ERP - Environmental Risk Professionals

Utility Impacts & Hazardous Releases

Restoration contractors respond after catastrophic events, such as fires, floods, mold incidents, natural disasters, etc., to clean up properties, extract water or sewage, remove debris, disinfect and sanitize, and ready properties for repairs. These contractors can face many environmental risks. They are handling contaminants at a site and may use various chemicals in their operations, and improper handling, spills, containment breach, and failure to fully abate contaminants can result in a release. Additionally, hazardous building materials and pollutants can be released if not adequately identified before restoration work. Transportation, storage, and disposal of pollutants or contaminated materials also may generate environmental exposures for the restoration contractor.

Improper Identification of Asbestos, Lead, or Hazardous Materials

During restoration, improper identification or the failure to completely identify and remove all areas of asbestos-containing materials, lead-based paint, and other hazardous building materials may result in inadequate recommendations and remedial actions, which could lead to hazardous air releases and result in additional remediation, tort liability, punitive damages, fines, and regulatory violations.

Mold in Hidden or Non-Visible Areas

Mold can be encountered in non-visible areas such as insulation, attics or roofs, crawl-space conduits, behind wallboard or sheetrock, under carpeting, and along piping or duct runs. When mold-impacted areas are disturbed, small spores and fragments are readily released. These mold particles can disperse and expose building occupants without careful containment and cleanup. Failure to identify, dry, or remove all moisture-impacted building materials allows for continued or subsequent mold growth.

Chemical Use & Improper Application

Various chemicals may be used at jobsites, such as antimicrobials, disinfectants, deodorizers, mold stain removers, fungicides, and preventative coatings and sealers. Chemicals used at improper application rates or concentrations, in combination with other chemicals, or with incorrect delivery systems can cause residues to remain in the building or create hazardous air emissions. Human health can be impacted by direct surface contact or inhalation.

Releases During Transportation or Handling

Releases during transportation or while loading and unloading chemicals, hazardous materials, or contaminated jobsite wastes can lead to environmental liability.

Improper Waste Segregation & Hazardous Disposal

Hazardous wastes must be properly segregated to avoid being accidentally mixed with non-hazardous waste and improperly disposed of. Jobsite wastes could be contaminated with biohazards, mold, asbestos, or lead-based paint. Improper disposal of hazardous materials can lead to cleanup and environmental tort liability. Environmental issues at a disposal site can result in potential liability for all parties that manifested waste to the facility.

Storage of Chemicals & Contaminated Wastes

Restoration contractors may store and stock supplies, including chemicals, solvents, paints, and sealers, in concentrated form, at their facilities or work yards, and leaks or spills may cause environmental impacts. Restoration contractors may also transport and store contaminated wastes at their owned site or temporary storage facilities pending final disposal, exposing them to third-party and cleanup claims.

Moisture Intrusion from Rebuild Activities

Restoration contractors will often be contracted for re-build activities. 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. Improper design or installation of plumbing and HVAC systems or building materials, including windows, insulation, and drywall, could also result in leaks, condensation, or water intrusion into building materials. This can result in the growth of mold and bacteria, which pose health hazards to building occupants and can absorb into building materials creating cleanup liability.

Improper Containment & Remediation Failures

Failure to properly seal off, decontaminate and remediate a jobsite, or failure to properly use equipment, could cause a release of contaminants, such as mold, asbestos-containing materials, or lead-based paint. Third-party claims and cleanup liability could result.

Contracting operations performed “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

First-party emergency response costs

First and third-party transportation pollution liability

Sudden and accidental coverage for owned/leased locations

Non-owned disposal site liability

Restoration contractors may be able to combine Commercial General Liability, Contractors Pollution Liability, and Professional Liability into one package policy. Worker’s Compensation and Auto may also be offered

Mold, legionella, bacteria, and fungi

Lead and asbestos

Loading and unloading

Silt and sedimentation

Natural resource damage

Claims Scenarios & Examples

A water pipe ruptured in a condominium complex, causing major water damage to many units. A restoration contractor was hired to clean up and remediate the damage. Several months after the cleanup was completed, a tenant became ill and had difficulty breathing, and she alleged it came from odors emanating from her suite. The condominium committee investigated and discovered that areas of drywall and insulation were wet and covered with toxic mold. A claim was made against the restoration contractor, alleging that he created a dangerous environment by failing to remove all the water-damaged material, install proper equipment to limit high humidity levels, provide proper air circulation, and prevent mold growth. The tenant sought to recover costs associated with bodily injury from mold exposure.

An apartment building owner hired a restoration company to remove and rebuild a flood-damaged deck. The contractor applied a waterproofing sealant to the surface of the new deck during construction and, at the time, failed to properly ventilate the area, resulting in toxic fumes entering a tenant’s apartment, causing her to become sick. The company and the building owners settled the personal injury claim with the tenant and then sought to recover their expenses under the contractor’s commercial general liability policy. The insurance company for the contractor argued that the claim was excluded under the absolute pollution exclusion clause.

After a pipe broke in their home, a couple hired a restoration contractor to clean up the water damage. After the work was completed, the couple and others living in their house became sick. The contractor allegedly failed to appropriately and fully clean up the water damage, resulting in the spread and additional growth of toxic mold throughout the home. The couple’s lawsuit against the contractor was settled for $7.2 million.

A sewer pipe back-flowed at a retail center. The property manager hired a fire and water restoration contractor to clean up the sewage. Due to improper cleanup, the claimant alleged he was exposed to raw sewage and contracted meningitis, leading to a rare bacterial infection called Lemierre’s syndrome. The contractor’s commercial general liability insurer denied the claim citing the pollution exclusion. The basis of the exclusion was that pollution includes bacteria and infectious diseases. The jury awarded $766,300.

A restoration contractor was hired to remediate water damage in a residential home. The contractor demolished water-damaged building materials and accidentally disturbed asbestos, releasing fibers into the air. After completing the remediation job, the homeowner hired an industrial hygienist to test for asbestos. The hygienist found that asbestos had spread throughout the house during the dry-out process, leading to bodily injury allegations, cleanup costs, and legal defense expenses.

After experiencing a flood in her basement, a homeowner called her insurance company, and six days later, they sent out a water restoration company. Unfortunately, mold spores had already started to develop due to the contractor’s delayed response time. Fans and dehumidifiers were set up to dry out the basement; however, mold-filled dust and air were blown throughout the basement and into the ducts, which spread toxigenic spores throughout the home. The homeowner developed health issues and sued the contractor.

A state’s Attorney General and Environmental Protection offices sued 31 companies, including a restoration contractor, that sent waste to a non-owned disposal site. The 60-acre site, a Superfund site, required cleanup for dumped toxic waste. The 31 companies agreed to contribute $20 million for the cleanup.

Contractors

Restoration

Environmental Exposures May Include: