Contractors

Sewer & Water Utility

Contractors that perform installation, maintenance, repairs, or testing related to sewer and water piping can face many environmental risks. 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:

Sewage & Wastewater Releases
Underground Utility Strikes
Pre-Existing Contaminated Soil
Silt & Sediment Runoff
Dewatering Releases
Aquifer Penetration & Subsurface Intrusion
Backfilling Damage to Pipes
Microbial Growth & Water Contamination
CIPP Styrene & Chemical Emissions
Equipment Leaks & Fuel Releases
Transportation Spills & Loading/Unloading Releases
Disturbance of Asbestos, Lead, Mercury & PCBs
Hazardous Jobsite Waste Disposal
Equipment Washout & Contaminated Water

Sewage & Wastewater Releases

Contractors that perform installation, maintenance, repairs, or testing related to sewer and water piping can face many environmental risks. 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.

Underground Utility Strikes

During excavation for new utility trenches, failure to properly locate underground utilities, such as gas lines, water, and sewage pipes, or unknown hazards, such as abandoned storage tanks and septic tanks, could result in a release of fuel oil, chemicals, toxic gases or sewage that causes contamination or impacts third parties.

Pre-Existing Contaminated Soil

Soils excavated for new water and sewer lines may 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.

Silt & 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, and contractors may face regulatory action such as cleanup orders or fines and penalties from federal, state, or local regulators.

Dewatering Releases

Dewatering activities for utility work could spread pollutants when water is discharged or pumped to 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.

Aquifer Penetration & Subsurface Intrusion

Excavation, directional boring, and other subsurface intrusions can disturb the soil and possibly penetrate an aquifer. This may result in creating pathways for contaminants in the soil to migrate off-site or to contaminate groundwater or surface water.

Backfilling Damage to Pipes

Trench backfilling may damage underground pipes, resulting in perforations that can release contaminants. When backfilling a utility trench, rocks in the backfill or pipe placement on jagged edges can damage the line.

Microbial Growth & Water Contamination

Contaminated groundwater or surface water can seep into water piping due to work performed by a sewer/water contractor. Causes may include leaking or improperly seated isolation valves, improperly installed adapters, malfunctioning backflow prevention devices, generated transitory pressures, etc. Inadequate flushing and sanitizing can allow microbial growth.

CIPP Styrene & Chemical Emissions

Contractors who install cured-in-place pipes to reline compromised sewer lines may incur environmental liability due to odors and emissions generated by this work. Steam used to harden resin used in the installation releases a mixture of particulates of partially hardened resin and organic compounds, including styrene, methylene chloride, and dibutyl phthalate. Third parties can be exposed to emissions and become ill. Bodily injury suits can result.

Equipment Leaks & Fuel Releases

Heavy and powered equipment on a jobsite may release fuels, oils, and fluids, either accidentally or from vandalism, discharging pollutants into the soil and groundwater and requiring cleanup. Similar exposures can occur during the storage or maintenance of equipment at the contractor’s owned facility

Transportation Spills & 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 operations. 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, in structures, piping, and equipment. This work can result in the release of inhalable particulates into the air that can harm nearby third parties or leaks that 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. These wastes may require special disposal or recycling procedures. Improper disposal or misdelivery of unidentified contaminated material can contaminate a landfill or non-owned disposal facility, resulting in claims for environmental cleanup and tort liability.

Equipment Washout & Contaminated 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 surface waters and harm natural resources and aquatic life.

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

After a contractor upgraded the sewer lines in a residential community, many homes experienced sewer line backup in their basements. The backup was due to incorrect grading of the sewer line, and the contractor faced third-party property damage and bodily injury claims from several parties, along with defense expenses.
A city hired a contractor to install sewer lines. The lines were to be installed below ground and underneath a natural gas line, and the contractor was to properly backfill the trench for the sewer lines. During the installation of the sewer lines, the natural gas line was broken several times, but the city’s utility department promptly repaired the breaks each time. One night, a man, who lived near the lines, went outside to investigate if there was a gas leak. An explosion and fire occurred, which killed the man. An examination of the area revealed a break in the gas line. The man’s daughter sued the contractor and city, alleging that the contractor negligently backfilled the trench, causing the break and gas release that led to the explosion and fire, resulting in the wrongful death of her father.
A faulty air release valve installed by a sewer contractor resulted in the accidental release of 8,000 gallons of untreated wastewater from a lift station. A vacuum truck recovered some sewage, but a significant amount was released into the nearby river.
A firm was contracted to perform the relining of a culvert pipe for a city-wide project. During the project, a homeowner claimed that fumes caused her to suffer tinnitus (ringing of the ears), dizziness, and other neurological problems. Reportedly, the home had no p-trap on the washer piping, allowing fumes to migrate into the house. The homeowner filed suit against the contractor.
During sewer installation at a residential community, a subcontractor improperly tied in piping, which resulted in raw sewage leaking into the ground. The raw sewage migrated into the underlying groundwater and contaminated residential wells. Bodily injury and property damage claims were filed against the contractor, subjecting them to indemnity and defense costs exceeding $500,000.
While excavating and repairing a sewer line, the contractor punctured an oil pipeline with a backhoe. Oil was released and migrated into a local river. Remediation and cleanup costs exceeded $5 million.
While working on a sewer lining project for the city, the workers bypassed the sewage to clean the sewer main before relining. There was a bypass pumping failure, and 10,000 gallons of raw sewage spilled into the street, storm drain, and river. The street had to be closed, and emergency cleanup measures were taken. The contractor was held responsible for all costs.

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