A recent Legionnaires’ disease outbreak in Central Harlem has caused concern in New York City. Legionnaire’s disease is a severe form of pneumonia caused by Legionella bacteria, often occurring when water droplets from cooling towers, hot tubs, or plumbing systems are inhaled.
One of the highest exposures of Legionnaire’s disease is cooling towers, which are rooftop units that release mist into the air while cooling large buildings. Currently 11 buildings in the NYC area have had cooling towers test positive for Legionella. This poses a significant risk for HVAC contractors, general contractors, and others working on projects involving cooling towers. The risks include:
It’s important to understand that bodily injury or property damage resulting from negligent installation, servicing, or failure to comply with ASHRAE Standard 188 (Legionella Management in Building Water Systems) is unlikely to be covered under a standard General Liability (GL) insurance policy.
General Liability Total Pollution Exclusion
The GL policy typically contains a Total Pollution exclusion. Here is an example of how the standard CG 21 49 exclusion reads:
This insurance does not apply to:
f. Pollution
(1) “Bodily injury” or “property damage” which would not have occurred in whole or in part but for the actual, alleged, or threatened discharge, dispersal, seepage, migration, release or escape of “pollutants” at any time.
(2) Any loss, cost, or expense arising out of any:
(a) Request, demand, order or statutory or regulatory requirement that any insured or others test for, monitor, clean up, remove, contain, treat, detoxify, or neutralize, or in any way respond to, or assess the effects of “pollutants”; or
(b) Claim or suit by or on behalf of a governmental authority for damages because of testing for, monitoring, cleaning up, removing, containing, treating, detoxifying, or neutralizing, or in any way responding to, or assessing the effects of “pollutants”.
“Pollutants” is defined as any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste, and includes microbial matter, fungus, mold, spores, bacteria, or other microorganisms.
Endorsements can be added to the GL policy for an additional premium, which provide limited coverage or a carve back for Legionella. There may be options to purchase an endorsement providing sub-limited coverage in the excess and surplus marketplace.
Contractors Professional Liability: Total Pollution Exclusion
Most Contractors Professional Liability policies also contain Total Pollution exclusions. These exclusions apply even if the Legionella risk stemmed from a design error.
Here is an example of how a sample Contractors Professional Liability policy reads:
Pollution and Microbial Matter Exclusion
This Policy does not apply to any claim, demand, suit, or proceeding alleging, arising out of, based upon, or attributable to:
a) the actual, alleged, or threatened discharge, dispersal, seepage, migration, release, escape, or presence of any pollutant at any time;
b) any direction or request to test for, monitor, clean up, remove, contain, treat, detoxify, or neutralize pollutants; or
c) any failure to prevent, contain, or remediate pollutants.
For purposes of this exclusion, “pollutants” mean any solid, liquid, gaseous, or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, biological contaminants, bacteria, fungi, mold, spores, mycotoxins, or any byproducts of the foregoing, and any substances that are or become regulated by any governmental authority.
There may be solutions to minimize the coverage gap. For example, some carriers will endorse a policy with a pollution cave back as it pertains to professional services. Another solution is a blended policy, providing both Contractors Professional Liability and Pollution Liability.
Why To Consider a CPL Policy
Purchasing a Contractors Pollution Liability (CPL) policy is a proactive way to protect against pollution claims related to Legionella. It’s essential that the policy’s definition of a pollution condition specifically includes Legionella pneumophila. A CPL policy can also offer additional benefits, such as the ability to add additional insured coverage for owners or other upstream parties, as well as completed operations coverage to extend protection beyond the project’s end.
Mitigate Coverage Gaps
For the most comprehensive protection, it's essential to coordinate your Contractors Pollution Liability (CPL) policy with your Contractors Professional Liability coverage. Together, these policies can offer broad protection for on-site operations, completed operations, and third-party bodily injury.
Be sure that the policy definitions explicitly include Legionella to avoid potential coverage gaps. Given the complexity of these exposures, it's critical to work with a broker who understands the unique risks associated with your operations. Contact TSIB today to speak with an expert and ensure your coverage aligns with your risk profile.
TSIB’s Risk Consultants are currently servicing the following locations:
East Coast: New York City, NY; Bergen County, NJ; Fairfield County, CT; Philadelphia, PA
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