October 4, 2013

Act professional

Source:, September 30, 2013
By: Jay Sturhahn, Sherman & Howard LLC

A recurring risk for licensed professionals remains the threat of liability claims arising from their work. Given the nature of the professional’s practice, the claims are complex and costly, regardless of their merit. Therefore, professional liability insurance is a critical component of any professional’s practice.

Professional liability insurance continues to be a significant expense. Consequently, it has been our experience that the premium is often the biggest driver in policy selection. But selecting professional liability insurance based on cost, to the exclusion of an analysis of coverage, has its own negative economic consequences. Securing the best coverage, at the best price, requires examination of certain critical factors.

Insure the Right Risk.

Don’t assume insurers will voluntarily cover every claim arising from the professional’s performance of a compensated act for a client. Many professionals provide a blend of professional services, whereas liability policies are designed to cover risk arising from the traditional practice of the profession. For example, lawyers often give operational advice to their business clients and architects are asked to provide construction advice. Whether claims arising from the performance of these “non-traditional” acts are covered will depend on the policy in question, so review the policy before binding. Also, if you are a professional that regularly engages in “non-traditional” acts – e.g., a lawyer that prepares clients’ tax returns – confirm that undertaking is covered.…

July 3, 2013

Substantial savings in moldy mobile home case

Source: Beazley Pro, Summer 2013

A customer alleged that her HVAC contractor failed to reconnect the ventilation system in her doublewide trailer during servicing. As a result, she said, mold and mildew developed in the attic and wall cavities of the trailer.

The plaintiff’s initial demand exceeded $150,000 and included the contractor tearing out and replacing all of the trailer’s interior walls, ceilings, floors and fixtures. Beazley, which provided Contractor’s Pollution Liability Insurance for the defendant, engaged two experts who uncovered that the water intrusion and moisture that led to the mold and mildew was due in part to vulnerabilities in the exterior envelope of the trailer. The contractor’s general liability carrier initially attempted to deny any payment on the claim; later it offered a nominal contribution of $3,000. Beazley pursued the general liability insurer for contribution and eventually obtained payment of $25,000 from the general liability carrier and settled the matter for $65,000, a fraction of the initial demand.

Lessons learned:
Bringing best-in-class resources to bear early in the claims process can make a pivotal difference in claim outcome. In this case, Beazley hired an international engineering company to do a building envelope analysis that revealed early on that areas of water intrusion unrelated to any actions by the contractor could have led to mold. This information quickly diffused the plaintiff’s demands… and led to the general liability insurer agreeing to pick up substantially more of the settlement (benefiting the insured, as it fell outside the contractor’s deductible).


April 25, 2013

Do Bacteria and Other Living Things Qualify as "Pollution" Under Insurance Policies?

Source: Becker’s Hospital Review, April 24, 2013

Hospitals and other medical facilities often deal with the outbreak of viral or bacterial infections in the course of their business. Many may not have considered these outbreaks as a form of “pollution,” but depending on the jurisdiction in which they are located, their insurance companies may very well do so. And doing so may limit severely a facility’s ability to obtain coverage for such incidents. Read more.


March 29, 2013

XL Group introduces pollution insurance protection in North America

Source: Insurance Business Review, March 21, 2013

XL Group has introduced a new pollution insurance policy to help the North American food and beverage industry address their environmental liability, clean up and disaster response concerns.

The new Environmental Food and Beverage policy will assist companies during recovery from accidental ammonia discharges, pathogen contamination among others.

XL Group North America Environmental business president Matthew O’Malley said less number of food and beverage businesses can afford a disruption to operations during costly and time consuming pathogen outbreak or other accidental pollution incidents.

”Fortunately, new tailored environmental insurance coverage can help food and beverage businesses quickly address and clean up if contamination or pollution conditions arise at their facilities,” O’Malley added.

Available through Greenwich Insurance and Indian Harbor Insurance, the policy offers the company’s standard Pollution and Remediation Legal Liability coverage, which provides protection for on and off-site bodily injury and property damage claims and cleanup and legal expenses.

The policy provides financial protection for cleaning and disinfection of storage areas and processing equipment, disaster response advisory expenses, medical and temporary living expenses.

Loss prevention services, including assistance from an in-house consulting staff and dedicated environmental claims specialist are also included in the coverage.


February 7, 2013

From Superfund to Super Coverage: 25 Years of CPL

Source:, February 1, 2013
By: Geoff Haver, New Day Underwriting Managers LLC

Contractors’ pollution liability insurance began as a way to indemnify contractors against Superfund cleanup exposures. Today’s CPL coverage is broad and affordable. Learn how to work with insurers on this essential coverage.

Contractors’ pollution liability, or CPL insurance, has been offered by the insurance industry for nearly 25 years. Today, construction firms consider CPL an integral part of their overall insurance portfolios Take a look back at the coverage, structure and cost of CPL policies in their infancy as well as the product, price and marketplace advancements that have occurred over the past 25 years.

In this time, we have gone from two or three insurers offering expensive and limiting coverage to more than two dozen insurers providing contractors pollution insurance, with overall market capacity exceeding $300 million.

But know first: There has never been a better time to transfer contractors’ pollution risk. CPL has never been as broad or as inexpensive as it is today. It simply offers an extremely effective method for alleviating the business risks associated with one-sided contracts and the indemnities for any and all claims associated with severe pollution exclusions.

Beginning with Superfund

My personal roots with insurance specialization started in the late 1980s, when I worked with a national broker to solve Superfund contractor indemnification. I was not the brains behind the project, but part of a team that assessed whether the private insurance industry could cover the operational environmental insurance risk of contractors working on Superfund sites. In conjunction, we sought to provide a private-market solution to the introduction of the 1986 absolute pollution exclusion introduced into many general and excess liability policies.…

July 13, 2012

Professional Liability Insurance for Contractors

Source: Construction Business Owner, July 1, 2012
By: Steven D. Davis & Ray Bustamante

Gain a better understanding of this complex and often misunderstood type of construction insurance.

The exposures that contractors face have become more complicated as a result of changes in project delivery systems over the past 20 years. This has forced construction executives to examine professional liability coverage—a complex and often misunderstood type of coverage.

In the past, an unendorsed Commercial General Liability (CGL) policy gave contractors a good option for insuring their general or operational liability risks. But the dynamics of coverage changed dramatically once the policy included the professional services exclusion, leaving contractors to sort through exposures arising out of their operations. Over time, an added endorsement, ISO CGL 2279, closed this coverage gap and restored coverage for bodily injury or property damage (BI/PD) in connection with the design of their means and methods.

The CGL policy covers physical activities that result in BI/PD, but the source of professional liability claims often come from issues relating to faulty design, cost overruns or a delay in completing the project due to professional negligence.

In construction litigation, professional negligence is usually defined as failure to perform duties according to the rules or standard of care or practice that would have been expected of another professional performing a similar task in the same region or location.…

April 27, 2012

New Day Policy Review Results in Coverage Enhancements At Reduced Rate

New Day was asked by the retail broker to review the current combined professional liability/pollution liability policy for a large mechanical contracting client, suggest coverage enhancements and market the account at renewal to ensure that the client received the broadest coverage at the best price. The retail broker advised which carrier’s were previously approached for this account and most of them were not appropriate for this type of risk. New Day explained the marketing strategy for renewal and why each carrier was being approached and the retail broker understood and accepted the strategy. New Day obtained a competitive alternative quote and leveraged that alternative to negotiate significant coverage enhancements with the incumbent carrier at a decreased rate. Those coverage enhancements included:

  • Rectification Coverage
  • Mitigation of Loss Coverage
  • Environmental Impairment Liability for the Insured’s Owned Locations
  • Punitive Damages Coverage

New Day’s proposal outlined the coverage enhancements in detail enabling the retail broker to explain them to the insured and resulting in the incumbent carrier retaining the business despite a 20% premium differential.…

August 11, 2011

Catlin Environmental Announces $15 Million in Available Capacity for its Environmental Products

Effective August 1st, Catlin Environmental has $15MM in Capacity for its three core environmental products, including Site Pollution Liability, Environmental Protective Professional and Pollution Liability, and Owners Environmental Protective Professional Indemnity products.

This increased capacity is a direct result of our growing commitment to the environmental insurance marketplace and is reflective of our strong growth in this market segment over the last year. It is also a reflection of the confidence the reinsurance market has placed in the expertise and integrity of our environmental underwriters.

The Catlin Environmental underwriting staff has an average of 15 years of environmental underwriting experience, which allows us to quickly respond to your insurance needs with solutions-oriented coverage proposals that often exceed your client’s expectations.

This increased capacity is available within all of Catlin Environmental products, and allows us to better serve your client’s environmental insurance capacity needs.…

July 28, 2011

Pollution Exclusions in CGL Policy Bars Coverage for Carbon Monoxide Poisoning

By: J. Kent Holland, Jr.

The pollution exclusion of a commercial general liability (CGL) policy was enforced to exclude coverage for injuries allegedly caused from carbon monoxide that was emitted from a propane-powered grinder that was being used to grind terrazzo floors while another contractor’s worker was working in the same area installing drywall. The worker filed suit in state court against the owner of the grinder, alleging the company was negligent in failing to provide proper ventilation when operating its grinders and that it failed in its duty to properly monitor the work environment for carbon monoxide gas.

The insurance companies filed a separate declaratory judgment action in federal court, contending that the absolute pollution exclusion bars coverage. The court granted summary judgment in favor of the insurance companies, and this was affirmed by the Federal circuit court on appeal, holding carbon monoxide is an “irritant” that was “dispersed” throughout the work site by the insured contractor. Moreover, the court held that this was a pollutant “brought on” to the premises by the contractor and therefore excluded from coverage.…

February 28, 2011

Architects, Engineers Liability Rates to Go Up: Report

Source:, February 25, 2011

Rates for architects and engineers professional liability insurance, which have been stable, are expected to go up this year, a new study reports.

A number of leading insurance companies offering this coverage expect to raise premium rates in 2011 up to 10 percent on average for both renewals and new business, according to a new survey by Ames & Gough.

The insurers are split in their planning with half expecting to maintain current rates and half expecting to seek increases. However, none said rates will go down in 2011. This represents a shift in the market for the first time in several years.

Among insurers planning rate increases, the expectations ranged from the low single digits to 10 percent or more.

On a combined basis, the insurers in the Ames & Gough survey account for roughly 70 percent of the overall U.S. market for this coverage.

For small and mid-sized architectural and engineering firms, competition among insurers continues to be heavy.…