Pollution and Professional Exposure for HVAC Contractors

While HVAC Contractors are traditional contract risks, they have become the focus of increasing pollution-related claims over the past few years. HVAC system installation, maintenance and repair can create poor indoor air quality and pollution conditions such as mold. Daily job site operations can degrade asbestos, lead or other contaminants in situ. Materials and equipment brought to the site may spill or leak while in use during transportation or contracting activities.

HVAC Contractors also have professional liability risks that may not be obvious to the insured as their primary focus is contracting. E&O claims may arise from: (1) site changes where failures may create a direct professional liability for the contractor, (2) inspection of subcontractors, and (3) actual design work performed, particularly where the contractor has the responsibility to comment on aspects of design that he knows are poorly developed.

The risks described above are often excluded from General Liability policies, so it’s important for HVAC contractors to have comprehensive coverage to protect themselves from potential claims, thereby securing the future of their business. Beacon Hill’s programs division, PartnerOne Environmental, has a range of products that can effectively meet the coverage needs of this business class:

Pollution Responsibility of Contractors

Contractors Pollution Liability insurance (CPL) is coverage designed to protect you from third party claims due to “Conditions of Pollution” resulting from the activities covered by the insured. This coverage applies to all tank contractors and is important as these contamination claims cannot be covered under the General Liability form.

How does the Contractors’ Pollution Liability coverage work?

Overall, CGL is designed to address the coverage gap created by pollution exceptions.

· Policies written to cover transactions usually performed “by or on behalf of” the insured.

· Coverage is provided for the operations of the insured away from their own campuses.

· Basic policies can be written on the basis of Claims Made or Occurrence.

Mold coverage is often offered as an endorsement of the CPL insurance policy or coverage portion.

· The mold is usually in the Requested form.

· Mold cover may have a lower limit of liability as well as its own exemption.

Pollution Liability of Contractors/E&O

The Contractors’ Pollution Liability/E&O policy provides coverage to general contractors, construction managers, and various trade contractors who may have both Pollution and Professional claims; Contractors’ Pollution Liability/E&O provides coverage for Professional risks for contractors. This coverage is important because these professional risks are often excluded from the General Liability and monoline Contractors’ Pollution Liability policies.

Workplace changes have been made

HVAC contractors are often offered installations that do not work exactly as planned. In these cases, contractors will often change the plan on site to keep the system working. The pollution conditions resulting from these changes constitute a direct professional responsibility for the contractor.

Performed design work

Many firms offer actual design services as part of their corporate profile. This can range from doing all the design work for the project, to doing some design work on one aspect of the HVAC system, or just having a perceived responsibility to comment on design aspects they know are poorly thought out. The last element is the most difficult to control and manage for HVAC companies.

Audit of backups

Proper selection and supervision of subcontractors is a professional risk shared by most contractors and is often excluded from CGL and core CPL policies. Many HVAC contractors do not use subsystems so this will not be an issue for them. But for those who do, exposure can be significant.

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