Contractors

Utility

Utility contracting operations include installing and maintaining electrical, gas, communication systems, and other utilities. Exposure to environmental liability can result from various activities, including on-site operations, equipment use and maintenance, and transportation and disposal practices. Earthwork activities such as excavation, trenching, tunneling, and boring can disturb soil contamination, damage subsurface utilities or tanks, and lead to erosion of silt and sediment. Handling, transportation, and disposal of jobsite waste, including hazardous chemicals, contaminated soil, wastewater, and sludge, can also create environmental liability.

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Environmental Exposures May Include:

Underground Utility Strikes & Releases
Pre-Existing Contaminated Soil
Backfilling Damage to Pipes
Aquifer Penetration & Subsurface Migration
Silt and Sediment Runoff
Dewatering Discharges
Herbicide & Pesticide Applications
Equipment Fuel, Oil & Fluid Releases
Equipment Washout & Decontamination Water
Transportation & Loading/Unloading Releases
Disturbance of Asbestos, Lead, Mercury & PCBs
Hazardous Jobsite Waste Disposal

Underground Utility Strikes & Releases

Failure to properly locate subsurface utilities, such as gas lines, water, and sewage pipes, or unknown hazards, such as abandoned storage or septic tanks, could result in damage and a release of fuel oil, chemicals, toxic gases, or sewage that harm the environment or impact third parties.

Pre-Existing Contaminated Soil

Excavated soils could have known or unknown pre-existing contamination. Contaminated soil could be collected and spread to clean areas of a site. Stormwater coming in contact with contaminated soil stockpiles that are not properly tarped or contained can spread contaminants. Contaminated dust can also generate hazardous air emissions that impact third parties and even enter building HVAC systems.

Backfilling Damage to Pipes

Backfilling could damage underground pipes and result in perforations that can release contaminants. When refilling a utility trench, rocks in the backfill or pipe placement on jagged edges can damage the line.

Aquifer Penetration & Subsurface Migration

Excavation, directional boring, and other subsurface intrusion can disturb the soil and possibly penetrate an aquifer. Subsurface work can create pathways for contaminants in the soil to migrate off-site or contaminate groundwater or surface water.

Silt and Sediment Runoff

Silt and sediment are fine-grained soil particles that can migrate in run-off due to a rain event, accidental water pipe break, or excessive watering for dust suppression. During construction activities for utility trenches, bare ground, and exposed earth is vulnerable to erosion by wind and water. Inadequate erosion controls can lead to surface run-off of these soil particles, impairing the proper functioning of stormwater drainage systems, causing ecological damage to streams and rivers, and causing adjacent property damage. Control of silts/sediments is required under the Clean Water Act. Contractors may face regulatory action such as cleanup orders, fines, and penalties from federal, state, or local regulators.

Dewatering Discharges

Dewatering could spread pollutants when water is discharged or pumped to off-site sources like lakes and wetlands or into storm sewer inlets or surface waters. Untreated water from construction dewatering operations may contain sediment or other pollutants found on-site from current or past land use.

Herbicide & Pesticide Applications

Leaks, spills, misuse, or over-application of herbicides and pesticides for vegetation management can contaminate soil and water sources. Applications made before heavy rains or on saturated soils can also contribute to contaminated stormwater run-off.

Equipment Fuel, Oil & Fluid Releases

Heavy equipment, fuel tanks, and powered equipment may be brought to and stay on a jobsite. The release of fuels, oils, and fluids from accidental spills, leaks, or vandalism can discharge pollutants into the environment and require cleanup. Additional exposure can occur during equipment storage or maintenance at the contractor’s facility.

Equipment Washout & Decontamination Water

Equipment washout and decontamination water can contain toxic materials and be caustic and corrosive. Improper washouts from cleaning mobile equipment, pumps, hoses, and drill rods can leach into soil and groundwater or migrate off-site and into storm drains that discharge into surface waters and harm natural resources and aquatic life.

Transportation & Loading/Unloading Releases

A release of chemicals, contaminated soil, fuel, or fluids could occur during transportation to and from a jobsite or during loading and unloading. Releases of contaminated wastes and wastewater during transport to a disposal facility can also create environmental exposure.

Disturbance of Asbestos, Lead, Mercury & PCBs

Installation and repair work can inadvertently disturb existing pollutants, such as asbestos, lead, mercury, and PCBs, releasing inhalable particulates into the air that can harm nearby third parties. Leaks can cause contamination, resulting in environmental cleanup and tort liability.

Hazardous Jobsite Waste Disposal

Wastes collected from a jobsite, such as soil, wastewater, sewer debris, sludge, and old discarded materials, may contain hazardous materials, such as polychlorinated biphenyls (PCBs), which can be found in transformers, cables, and fluorescent lamp ballasts; mercury, which can be found in gas meters and thermostats; and wood treatment preservatives found on utility poles. These wastes may require special disposal or recycling procedures. Improper disposal or misdelivery of unidentified contaminated material can result in contamination at a landfill or non-owned disposal facility and claims for environmental cleanup and tort liability.

Contractors Pollution Liability Can Provide Coverage For

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

Loading and unloading

First-party emergency response costs

Mold, legionella, bacteria, and fungi

Lead and asbestos

Silt and sedimentation

Non-owned disposal sites

Claims Scenarios & Examples

Vandals opened a mobile refueling tank, releasing diesel fuel onto virgin soil. The utility contractor on the site was held responsible for the cleanup costs from the release.
A utility contractor spread soil across a project site without knowing the soil was contaminated. The contractor was brought into a lawsuit for exacerbating the extent of the contamination. After deliberation, the contractor was responsible for $250,000 in cleanup and defense costs.
A utility construction company was replacing natural gas meters at a home when some mercury unknowingly spilled from the meter. Nothing was noticed until the homeowners found a small pool of mercury in their basement several weeks after the work was done. The mercury had vaporized, and the items in the basement had absorbed it. The homeowners sued the contractor for $350,000 in remediation expenses, which included testing the house and removing the mercury from the property. Also, they included expenses from the property damage of the belongings affected by the spill.
A utility contractor was hired to control the vegetation that grew along a power line right of way. The contractor applied an herbicide to the area to reduce the vegetation. After a rainstorm, the herbicide was washed onto nearby farmland. The farmer’s crops and land were severely damaged, so the farmer filed a lawsuit, alleging $350,000 in damages. The contractor filed a claim with his general liability insurance carrier; however, the carrier denied the claim under their Absolute Pollution Exclusion.
A utility contractor was retrofitting relay equipment when it damaged the switching gear resulting in a release of mercury. The contractor did not clean up the spilled mercury, which volatilized and migrated into an HVAC system. The contractor was liable for the cleanup and disposal of mercury and for decontaminating the HVAC system for the entire building. Costs exceeded $165,000.
A utility contractor was working on a project excavating a 375-foot trench. The contractor stockpiled soil on an adjacent property; however, dioxins were discovered before project completion. The EPA investigated the situation and issued an administrative order, holding the contractor and their client responsible for the contamination of the adjacent property. Government-mandated cleanup costs exceeded $250,000.
A shipyard hired a utility contractor to repair leaks on fuel lines. A valve that separated the active lines from the inactive lines that were being repaired was opened by an unknown party, and fuel flowed through the lines that were being fixed. As a result, 3,500 gallons of fuel were released. Cleanup costs, including remediation of soil and groundwater, totaled $500,000.
One weekend, a utility contractor left an unfinished concrete vault open. Heavy rains washed away sediment controls, allowing sand and silt to migrate from the unfinished vault into a nearby bay. As a result, the contractor was fined by a regulatory agency for natural resource damage caused by the release of sediments into the bay.

Final Consideration

As a contractor you can be faced with the cost to defend yourself against allegations or legal action from pollution 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 environmental claims handling expertise.

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This environmental risk overview offers a general understanding of potential risks and may not reflect all risks associated with your business. Environmental Risk Professionals has compiled this overview for informational purposes only. This overview does not constitute legal opinion or advice, nor does it establish a consultant-client relationship. This overview is not intended to guide project parties in interpreting specific contracts or resolving disputes; such decisions may require consultation with counsel and depend on various factors. © 2025 Environmental Risk Professionals, LLC