Is Your Property Covered? 6 Types of Liability Insurance Needed


Property owners and managers expose themselves to potential liability any time they engage a third party to perform work on their building's premises. If the third party causes injury to a building occupant, tenant, or employee, the owner or manager is a target for liability actions.
To prevent a lawsuit at all costs, this post dives into the 6 types of liability insurance needed to cover potential injury.

1. Professional Liability Insurance

Environmental consultants are often hired to identify and evaluate the presence of contamination or to design an abatement or remediation program and evaluate its implementation. When hiring an environmental consultant, ask the consultant to show evidence of this insurance.

2. Asbestos Abatement Liability Insurance

Property owners should require an asbestos abatement contractor to carry asbestos abatement liability insurance. This will protect against claims of third-party bodily injury and property damage arising from asbestos abatement projects.

3. Lead-based Paint Abatement Liability Insurance

Similarly to asbestos abatement, contractors hired to do remediation work should carry this form of liability coverage. During lead-based paint abatement operations, lead dust can cause serious health hazards. The adverse effects of this exposure can be diagnosed almost immediately and in turn, will need to be treated quickly.

4. Contractors’ Pollution Legal Liability (CPL) Insurance

Contractors who perform asbestos or lead remediation projects should also purchase CPL insurance. CPL insurance provides coverage for third-party bodily injury and property damage claims, cleanup costs, and defense costs at the project site.
In addition, this type of insurance can be used for other types of projects, such as underground storage tank removal, and for other types of contractors, such as HVAC contractors or contractors applying sealant to a parking lot.

5. Owner-Controlled Environmental Insurance Program (OCEIP)

Property owners have the option to control the insurance of their hired consultants and contractors under an OCEIP. In the case of large-scale asbestos abatement or other substance remediation projects, OCEIPs are typically used by owners who have multiple contractors working on the same project. The main advantage is that the property owner controls one policy insuring multiple parties at the site. When an OCEIP is used, owners can ensure that the insurance underwriters understand and cover the scope of operations, so that there are no unforeseen issues with projects.

6. Cost Overrun Insurance

When environmental remediation projects exceed their projected costs, cost overrun insurance helps to pay for the excess costs. It is important to keep in mind that cost overrun policies do not provide liability coverage, such as bodily injury, property damage, or defense costs. Examples of situations that these policies typically cover include failure of the remediation, unknown or new pollution conditions within the defined area, regulatory change orders, and errors in estimated remediation costs.

Since all of the insurances listed above can be provided on a claims-made basis, the owner should require the consultant to maintain coverage for several years beyond the end of the contract. This will help address any potential operations claims in the future.
This article is adapted from BOMI International’s Law and Risk Management course, part of the RPA® designation program. More information regarding this course is available by calling 1.800.235.2664. Visit BOMI International’s website, www.bomi.org.

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