Exposures

Why Covering the Pollution Exposures of HVAC / Mechanical Contractors Cannot Be Overlooked

HVAC and Mechanical Contractors are faced with a unique challenge in today's insurance market. While they are traditional contracting risks, they have become the focus of growing pollution and mold related claims over the last several years. Exacerbating the problem is the trend of holding these contractors to a higher standard than many other trades, in effect giving them a "professional" liability exposure. These firms are now being expected to not only install the equipment properly, but to consult on its design and identify potential problems with another's design as well. While flattering, it creates a coverage issue for many of these risks. HVAC and Mechanical Contractors have two primary areas of concern: contracting services creating environmental problems and growing professional exposures.

Contracting services can create environmental problems in the following ways:

Installation leads to hazardous indoor air quality.

One of the biggest environmental concerns faced by Mechanical / HVAC professionals is the allegation that their work has led to an unhealthy indoor environment. This can manifest itself in many ways, including odors, ill employees, or staining and damage to walls and fixtures. When these allegations lead to Bodily Injury, Property Damage, or Business Interruption, the claims can become sizeable. If the basis of the claims is the toxic nature of the contaminant, pollution exclusions are often cited.

Installation leads directly to mold growth.

Mold growth is generally caused where moisture, a food source, and an acceptably warm environment meet. One of the unfortunate drawbacks to installation problems with HVAC systems can often be excessive moisture, either in the form of condensation or actual leaks. This moisture, matched with wood or wall board and warmth, leads to mold. Most mold claims are excluded from CGL policies.

Job site pollution caused by the contractor disturbing existing conditions.

Many claims faced by …

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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 …

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