While HVAC contractors are traditional hiring risks, they have become the focus of increasing pollution-related claims in recent years. Installation, maintenance, and repair of the HVAC system can create polluting conditions, such as poor indoor air quality and mold. Daily operations in the workplace could disturb asbestos, lead, or other contaminants in the workplace. Materials and equipment brought into the workplace can spill or leak while in transit or in use during hiring activities.

HVAC contractors also have professional liability risks that may not be obvious to the insured, as hiring is the primary focus. E&O claims could arise from: (1) workplace modifications where malfunction may create direct professional liability for the contractor, (2) oversight of subcontractors, and (3) actual design work performed, specifically when the contractor has a perceived responsibility to comment on design aspects that he knows are underdeveloped.

The exposures described above are generally excluded from general liability policies, so it is important that HVAC contractors have comprehensive coverage that protects them from potential claims and therefore helps secure the future of their business. Beacon Hill’s program division, PartnerOne Environmental, has a number of products that can effectively address the coverage needs of this class of businesses:

Liability for contamination of contractors

Contractor Pollution Liability (CPL) insurance is coverage designed to protect against third party claims for damages caused by “pollution conditions” arising from the insured’s covered operations. This coverage is applicable to all types of tank contractors and is important because these contamination claims may not be covered through the General Liability form.

How Does Contractor Pollution Liability Coverage Work?

Generally designed to address the coverage gap created by the CGL contamination exclusions.

· Policies generally written to provide coverage for operations performed “by or on behalf of” the insured.

Coverage is provided for the insured’s operations outside its own premises.

Base policies can be written on the basis of Claims Made or Occurrence.

Mold coverage is generally offered as an endorsement to the CPL insurance policy or part of the coverage.

Mold is usually found on a made claims form.

Mold coverage may have a sub-limit of liability, as well as its own deductible.

Contractor / E&O Contamination Liability

The Contractors / E&O Pollution Liability policy provides coverage to general contractors, construction managers, and various commercial contractors who could potentially have both Pollution and Professional claims; Contractor / E&O Contamination Liability provides coverage for professional exposures for contractors. This coverage is important because these professional exposures are generally excluded from the General Liability and Contractor Pollution Liability policies.

Modifications were made to the workplace

HVAC contractors are often presented with facilities that do not perform exactly as planned. In these situations, contractors will often modify the plan on site to make the system work. The contamination conditions arising from these changes create a direct professional liability for the contractor.

Actual design work done

Many companies provide true design services as part of their corporate profile. This can range from doing all the design work for the project, doing some design work pertaining to one aspect of the HVAC system, or simply having a perceived responsibility to comment on design aspects that they know are poorly thought out. The last element is the most difficult for HVAC companies to control and manage.

Subs monitoring

Proper selection and supervision of subcontractors is a professional exposure shared by most contractors and is generally excluded from basic CGL and CPL policies. Many HVAC contractors don’t use subs at all, so this won’t be a problem for them. However, for those who do, the exposure can be significant.