How General Contractors Can Help Safeguard Against Pollution Liability with Subcontractors

travelers red umbrella
By Travelers
2 minutes
man inspecting construction site

Pollution risks can jeopardize the financial and reputational well-being of a general contractor’s business, even when the construction operations are performed by a subcontractor. Proper risk management, risk transfer strategies and insurance coverage can mitigate these threats.

Pollution hazards

Contractors working on construction projects may create or uncover existing pollution conditions that put the general contractor (GC) at risk.

Construction pollution exposures can result from operations, transportation or waste disposal and can come in many forms, such as:

  • Diesel fuel, used by heavy equipment and trucks, that leaks and can affect soil as well as ground and surface water.
  • Lead, silica dust and asbestos when released into the air, as well as hazardous fumes.
  • Contaminated job site runoff, hazardous material/waste on-site storage or underground utility (sewer, natural gas) line ruptures or releases from damaged underground storage tanks.
  • Fungi/mold and bacteria, which can lead to bodily injury or costly property damage and cleanup/decontamination.
  • Spills of hazardous materials or waste during transportation.

Construction pollution prevention – risk management strategies 

Early and ongoing mitigation efforts may help reduce the pollution exposures general contractors face when working with subcontractors. Consider the following practices to help reduce the risk of job site pollution:

  • Awareness training and safety policies, procedures and practices (e.g., hazard communication in a health and safety plan).
  • Formal subcontractor prequalification helps ensure that subcontractors are authorized, with the appropriate experience, training, skills and credentials, to properly complete the job. For example, when asked to hire an environmental contractor who specializes in services such as asbestos and lead abatement or mold and contaminated soil remediation, a GC should ensure that the contractor is qualified and licensed/certified to do the work and that they have provided acceptable evidence of pollution liability coverage, including Additional Insured status in favor of the GC and policy limits meeting the GC’s requirements.
  • Consistent, ongoing oversight by a qualified, experienced representative of the GC is essential. Provide program administration with a formal, written quality assurance/quality control (QA/QC) program naming the individuals with QA/QC responsibilities and accountability. Ensure that materials and workmanship comply with building codes, design specifications and national standards as part of an effective oversight practice. Another GC best practice is to obtain and retain copies of written, third-party sign-off on any RFIs/changes to the scope of work.
  • Contractual risk transfer (CRT) is a legally binding approach to transferring risk to the party that is in the best position to control it with respect to the services provided. CRT comes into play in many aspects of construction agreements with subcontractors, such as plumbers, HVAC contractors, haulers, disposal companies and others.
  • Finally, documentation can be the key to successful defense against pollution liability claims. Lack of follow-up and documentation, even with a contract in place, can create significant issues in a claim situation, particularly with environmental losses, which can be severe and complex. Effective, thorough document retention policies and procedures can significantly improve the chances of achieving the best possible outcome in a claim situation.

The right insurance coverage, including a contractors pollution liability policy, and proof of insurance from subcontractors, helps protect GCs from liability for bodily injury, property damage or cleanup costs for pollution caused by a subcontractor while performing construction operations.

Learn more about Travelers contractors pollution liability insurance or talk to your insurance agent.

Person signing a certificate of insurance.

Top Stories

Do You Have a Contractual Risk Transfer Program?

A contractual risk transfer (CRT) program can help protect contractors when working with third-party services or products.

More Prepare & Prevent

Managing Your Construction Risk

Managing construction project risks effectively helps protect your reputation and bottom line. Travelers shares six tips for construction risk management.

Construction workers analyzing risk while standing in a warehouse.

More Prepare & Prevent

Don't Let Shortfalls Be Your Downfall: Navigating Construction's Labor, Equipment and Materials Constraints

Increasing costs, labor and material shortages, and project delays are shaking up the construction industry. Discover strategies to overcome these challenges.

Text on a red background reading "don't let shortfalls be your downfall: navigating construction's labor, equipment and materials constraints".

More Prepare & Prevent

3 Construction Work Zone Safety Tips

Preparation, inspection, and worker training are critical steps to keeping a construction work zone safe. Explore our top work zone safety tips today.

Orange construction safety sign in a busy city street.