Q+A: Lead RRP and Insurance

by bkrigbaum@solagroup.com

Question: We are a small remodeler. My questions pertain to insurance. There always will be a number of companies working without insurance. For those of us who carry insurance, I am finding that normal general liability and workers’ compensation insurance policies do not cover lead-based-paint exposures. Therefore, there may be a number of contractors working under RRP thinking that because they have general liability policies they are covered. We are finding that additional policies are needed for lead-based-paint protection. That means adding more costs to the project. 
Are there general liability and workers comp policies that cover lead-based paint?
Are there policies with premiums that are project specific? Costs per project can be easily identified for developing bids.
Are RRP insurance costs from a contractor’s perspective a big void that no one has looked at?
—Carl Brandt

Answer: In my firm’s experience with RRP laws and pollution liability, we have not found insurance carriers are willing to offer pollution coverage on a general liability policy. With that being said, there are a few insurance companies, such as ACE, which offer insurance programs to cover pollution liability and professional liability. These programs are separate and will add additional coverages and premiums. 

As a point of clarification, workers’ compensation policies do not have exclusions for pollution or lead-based paint. If an employee is injured on the job and in the course of employment, workers’ compensation benefits are to be paid based on the workers’ compensation laws in each state.

Depending on the carrier offering the pollution liability policy, policies can sometimes be purchased on a per project basis. However, it has been my firm’s experience that insurance companies usually like to write the policies on an annual basis rather than a per project basis.

Each project is unique, and the owners or general contractors for each project may or may not require pollution liability coverage to be in place for the duration of the job. In the case that pollution liability is required, excess costs associated with the coverage are usually overlooked and can become very large. It is important to remember that pollution liability coverage is not meant to provide coverage for failure to abide by the laws set by the EPA. The coverage is designed to provide a specified limit of liability protection against a contractor’s negligence in causing or contributing to a pollution event.

—Thomas J. Krug, CIC
J. Krug & Associates Inc.
Mt. Prospect, Ill.

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