Contractors today are faced with increasingly complex exposures. Some of these stem from the evolving scope of work performed and contractual responsibility assumed, and some are created by the efforts of the legal community to hold contractors accountable. 

The scope of coverage an insured has is related to how the claim is filed, and what specific allegations are being made. An insured needs to have the right coverage to be afforded a defense by the insurance carrier. The insurance industry has responded to this need with meaningful coverage enhancements. As agents work with their contracting clients this spring, they need to look for these extensions of coverage.

The first, and perhaps the most significant increase in exposure, is the professional exposure contractors have. While many people don’t believe contractors have a true, or traditional, professional exposure, there has been a notable uptick in these types of demands over the last two years. Contractors who provide any sort of design input, whether it is preparation of drawings or simple job site changes, run the risk of having a lawsuit brought against them alleging an error or omission. Claims are also often directed at the contractor’s selection or supervision of subcontractors, again alleging a failure of the contractor’s professional responsibilities. While this is often considered part of the “means and methods” of their contracting services, it is important to be sure your carrier agrees.

The environmental marketplace has aggressively pursued this business by linking their Contractors Pollution Liability (CPL) products with Professional Liability Coverages. Typically available for both environmental and non-environmental risks, the carriers provide a broad coverage form that addresses both the pollution risks associated with a contractor’s operations, as well as their professional exposures.

A classic example of a risk buying this coverage is a heating and air conditioning contractor. HVAC contractors may have an in-house or subcontracted design component of their operations, but even without that, they may have a professional exposure. Modifications to plans on a job site are a common occurrence. Advice given at a site to another contractor can be the source of a claim. If a contractor moves a duct or return, or changes the size of a trunk line, there may be resulting damages, whether environmental or not. Without professional coverage on the form, if a claim comes in alleging a professional failure, not only may there not be coverage, there may be no defense either.

In addition to professional concerns, contractors have to be aware of several other exposures as well. Contractors Pollution policies typically cover pollution conditions at a job site, but they do not address the additional exposures insureds have such as disposal of waste from a job site. Whether a release happens during transit, or at a landfill where the waste was taken becomes a Superfund site in the future, there are coverage extensions available to protect the insured. Transportation Pollution Liability (TPL) provides coverage for over the road spills. Non-Owned Disposal Site coverage (NODS) provides coverage for liability that might arise if a properly permitted disposal site becomes a Superfund site in the future, and the contractor is pulled into the claim.

Another important exposure for contractors to think about is the pollution exposure related to their owned or leased sites. As CPL forms only cover job site exposures, insureds need to think about the likelihood they might contaminate their own site, or surrounding properties. Storage of materials, paints, solvents, or fuels, as well as any heavy equipment or vehicle maintenance can all lead to significant pollution exposures. Enhancements to protect against this are available as endorsements to most CPL/E&O policies.

In addition to the enhancements outlined here, many Contractors Pollution and Professional forms are also adding in coverage for Emergency Response Costs, Contractors Professional Protective Coverage, Restoration Costs, and many others.

The growing complexity of today’s environmental exposures, coupled with the range of products offered, has led to a time where expertise matters more than ever before. An agent who is well versed in the various forms and carriers can provide significant value to their clients.