Stricter governmental regulations coupled with the challenges associated with costly cleanups have not only placed more emphasis on risk management, but also the methods for protecting assets under catastrophic conditions.
This is especially true when the concerns for hazardous products, general site and/or large bodily injury or property exposures are especially high.
As a result, nearly all construction projects carry some form of risk, making pollution liability coverage a must for most applications. In recent years, many environmental contractors, waste transporters and environmental consultants have responded to these potential exposures with the purchase of Combined Environmental Casualty Programs consisting of General Liability (GL), Contractors Pollution Liability (CPL) and Professional Liability (PL) coverage in one policy form.
This combined policy form provides coverage for third-party liability arising from the professional services performed by or on behalf of the named insured. It also covers premises, operations, completed operations, bodily injury/property damage from pollution conditions, pollution clean-up and acts and the errors and omissions arising from professional services. In recent years, the growing popularity of this single-source coverage has coincided with the increase of claims linked to project or environmental management, the failure to identify inadequate remediation, faulty work and the improper supervision of subcontractors.
In 2017, the marketplace continued to see changes as additional carriers entered the space with enhanced policy forms. Contractual requirements continue to be one of the key motivators for purchasing this coverage. Other benefits include flat and non-auditable policies the broad coverages provided in this combined coverage form.
However, while the coverage for primary general liability, contractors’ pollution and professional liability is readily available, the professional liability exposures for environmental consultants are being more carefully underwritten as a result of the increase in claims. Carriers in the past who were willing to add independent contractors onto general liability policies are currently pushing back on these exposures. Furthermore, professional liability exposures for consultants in this category are undergoing increased assessment due to the increase in claims and focus on insuring environmental professionals and not traditional professional liability.
Another development is that supplemental applications are being heavily analyzed with the offering of detailed information as a key to favorable terms. Carriers for these specialty lines of coverage are no longer willing to take on subjectivities after the fact and are requiring full exposure of information in order to bind accounts.
In addition, all insureds should understand that professional liability exposures will continue to be under a careful watch under the terms of combined programs. Increasingly more attention is being placed on services that do not fall within the scope of true environmental work/services. For instance, contractors and consultants who provide both design and product installation services are being heavily reviewed in this increasingly tightening marketplace.
Increased underwriting scrutiny is also related to the evolution of business auto and product liability claims, which rose again in 2017. Auto claims are now expanding beyond what most carriers consider the purview of auto coverage, leading to more claims penetrating into excess layers and the increasing concerns of carriers for exposing more limits on this combined policy form.
As new carriers continue to expand this market, many insurers are also pushing back on accounts when exposures cross into non-environmental areas due to unanticipated losses or the frequency of losses. Additional attention is being paid to ownership issues and named insureds due to the concerns for the expanded reach into non-environmental exposures.
Subsequently, Combined Environmental Casualty Programs are ideal for executives looking to protect their organizations and projects from wide-ranging exposures that could surpass standard environmental and pollution claims. It is especially applicable when the lines are blurred, but the potential risks are substantial. This is particularly true in the areas of asbestos or mold remediation, abatement and demolition projects as well as the maintenance and installation services performed in industrial areas or hazardous waste sites. To navigate the complex issues related to environmental casualty and excess coverage, it is always best to consult certified industry professionals regarding the suitable coverage solutions.