doesn't overwrite policy language and it has no coverage in it at all. Gap number three. You can be liable for pollution that you didn't even cause and this one business owners don't see coming. Under federal superfund laws if you own the property you can be on the hook for contamination that the previous owner created decades before you even showed up. You didn't spill it. You didn't know about it. You didn't own it but it's your problem. The same thing happens on the contracting side which is exactly what the tank story is about. You didn't put it in the ground. You just hid it. Here's where the policy choice matters. Contractors pollution liability covers pollution from the work at someone else's site and generally excludes conditions that already existed. Pollution legal liability covers contamination at locations that you own or lease and will often cover pre-existing conditions which is the whole reason it exists. So if you own or lease your yard your shop or your building contractors coverage alone doesn't do it. Know which policy covers the work and which one covers the dirt. Look pollution is one exposure where the law shows up years after the work is done and the paperwork you're relying on was written by somebody who may not have had a reason to read that form. The good news is that isn't as expensive as you'd guess. Most small and mid-sized businesses land somewhere between $2,500 and $15,000 a year against a Here's the bottom line. If you want to be certain that you have the kind of protection that your contracts are demanding or you want to be certain you have the right coverage for your operation then click the link below and let's find 30 minutes to discuss your situation and make sure you have what you need. No pressure, no sales pitch, just an honest conversation on whether the coverage you have is what you think you have and it's what you actually need. Have other questions or issues? Looking for an expert advisor to help guide you in the right direction? Reach out or drop a comment below. Thanks for watching and hit that like button if you found this valuable. Thanks.