Construction companies are increasingly relying on specific insurance policies that protect against lawsuits regarding contamination and pollution. Contractor’s pollution liability, or CPL policies, help construction companies that may face lawsuits related to construction projects.
Pollution and contamination issues related to construction projects garner a lot of negative attention. They can also be financially and professionally difficult to navigate for companies involved in lawsuits. CPL policies can protect project owners and any contractors involved from liability claims.
Pollution, contamination, and other harmful environmental issues can occur during a construction project or after it has officially been completed. During a construction project, excavating, building roads, operating heavy machinery, and the materials used for the building can have a negative impact on the earth around the project.
If something should go wrong during the construction project, the mistake might not be known until after the project has been completed. A CPL policy helps minimize a project’s liability when it comes to environmental issues.
Project-specific CPL policies are useful for insuring a particular project that could have an environmental impact in a concentrated area. Obviously, the risk of pollution or contamination are highest where the construction is occurring. In most cases, contractors on a project will purchase a CPL policy and include the owner of the project as the additional named insured on the policy.
Although the instances of CPL policy purchase have increased, there are still some coverage gaps that need to be addressed. Often, the wording of the insurance requirements from the project owners conflicts with the CPL policies.
CPLs come in occurrence and claims-made forms. When a CPL is claims-made, additional insurance is needed for any issues that may arise after the construction project is completed. An occurrence-based policy doesn’t require any additional insurance purchases, but this can cause an increase in risk of claims made after the project is over. If a project owner or contractors choose not to purchase completed operations insurance additions to their CPL policy, this can leave a dangerous coverage gap.
Regardless of policy type, a project owner or contractor’s liability is only for the time period that the insurance policy is for. If damages occurred during that period, the insurance policy comes into play. Having a CPL policy and a completed operations policy can keep a project protected for longer.
A completed operations period refers to the time that a project has been completed, but issues related to the project may still cause problems. This can be a difficult timeframe to pin down. Some projects are more likely to cause pollution or contamination issues during construction, while others may have a bigger environmental impact after the job is done.
Benefits of CPL policies
CPL policies come with a few benefits. One benefit is that a CPL policy is project-specific, meaning an insurance policy can be tailored to an individual project’s characteristics. A policy holder can take into consideration the expected duration of the project, when the most environmental damage may occur, and what the completed operations period might be.
There are many insurance policies that try to cover environmental issues as part of a blanket policy. Having the ability to cater an insurance policy to the needs of a particular project decreases gaps in coverage and helps keep your risk lower for longer.
Additionally, you can choose to purchase completed operations coverage for claims or occurrence policies to cover all bases left by a construction project. CPL insurance isn’t the same as a general liability policy or other environmental insurance policies. An expert in environmental insurance issues should be consulted for your individual project to determine the best insurance for your project.
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