ERP - Environmental Risk Professionals

Subcontractor Liability

General contractors may hire subcontractors for whom they are responsible. Actions of subcontractors and hazardous material exposure can become the liability of the project general contractor. Since pollution laws are joint and several, general contractors can be held liable for more than the percentage of work they performed of the actual activity that created the loss.

Chemical and Fuel Releases

Chemical releases related to spills or leaks can contaminate soil and groundwater. Exposures can include fuel or hydraulic fluid from construction equipment or potentially toxic materials such as solvents, paints, and sealants used and stored at a jobsite. A release could contaminate run-off and migrate into storm drain systems, drinking water wells, or off-site streams and rivers, resulting in extensive cleanup liability and potential natural resource damage.

Airborne Chemical Emissions

Release of contaminants in the air, such as fumes from various chemical sources, including aerosol cans, adhesives, sealants, curing compounds, and cleaning solutions, can expose third parties to hazardous air emissions and lead to environmental tort liability.

Erosion and Sediment Runoff

Improper erosion controls for work involving the disturbance, relocation, or stockpiling of soils, such as excavating, trenching, or grading, can lead to contaminated run-off of silt and sediments, which are fine-grained soil particulates. These particulates are readily carried off from rain, accidental pipe breaks, or excessive watering from dust suppression and can impair the proper functioning of stormwater drainage systems, cause ecological damage to streams and rivers, and result in adjacent property damage.

Pre-Existing Contaminated Soil

During excavation or site preparation, pre-existing contaminated soil could be collected and spread to clean site areas or contaminate ground and surface waters.

Underground Utility Strikes

Subsurface work can impact underground utilities, like gas lines and sewage pipes, or unknown hazards, such as abandoned storage and septic tanks. Accidental puncture and release of fuel oil, chemicals, toxic gases, or sewage can contaminate soil and groundwater and release hazardous air emissions, resulting in cleanup costs and third-party bodily injury and property damage claims.

Disturbance of Hazardous Materials

Installation, demolition, and renovation can disturb existing asbestos, lead-based paint, and polychlorinated biphenyls (PCBs). Asbestos can be found in ceiling and floor tiles and wiring insulation. PCBs can be found in areas such as window caulk and light ballasts. Mold may also be disturbed where water intrusion has occurred. Improper identification and inadvertent disturbance of these materials may cause a hazardous release, leading to third-party bodily injury claims and remedial and disposal liabilities.

Moisture Intrusion and Mold Growth

Installation of some building materials, including flooring, windows, insulation, and drywall, and work on systems such as plumbing and HVAC, can generate moisture intrusion issues in the form of condensation or leaks, resulting in the growth of mold and bacteria, which pose health hazards to building occupants and can absorb into building materials creating cleanup liability.

Post-Construction Liability

Once work has been completed and put to its intended use, contractors can still be liable for pollution exposures, at least through the statute of repose, for construction defects or from products or materials installed or installed incorrectly.

Transportation-Related Exposures

Transportation creates a wide range of exposures. Spills may occur while chemicals, waste debris, raw materials, or equipment are transported to and from the jobsite or disposal facility or during loading and unloading operations. Transportation exposures may be from the insured operating their vehicles or through contingent liability through those they hire.

Improper Waste Disposal

Improper disposal of wastes can lead to cleanup costs and environmental tort liability. Materials, such as chemicals and solvents, or contaminated wastes, such as soils or asbestos-containing materials, may be classified as hazardous waste and require special disposal procedures. Businesses are required to determine whether the waste they generate is hazardous. Hazardous waste may also be inadvertently mixed with construction debris/waste and disposed of improperly. Investigations for improper disposal at a disposal facility can result in potential liability for all parties that manifested waste to the facility.

Contracting operations completed “by or on behalf of” the insured

Contracting operations performed at a jobsite

Third-party claims for bodily injury and property damage

Third-party claims for cleanup

Defense of third-party claims

Natural resource damage

Sudden and accidental coverage for owned/leased location

First and third-party transportation pollution liability

First-party emergency response costs

Mold, legionella, bacteria, and fungi

Lead and asbestos

Non-owned disposal sites

Loading and unloading

Silt and sedimentation

Claims Scenarios & Examples

While working on a school project, a general contractor (GC) accelerated the schedule to meet the planned completion date. Despite the incomplete building envelope, the GC allowed the drywall contractor to start work. As a result, rain damaged most of the installed drywall and onsite materials. The GC was responsible for $2 million in repair and delay costs.

Two years after a new high school was completed, it was discovered that the installed window system allowed water to infiltrate the building. Due to the faulty installation, mold was discovered. The subcontractor who installed the windows was no longer in business, so the general contractor and window manufacturer were responsible for the remediation costs. The general contractor did not have pollution coverage and had to pay $900,000.

A construction manager was in charge of an office building construction project. The manager hired a mechanical contractor to design the heating and ventilation systems for the project. The contractor incorrectly calculated the building’s heating and cooling needs which caused mold in the building. The system had to be replaced, the building needed mold remediation, and the tenants had to be relocated during the process. Claims totaling $450,000 were filed to cover these expenses.

A general contractor was part of a redevelopment project. During demolition and re-grading activities, the general contractor punctured an unknown heating oil tank, releasing residual heating oil into the subsurface. Due to sandy soils and a shallow groundwater table, the oil spread quickly and migrated into the groundwater. The extensive cleanup and remediation required regular groundwater monitoring until environmental regulators could grant closure. Remediation and project delay costs exceeded $750,000.

During the development of a residential community, a contractor’s method of controlling soil erosion failed, resulting in the excessive run-off of soil into a local creek. Additionally, the erosion control method used resulted in elevated levels of phosphates contaminating the site and causing excessive algae growth. A lawsuit was filed against the development owner and contractor, claiming they violated the Clean Water Act and State Laws. The development owner then sued the general contractor for breach of contract.

A general contractor constructed a senior care facility. After completion, the owner’s inspection revealed water intrusion and mold contamination throughout the building, with more than $1.3 million in damages. Experts were retained, and inspections revealed multiple construction defects.

A general contractor (GC) was working on a renovation project for an older apartment building. During the project, the flooring subcontractor found an old tile floor underneath the plywood subfloor. Some of the tiles underneath were disturbed when the subfloor was ripped up, and the project was halted for asbestos testing. The analysis determined the tile contained asbestos, which was also released when the tile was disturbed. An asbestos abatement contractor was brought in to remediate the building. The GC was responsible for the asbestos abatement costs incurred as his subcontractor released the asbestos when they disturbed the tile.

A general contractor laid a coat of Naphtha, a flammable hydrocarbon mixture, before laying a final coat of blacktop on a new road construction project. A rainstorm came into the area and caused the chemicals to migrate into a nearby stream.

A general contractor was responsible for overseeing a hospital wing renovation. After two patients died in the intensive care unit adjacent to the construction zone, they determined the cause of death to be an organic fungus found in the ventilation system that was disturbed during demolition activities. The contractor was sued for inadequate monitoring and containment of the construction zone and was responsible for $10 million in damages.

A General Contractor used gas-powered generators and equipment while working on building renovations. In the course of the work, the contractor did not properly vent or contain the emissions from the equipment. Employees working in the building began complaining of headaches, nausea, and respiratory problems. An air quality study found increased carbon dioxide levels in the building resulting from the emissions from the construction equipment. The contractor was liable for over 30 claims from building-related illnesses totaling over $100,000.

A general contractor was overseeing the installation of a new roof for an office building and shopping center. A chemical reaction occurred from the roofing materials decomposing that emitted fumes into the office building. A $400,000 property damage and loss of use claim was filed against the contractor.

A general contractor (GC) hired a refrigeration contractor to upgrade a cold storage warehouse’s refrigeration system. An ammonia leak was traced back to a failed refrigeration system valve. Seventeen people nearby had to be hospitalized from the leak, and the warehouse had to be shut down. Because of contract indemnification, the GC incurred $1.75 million in third-party bodily injury, property damage claims, and defense expenses.

Contractors

General Contractor

Environmental Exposures May Include: