Too many times claims can be denied by general liability policies for issues involving forms of pollution or professional liability. Most agents and brokers can obtain the coverage and can face their own errors and omissions issues by not offering coverage to supplement their general liability coverage to contractors. Admittedly, such coverage for residential construction is hard to come by…until now.
WISE has partnered with multiple A rated insurers to address the pollution and professional exposures now facing the construction industry. With affordable, broad coverage options for both commercial and residential construction, claims denials will be minimized and builders and contractors can stay in business while confidently taking on work they may otherwise turn away.
What are some examples where such coverage could apply? How can some general liability exclusions be remedied?
Is a “growing concern”. The famous Ed McMahon claim in Texas for bodily injury and loss of his house due to black mold made news years ago, and it’s been excluded by general liability policies ever since. WISE can insure this for all trades and builders alike. This can be important; as some mold can accelerate rot and shorten the expected lifetime of critical housing components.
BODILY INJURY and PROPERTY DAMAGE
Has limited coverage with GL. The form quoted covers “wrongful acts” resulting from an “error or omission” with no limitation to BI/PD. This means economic loss is plausibly covered.
ASBESTOS OR LEAD
Exposures during remodel, remediation, or renovation work. Commercial buildings are notorious for such exposures, and so are old homes. For credentialed contractors, these asbestos and lead exclusions can be bought back and coverage put in place for allegations made by third parties alleging that the work performed left these pollutants exposed and hurt people.
Poisoning due to HVAC issues is more common than people think. Since it’s listed by the EPA as a pollutant, the catastrophic bodily injury possibility is likely not covered by general liability.
(1) “Bodily injury” or “property damage” arising
out of the actual, alleged, or threatened
discharge, dispersal, seepage, migration,
release, or escape of “pollutants”.
And various added language.
GREEN HOME or ENERGY STAR
Performance failures after the home has been bought and occupied is a huge potential liability. As general liability only typically covers bodily injury and property damage, economic loss due to under-performing homes that were promised to save on utility dollars and boost resale value are likely not covered. The impaired property exclusion found in general liability would also apply.
Describes a piece of property that includes the insured’s defective or sub par work, and because of this can no longer be used or is less useful. A prime example would be an underperforming “Green Home”. If it’s energy efficiency doesn’t pan out….it ends up costing more to operate the house, thus lowering the property value.
m. Damage To Impaired Property Or Property
Not Physically Injured “Property damage” to “impaired property” or property that has not been physically injured,
arising out of:
(1) A defect, deficiency, inadequacy or
dangerous condition in “your product” or “your work”, or
(2) A delay or failure by you or anyone acting on your behalf to perform a contract or agreement in accordance with its terms.
This exclusion does not apply to the loss of use of other property arising out of sudden and accidental physical injury to “your product” or “your work” after it has been put to its intended use.
RECALL of PRODUCTS
From use because of any known or suspected defect, deficiency, inadequacy or dangerous condition. Imagine Pex pipe being recalled by the manufacturer BEFORE BI/PD has incurred. The cost of the product is born by the manufacturer, but the cost of pulling the system and installing the new one falls unfortunately upon the builder.
n. Recall Of Products, Work Or Impaired Property Damages claimed for any loss, cost, or expense incurred by you or others for the loss of use, withdrawal, recall, inspection, repair, replacement, adjustment, removal, or disposal of:
(1) “Your product”
(2) “Your work”, or
(3) “Impaired property”,
if such product, work, or property is withdrawn or recalled from the market or from use by any person or organization because of a known or suspected defect, deficiency, inadequacy, or dangerous condition in it.
Is not excluded. This can be an issue when an error occurs in the transaction… for example, a bad abstract resulting in a flawed title on an entire development. Think of representations that are disputed and warranties that are misunderstood. No specific exclusion in the proposed program, but certainly excluded by GL.
DESIGN & ENGINEERING FAILURE
Possibilities scare many responsible contractors. Elevated decking load calculations, choice of materials, and other subtle but critical aspects of a situation are not covered by general liability. Think of a second story deck collapsing from the weight of lots of people… The choice of actual or alleged wrong components or a design flaw common to all homes is excluded by GL, while covered here.
Wise has successfully quoted and bound these types of policies for various kinds of commercial and residential builders and trades. Even large tract or multi family builders can be eligible. WISE doesn’t require placement of the general liability coverage to quote or bind these crucial coverage’s. The application process can be as simple as the same documents used for a general liability submission.