Today’s insurance market presents unique challenges to HVAC and Mechanical Contractors. Although they are considered traditional contracting risk, they have become the center of mold-related claims and pollution over the past few years. The trend to hold these contractors to a higher standard that other trades is exacerbated by the fact that they are now subject to “professional” liability. These companies are expected to not only properly install the equipment but also to review and discuss other designs, as well as to identify any potential problems. It is flattering but it raises coverage issues for many of the risks. HVAC and Mechanical Contractors are most concerned about two main areas: the environmental impact of contracting and increasing professional exposures.
The following are some ways contracting services could cause environmental problems
Indoor air quality can be dangerous due to improper installation.
Mechanical/HVAC professionals face one of the most serious environmental issues: the claim that their work has created an unhealthy indoor environment. It can take many forms, such as odors, sick employees, staining, and damage to walls or fixtures. The claims for Bodily Injury, Property Damage, and Business Interruption can quickly mount if these allegations are true. Many times, pollution exclusions will be cited when the basis for the claims is that the contaminant is toxic.
Mold growth is directly attributable to improper installation.
Mold growth can be caused by moisture, food sources, and a warm environment. Excessive moisture can lead to problems in HVAC systems, such as condensation and actual leaks. Mold can form when moisture is combined with warmth and wood or wallboard. CGL policies exclude most mold claims.
The contractor may cause pollution on the job site by changing existing conditions.
Mechanical/HVAC contractors face many claims due to asbestos, lead, and existing mold being disturbed while they are working. Asbestos wrap can be placed on pipes, as well as lead paint on doors and windows. Contractors can be held responsible for making these conditions worse by spreading contamination.
Pollution at the job site due to contaminants brought by the contractor.
Many Mechanical/HVAC contractors work with generators that require fueling. These contractors also frequently use solvents as well as acids, glues, or other toxic substances while on the job. These materials can be released or improperly disposed of, which could lead to pollution claims.
Subcontractors are responsible for the operations of contractors.
Subcontractors are hired by Mechanical/HVAC contractors to perform work like electrical, plumbing, remodeling, and construction. They could be held responsible for any pollution caused by their work. The contractor will insist that the subcontractor has his own insurance and add the contractor to the Insured list. The Mechanical/HVAC contractor might have to defend against claims related to work they did because the subcontractor caused a pollution condition and his coverage was inadequate.
HVAC companies have a growing professional exposure. Many firms offer design services as part or their corporate profile. This could include doing all the design work, or just commenting on poor design aspects. This last aspect is the most difficult for HVAC companies to manage and control. Many HVAC contractors find themselves in situations where installations don’t work as expected. Contractors will often modify the specifications while on the jobsite in order to make the system function. These changes can lead to problems that are directly related to the contractor’s professional responsibility.
Contractors also have to supervise subcontractors and make sure they are properly selected and monitored. This professional exposure is not covered by basic CPL and CGL policies. Contractors who may have to outsource a part of a job can face significant exposure.
It is important that you remember that Contractors Pollution is an important issue, and Professional Liability is also important. However, Mold is the most important aspect of this business. You will not find many products that include all three. It is important to know how to protect your insureds by ensuring they have the correct coverage.
