Author, Kevin Howard, Account Executive, Rancho Mesa Insurance Services, Inc.

Mechanical HVAC contractors are essential to making sure that buildings around the globe have controlled temperatures and are energy efficient. Nationwide, the demand for mechanical HVAC contractors often keeps these businesses with full backlogs. These companies use various materials that create the potential for a pollution liability claim. Refrigerants, gases, flammable liquids, and lubricants are examples of these types of pollutants. If leaked or exposed, walls, ceilings, and floors can develop damage or mold that is not covered by standard commercial general liability policies.

Pollution liability insurance is a separate and specific form of insurance meant to protect businesses from pollution-related claims. Pollution risks may arise from activities such as the improper disposal of hazardous materials, fuel spills, or accidental leaks from HVAC systems. Such incidents can lead to damage to the environment, neighboring properties, and public health, which could potentially result in costly legal disputes and cleanup expenses.

Below we will cover two common pollution claim examples in an effort to raise awareness and drive home the need for commercial pollution liability insurance specifically for HVAC mechanical contractors.

Claim Example 1: Contamination of Ground Water due to HVAC System Leak

In this example, XYZ Mechanical installed an HVAC system in a commercial building. The building is adjacent to a residential development. Post install, there was a leak in the refrigerant line which seeped into the dirt below the building which went undetected for weeks. The refrigerant seeped into the groundwater supply causing contamination.

Hazard - This claim example would have a significant impact on wildlife, could cause harm to residents and would need a specific extraction/clean up that would be costly to a business owner.

Protection - A pollution liability insurance policy would react to this type of claim and could offer coverage for the cleanup, any third-party injuries, and the cost for legal proceedings.

Claim Example 2: Fuel-Contaminated Environment
ABC Mechanical is hired to install an energy efficient HVAC ground unit for an apartment complex. There was an underground unmarked fuel storage tank that was accidentally drilled into and caused a leak.

Hazard - This claim example would need immediate attention for the potential risk of fuel leaking into the ground and a plan for cleanup. The leak could make its way into the groundwater contaminating wells and potentially causing contamination of water. There would also be some health hazards for residents that could become a concern.

Protection - A pollution liability policy would come to aid with emergency response, cleanup cost, third- party bodily injury and legal defense costs.

Pollution liability is very often an overlooked coverage for many HVAC mechanical contractors. In 1986, however, the total pollution exclusion (TPE) became a standard exclusion in commercial general liability policies and has since created the need to purchase commercial pollution liability policies due to the variety of exposures to risk. The cost is relatively minor and the benefit very high if and when coverage is triggered. If you have questions regarding commercial pollution liability, please contact me at khoward@ranchomesa.com or (619) 438-6874.