Improper design, installation, maintenance, balancing, and testing of HVAC systems can allow excessive moisture to overflow, leak, condense, or pool, resulting in mold growth. Mold can disperse through the system into other building areas or be absorbed by insulation and other building materials. Mold can lead to claims of severe bodily injury or significant remediation costs.
Legionella is a bacterium that causes a form of potentially fatal pneumonia. It thrives in large central air-conditioning systems, cooling towers, and other locations associated with the HVAC system, where bacteria can accumulate in warm, stagnant, pooled, or infrequently drained water. Errors in design/assembly, failure to eliminate water collection areas, poorly maintained ductwork, and inadequate sanitizing of parts and surfaces can support growth. Exposure of third parties to legionella-contaminated mists or vapors can result in severe health issues like Legionnaires’ disease.
Sick Building Syndrome occurs when unhealthy indoor air quality causes building inhabitants to suffer health problems while in a building. It is often attributed to poor design, maintenance, filtration, or ventilation in a building’s HVAC system. Exposures contributing to unhealthy indoor air include biological contaminants such as bacteria and mold inside or outside the building that enter the HVAC system, including chemical or gaseous pollutants, volatile organic compounds, or carbon monoxide.
Air conditioning system refrigerators include ammonia, hydrofluorocarbons (HFCs), or chlorofluorocarbons (CFCs). Improper repair, installation, or maintenance of systems can result in a hazardous release of these chemicals. Exposure to third parties may result in serious health effects or even death.
Installation or repair work can disturb existing asbestos, lead-based paint, or mold. Asbestos can be found in areas such as ceiling tiles, insulation, and around wiring. Mold-contaminated materials can 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.
Materials used during the construction, repair, and maintenance of systems may include chemicals, sealants, coatings, coil cleaners, surfactants, degreasers, deodorizers, and antimicrobials which can release hazardous and irritating fumes to occupants during application, curing, or drying. Improper application, chemical residuals, and failure to properly ventilate the area or shut down the HVAC system could result in third-party liability. Spills on the jobsite or discharging these materials down drains or into storm sewer systems can create additional environmental liability.
Spills and leaks of chemicals, solvents, and cleaners at the storage location during transportation or loading and unloading may cause third-party and cleanup liability. Combinations of incompatible chemicals can react violently or produce toxic byproducts/gases when stored together or mixed. Some products are flammable and may result in a fire that spreads and releases other contained materials and produces hazardous vapors.
Contractors are responsible for determining if their wastes, such as spent solvents or refrigerants from air conditioning units, are subject to hazardous waste disposal requirements. Improper disposal can lead to environmental tort liability and cleanup costs.
Companies may provide in-house design services that can result in professional liability. This may include performing all the design work, performing some work relative to an aspect of the HVAC system, or providing professional opinions on design aspects. Design exposures can include equipment selection, drains’ slope, location of outdoor air intakes and exhaust, ventilation controls, and moisture controls.
Contractors may make modifications to design specs while at the jobsite. Malfunctions arising from these changes create a direct professional responsibility for the contractor.
Proper selection and supervision of subcontractors can be professional exposure for the contractor responsible. Contractors may be required to defend themselves against claims relating to work for which they were responsible due to the hiring of the sub.
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
First-party emergency response cost
Mold, legionella, bacteria, fungi, lead, asbestos, and more
Sudden and accidental coverage for owned/leased locations
First and third-party transportation pollution liability
Loading and unloading
Professional liability
Mitigation/rectification
Excess/contingent design
Defense of third-party claims
Non-owned disposal site liability
As a contractor you can be faced with the cost to defend yourself against allegations or legal action from pollution or professional related events, regardless if you are at fault or not. Having the proper insurance coverage in place will help fund the expenses incurred to investigate or defend against a claim or suit and provide you with claims handling expertise.