The Pollution Exclusion Problem
Here's something that catches contractors off guard. Your general liability policy has a pollution exclusion. If your work releases contaminants, causes soil contamination, or creates an environmental cleanup situation, your standard GL will likely deny the claim.
This isn't a theoretical concern. California's strict environmental regulations mean contractors face real exposure.
Who Needs Pollution Coverage
Demolition Contractors
Tearing down older structures in California means potential encounters with asbestos, lead paint, and other regulated materials. Even with proper abatement procedures, accidental releases happen. A demolition crew in the Inland Empire disturbed an underground storage tank they didn't know existed. Cleanup costs exceeded $200,000 before the contaminated soil was fully remediated.
Excavation and Grading Contractors
Digging into California soil, especially on properties with prior industrial use, creates contamination discovery risk. Brownfield sites and former agricultural land with pesticide residue are common throughout the state.
Painting Contractors
Lead paint disturbance during renovation work on pre-1978 buildings triggers EPA RRP Rule requirements. Violations create both regulatory fines and cleanup liability.
HVAC Contractors
Refrigerant releases carry environmental penalties. Older systems using R-22 or other ozone-depleting substances require careful handling. Accidental releases must be documented and reported.
Plumbing Contractors
Sewage spills, chemical drain cleaning incidents, and cross-contamination of water supplies all create pollution exposure that standard GL won't cover.
Types of Pollution Coverage
Contractors Pollution Liability (CPL)
This is the most common form for construction businesses. CPL covers third-party bodily injury and property damage from pollution incidents arising out of your contracting operations, both on-site and during transit. It also covers cleanup costs you're legally obligated to pay.
Site-Specific Pollution Liability
Coverage tied to a specific project or location. Useful for high-risk remediation projects or work on known contaminated sites. The policy covers pollution conditions discovered or worsened during the project.
Combined GL and Pollution Policies
Some carriers offer blended policies that eliminate the pollution exclusion gap. These are particularly useful for contractors who regularly encounter environmental exposures but don't want to manage separate policies.
California-Specific Considerations
California's environmental regulations are among the nation's strictest. The Department of Toxic Substances Control (DTSC) can order cleanup and hold contractors liable. Regional Water Quality Control Boards regulate discharges and stormwater. Air quality management districts enforce emission standards. Local health departments get involved with lead and asbestos issues.
Penalties for violations can reach millions of dollars. Having proper coverage in place protects your business from catastrophic loss.
Cost Factors
Pollution liability premiums depend on your trade and specific operations, annual revenue, the types of pollutants you may encounter, your geographic operating area, and your environmental safety protocols.
For many contractors, annual premiums run between $2,500 and $10,000. That's reasonable protection against claims that routinely reach six or seven figures.
Common Questions
Does my general liability cover any pollution at all?
Most GL policies include a limited "hostile fire" exception, covering pollution from a fire you didn't expect. Otherwise, the pollution exclusion applies broadly.
Is pollution liability required in California?
Not universally, but many project owners and GCs require it contractually, especially for renovation, demolition, and remediation work.
What about mold?
Mold is typically excluded from both GL and pollution policies, though some pollution policies offer mold coverage by endorsement. Contractors working in water-damaged environments should specifically address this gap.