Pollution and Occupational Exposures for HVAC Contractors

While HVAC contractors are traditional contracting risks, they have become the focus of increasing pollution-related claims in recent years. HVAC system installation, maintenance, and repair can create polluting conditions such as poor indoor air quality and mold. Daily operations at the workplace could disturb asbestos, lead, or other contaminants on the site. Materials and equipment brought into the workplace may spill or leak during transit or use during contracting activities.

HVAC contractors also have professional liability exposures that may not be obvious to the insured since contracting is the primary focus. E&O claims could arise from: (1) job site modifications where malfunction may create direct professional liability for the contractor, (2) supervision of subcontractors, and (3) actual design work performed, specifically when the contractor has a perceived responsibility to comment on aspects of design that he knows are underdeveloped.

The exposures described above are generally excluded from general liability policies, so it is important that HVAC contractors have comprehensive coverage that protects them from potential claims and therefore helps to future-proof 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:

Contractor Pollution Liability

Contractors Pollution Liability (CPL) insurance 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 through the general liability form.

How does the Contractors Pollution Liability coverage work?

· Generally designed to address the coverage gap created by CGL’s contamination exclusions.

· Policies generally written to provide coverage for operations performed “by or on behalf” of the insured.

· The operation of the insured outside his own premises is covered.

· Basic policies can be written on the basis of Claims made or Events.

Mold coverage is usually offered as an endorsement to the CPL insurance policy or as part of the coverage.

Mold is usually found on a Made Claims form.

· Mold coverage may have a sub-limit of liability, as well as its own deductible.

Contractor/E&O Pollution Liability

The Contractors/E&O Pollution Liability policy provides coverage for general contractors, construction managers and various commercial contractors who may have Professional and Pollution claims; Contractors Pollution Liability/E&O provides occupational exposure coverage for contractors. This coverage is important because these occupational exposures are generally excluded from monoline contractors’ general liability and pollution liability policies.

Modifications were made in the workplace

HVAC contractors are often presented with installations that don’t work exactly as planned. In these situations, contractors will often modify the plan on site to make the system work. Contamination conditions arising from these changes create a direct professional liability for the contractor.

Actual design work done

Many companies provide actual design services as part of their corporate profile. This can range from doing all of the design work for the project, doing some design work related to one aspect of the HVAC system, or simply having a perceived responsibility for how aspects of the design know to be poorly thought out. The last item is the most difficult for HVAC companies to control and manage.

Supervision of substitutes

The proper selection and supervision of subcontractors is a professional exposure shared by most contractors and one that is generally excluded from basic CGL and CPL policies. Many HVAC contractors don’t use subs at all, so this won’t be a problem for them. However, for those who do, the exposure can be significant.