When you think about pollution liability, you might picture oil refineries or chemical plants — not earthmovers and grading contractors. But the reality is that heavy construction operations often carry significant pollution exposures, many of which are not covered by standard Commercial General Liability (CGL) policies.
For excavation contractors, road builders, demolition firms, or any business disturbing soil, pollution risks can be costly and complicated. One accidental spill or a hidden contaminant can trigger third-party lawsuits, regulatory fines, and cleanup costs that could sink a project.
At Tooher-Ferraris Insurance Group, we help contractors and developers understand how to protect themselves from these hidden risks. Let’s break down why CGL pollution exclusions matter, when to consider Contractors Pollution Liability (CPL), and how site-specific policies can safeguard your business.
Why Heavy Construction Has Pollution Risks
In the heavy construction world, “pollution” can come from unexpected places:
- Excavation: Unearthing old fuel tanks, asbestos, or contaminated soil.
- Equipment leaks: Hydraulic fluid, fuel spills, or oil leaks from heavy machinery.
- Stormwater runoff: Sediment and pollutants entering local waterways.
- Demolition debris: Releasing hazardous materials like lead or PCBs.
Even if your crews follow strict environmental protocols, accidents happen — and the cleanup costs can be staggering.
Why CGL Pollution Exclusions Matter
Most contractors carry a Commercial General Liability policy that protects them against bodily injury, property damage, and related legal costs. But here’s the catch: standard CGL policies almost always contain a total or absolute pollution exclusion.
What does that mean?
If your work unintentionally releases a pollutant that causes third-party damage — say, contaminating a nearby river — your CGL carrier can deny the claim.
And these exclusions aren’t always obvious. Many policies define “pollutants” broadly to include anything from chemicals to smoke or vapor. The result? Contractors who think they’re covered for an accident may find out too late that they’re on the hook for environmental damage.
Real-World Example
Picture this:
A grading contractor unknowingly uncovers contaminated soil while excavating for a new development. The soil is transported off-site but spills along the way, contaminating nearby land. The state issues an environmental cleanup order and third parties sue for property damage.
The contractor files a claim with their CGL carrier — only to have it denied due to the pollution exclusion.
When to Consider Contractors Pollution Liability (CPL)
A Contractors Pollution Liability (CPL) policy can fill these dangerous gaps. CPL insurance is designed specifically to cover:
- Third-party bodily injury or property damage from pollution conditions.
- Cleanup costs, legal defense, and crisis management expenses.
- Both sudden and gradual pollution incidents.
- Work performed by you or your subcontractors.
Who should consider CPL?
Any contractor whose operations could disturb existing contaminants or create new exposures should look at pollution liability coverage. This includes:
- Excavation and grading contractors
- Road and bridge builders
- Demolition contractors
- Utility contractors
- General contractors overseeing complex sites
Site-Specific Pollution Liability
Sometimes, one project carries unique pollution risks — like working on a brownfield site or near sensitive ecosystems. In these cases, a site-specific pollution liability policy can be the better solution.
Site-specific coverage protects the project owner, general contractor, and other stakeholders for known and unknown conditions related to that site. Many lenders and project owners now require these policies as part of their risk management program.
Policy Best Practices
If you’re considering pollution coverage, keep these tips in mind:
Review Contract Requirements:
Many public and private projects require proof of CPL. Don’t wait until bid day to discover you’re missing coverage.
Assess Subcontractor Risk:
A subcontractor’s pollution mishap can still land you in court. Make sure subs carry appropriate CPL limits — and track certificates carefully.
Work with an Expert Broker:
Pollution coverage can vary widely between carriers. Work with a broker who understands environmental risks and can negotiate the right endorsements for your operations.
Protect Your Projects — and Your Balance Sheet
Heavy construction is challenging enough without unexpected environmental liabilities draining your resources. With tight profit margins and strict regulatory oversight, one uncovered pollution event can do lasting damage to your bottom line and reputation.
Tooher-Ferraris Insurance Group helps contractors assess their real exposures, find hidden coverage gaps, and implement risk transfer solutions that protect them in the field and in the boardroom.
Stay Covered and Compliant
Do you know what your CGL actually excludes? Let’s find out together. Connect with a Tooher-Ferraris advisor today to review your pollution exposures and see if Contractors Pollution Liability or site-specific coverage makes sense for your projects.