Contractor’s pollution liability (CPL) insurance covers contractors from the financial risk affiliated with pollution conditions occurring on one of their projects. The CPL market is currently quiet except for some discussions around COVID, according to Slivka. In 2020, the market was mostly soft and stable, and occurrence CPL coverages are common and available throughout the market.
“Carriers continued to broaden their products in 2020, with common forms covering bacteria, Legionella, microbial matter, silt/sedimentation, silica, illicit abandonment and electromagnetic fields,” he says. “Supplemental defense expenses are available from most carriers, with some insureds providing defense expenses that exist entirely outside the limit of liability of pollution claims.”
While CPL claims have included a few six- and seven-figure damage amounts, capacity remains strong, with individual carriers providing up to $50 million in per-occurrence/aggregate limits, Slivka says, adding that rates are expected to remain aggressive for this low-frequency, high-severity line of coverage.
What is contractors liability insurance?
Contractors liability insurance covers building professionals and contractors for accidents during construction. This form of liability insurance, which is also known a CPL insurance, can be bought by contractors that provide services like building and design. CPL also covers contractor errors and mistakes made by third parties that the contractors have hired, i.e., architects, engineers, and other vendors.
Contractors can hire third parties to complete work within the larger project, including engineering evaluations, design work, and the hiring of subcontractors for construction requiring a specialized skill (i.e., electrical work, drywalling, or plumbing). Bigger contractors can provide those services in-house, which can earn more profit – but doing so carries an added risk.
How much does this insurance generally cost?
The cost of general contractor insurance depends on the company’s policy limits, the value of the company’s equipment, the business’s risks, and various other factors. The following chart is an example of the monthly and yearly costs for contractors liability insurance policies:
|Insurance type||Monthly Cost||Yearly Cost|
|General liability insurance||$90||$1,090|
|Commercial auto insurance||$165||$1,990|
For general liability insurance, general contractors may pay a median premium of roughly $90/month (or $1,090/year). That type of policy will provide protections against advertising injuries, third-party injuries, or third-party property damage. To save money, general contractors can bundle commercial property insurance with general liability insurance in a company owner’s policy.
For workers’ compensation insurance for general contractors, the median cost could be roughly $265/month (or $3,175/year). Required in all states for company’s with workers, this policy covers lost wages and medical fees for work-related illnesses or injuries.
Commercial auto insurance covers vehicles owned by a contracting company, with a median rate of roughly $165/month (or $1,990/year). That policy will help pay for medical costs and property damage resulting from vehicle damage from vandalism or weather, vehicle theft, and an accident.
For contractors’ equipment and tools coverage, general contractors could pay a median premium of roughly $15/month (or $170/year). This type of policy will help to cover the replacement or repair of stolen, lost, or damaged equipment or tools.
For professional liability insurance, general contractors will pay a median of under $45/month (or $520/year). Also known as errors and omissions insurance, this type of policy covers general contractors in the event of client lawsuits claiming negligent, late, unsatisfactory, and incomplete work.
Are contractors covered under general liability insurance?
Typically, general liability insurance does not protect subcontractors or independent contractors, meaning your company’s insurance probably doesn’t cover mistakes made by independent contractors or protect your customers from the mistakes. It is also unlikely that general liability insurance will cover damages or accidents caused by subcontractors or independent contractors.
To some extent, however, there are policies that do provide the necessary coverage. It is important that companies understand what their coverage states regarding independent contractor liability, especially prior to hiring these contractors. The business’s insurance company should also be notified. Additionally, companies should select independent contractors and subcontractors based on skill and experience. As a condition of service, companies should insist the contractor procure their own general liability insurance coverage. Another possibility is for a company, with umbrella coverage, to extend its basic general liability insurance, which provides an added level of liability protection. This might cover losses if the business’s customer takes the company to court due to errors made by an independent contractor.
What are contractors liable for?
Because contractors and construction companies alike face high risks, general liability insurance can help pay for any expense resulting from property damage and third-party injuries. General liability insurance may cover the cost of repairs and medical bills if, for example, property damage happens while renovating or a visitor is injured on a jobsite. The following is what contractors can be liable for and the type of coverage general liability provides.
Customer injury. A company might be blamed for injury if, while completing a carpentry or electrical job, a customer trips over a ladder or a toolbox. The company, in that case, might wind up paying for legal and medial expenses if the customer sues. General liability insurance will, however, cover settlements, court-ordered judgements, attorney fees, funeral expenses in the event of fatal accidents, or medical bills.
It should be noted, however, that this policy does not cover injuries sustained by employees. Companies, in those cases, will be required to buy workers’ compensation insurance.
Customer property damage. For contractors and builders, errors on the job can cost a lot of money. When client property sustains damages, general liability insurance safeguards small businesses.
Libel and slander. It is possible that a company, while advertising for its own services, will inadvertently copy another business’s ad campaign or slogan. In such cases, general liability insurance covers accidental advertising injuries, such as: defamation, both slander (spoken) and written (libel); and copyright infringement.
Products-completed operations. When finished work causes property damage or bodily injury because of faulty workmanship, products-completed operations coverage provides companies protection. If two weeks after a plumber installs a kitchen sink, for example, and the customer finds the sink is leaking and damaging costly kitchen flooring, this type of coverage will protect the plumber from a lawsuit over the faulty installation.