...Fortunately, There’s Coverage You Can Count On

Liabilities associated with environmental exposures can devastate a business. XL Insurance covers utility contractors, protecting against financial losses that can strip a business of its profitability.

Case Studies Involving Utility Contractors

In the following case histories, the environmental exposures take a variety of forms. These examples demonstrate just some of the many ways in which utility contractors can incur environmental liabilities.

Contaminated Soil

A utility contractor unknowingly spread petroleum contaminated soil across a project site. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor was responsible for $250,000 in cleanup and defense costs.

Trench Troubles

A utility contractor stockpiled soil on an adjacent property. The scope of the project included excavation of 357 feet of trench for one week at a cost of roughly $30,000. Prior to completion of the work, dioxin was discovered in the soil. The US Environmental Protection Agency investigated the situation and issued an administrative order finding the contractor and their client responsible for contamination of the adjacent property. Government-mandated cleanup costs exceeded $250,000.

Backhoe Hits Gas Line

A utility contractor was working on a $500,000 sewer rehabilitation project. During excavation of a trench, the bucket of a backhoe hit a natural gas line. This forced evacuation of the immediate area, including a small strip mall. Store owners filed loss of business claims against the contractor which exceeded $75,000. The contractor’s general liability insurance carrier denied the claims based on their policy’s Total Pollution Exclusion.

Contractual Liability

While installing new overhead electrical lines, a utility contractor had a subcontractor sinking the new utility poles. The subcontractor hit an underground sewer line with an auger while installing the new poles. Through contractual liability, the utility contractor was responsible for the actions of the subcontractor. Cleanup of spilled sewage and repair of the sewer line amounted to $190,000.

Claim Denied

A utility contractor was contracted to control the vegetation on a right of way (power lines). The contractor applied a herbicide to reduce the vegetation. After a rain storm, the herbicide was washed into the adjoining farm land. The farmer’s crops and land were severely damaged. The farmer filed a lawsuit alleging $350,000 in damages. The contractor filed a claim with its general liability insurance carrier. However, the carrier denied the claim under the Absolute Pollution Exclusion since the herbicide was brought on-site by the contractor.

The examples above are intended to illustrate the wide variety of environmental exposures faced by institutions, business and industry and the many ways in which those exposures can arise. Insurance coverage in any particular case will depend upon the type of policy in effect, the terms, conditions and exclusions in any such policy and the facts of each unique situation. No representation is made that any specific insurance coverage would apply in the above examples. Please refer to the individual policy forms for specific coverage details.

Common Environmental Exposures For Utility Contractors

Operational Exposures

• Completed operations exposures from improper line hook-up
• Excavation through and spreading of unknown pre-existing contaminated soil
• Impacting underground utility lines and other underground structures (and associated loss of business exposure)
• Overuse of herbicides that could burn out vegetation
• Impacting groundwater from drilling and excavation work (e.g., cross contamination of aquifers, etc.)

Owned Premises Exposures (maintenance garages, fabrication shops, etc.)

• Leaking underground/aboveground storage tanks
• Residual contamination from minor spills of oils, fuel, lubricants, etc., and poor housekeeping
• Surface contamination from fuels and lubricants stored improperly (without secondary containment)
• Improper disposal of waste materials
• Unidentified, pre-existing contamination from past owners of the premises

Transportation Exposures

• Inadvertent transport and subsequent disposal of unknown contaminated soil
• Spills of asphalt or cement during transport
• Resulting pollution from collisions with various structures (e.g., pole mounted transformers, aboveground tanks, etc.)
• Fuel/oil spills/leaks from vandalism
• This list is intended only to outline some typical environmental exposures common to utility contractors and is not all-encompassing.