By Sarah Crooks, Town of Ajax
Insurance requirements can be challenging to navigate, especially when distinguishing between specialized coverages beyond standard policies such as Commercial General Liability or Automobile Liability. Two types of coverages that can cause confusion are Environmental Liability / Environmental Impairment Liability (often used interchangeably in the province of Ontario) and Contractor’s Pollution Liability.
- Environmental Liability: Covers existing or long-term contamination, such as cleanup, damage, and injury as a result of pollution.
- Contractor’s Pollution Liability: Covers pollution incidents resulting from a contractor’s operations during construction, renovation, or excavation.
What’s the Difference?
Insurance requirements can be challenging to navigate, especially when distinguishing between specialized coverages beyond standard policies such as Commercial General Liability or Automobile Liability. Two types of coverages that can cause confusion are Environmental Liability / Environmental Impairment Liability (often used interchangeably in the province of Ontario) and Contractor’s Pollution Liability.
Environmental Liability
Environmental Liability typically covers existing contamination or contamination that develops over time. It includes costs associated with cleaning up or remediating pollution, damage to property caused by contamination, bodily injury resulting from contamination/pollution and legal costs as a result of a claim. Environmental Liability would typically be required for projects that involve excavation, fuel, chemicals or other hazardous material as well as demolition work where there may be a risk of asbestos or mould.
Contractor’s Pollution Liability
Contractor’s Pollution Liability on the other hand is a specialized form of Environmental Liability. It provides coverage for pollution events that arise as a result of a contractor carrying out work. It typically covers costs associated with cleanup or remediation, bodily injury resulting from pollution or property damage that comes about from the Contractor’s operations. A large scale renovation project on an older building may require Contractor’s Pollution Liability in the event the renovation work leads to a pollution incident such as the release of asbestos.
Key Takeaway
A key takeaway is that while the Certificate of Insurance may appear compliant, it’s important to verify that the coverage that has been provided aligns with the requirements of the contract. Policy names are not always clear in the way they reflect coverage, and different contractors may use different terms. When preparing insurance requirements for a bid solicitation, it is important to request only the coverage that is most appropriate for the project. Asking for any type of specialized insurance such as Contractor’s Pollution Liability when it’s not necessary may increase costs for bidders and drive project costs higher than necessary.
Final Note
If you’re ever unsure when determining insurance coverage, it is always recommended to consult with your organization’s risk management team or insurer.