How to Manage Risk Using Construction Insurance & Bonds – Part 12: Pollution Liability

By AIA Contract Documents

April 10, 2023

One of the best ways to manage risk on construction projects is through insurance and bonds. Throughout the next several weeks, the AIA Contract Documents Program is going to release a series of articles pertaining to construction insurance. This is Part 12: Pollution Liability.

What is Pollution Liability Insurance?

While there are many different types of policies that cover pollution liability, one of the more common types is the Contractors’ Pollution Liability policy. As stated by a leading construction law treatise, “[t]his insurance provides coverage for bodily injury and property damage (including clean-up) from pollution conditions arising out of covered operations performed by the insured or its agents on another’s real property. These policies also may afford coverage for pollution arising out of professional services rendered by the contractor or its agents… Contractors’ pollution liability is often coupled with an errors and omissions coverage part [and] is structured to cover a consultant’s failure to discover contamination during a Phase I or Phase II audit. The policy also responds to negligent design of a remediation system.”[1]

Do AIA Contracts Contain Insurance Requirements Related to Pollution Liability?

Yes. The Insurance and Bonds Exhibit to A101-2017 contains multiple sections where the parties can choose whether the Contractor will procure insurance related to pollution coverage:

  • A.3.2.9 If the Work involves the transport, dissemination, use, or release of pollutants, the Contractor shall procure Pollution Liability insurance, with policy limits of not less than  ($    ) per claim and    ($    ) in the aggregate.
  • A.3.2.10 Coverage under Sections A.3.2.8 and A.3.2.9 may be procured through a Combined Professional Liability and Pollution Liability insurance policy, with combined policy limits of not less than  ($    ) per claim and    ($    ) in the aggregate.

Stay tuned for Part 13!

AIA Contract Documents has provided this article for general informational purposes only. The information provided is not legal opinion or legal advice and does not create an attorney-client relationship of any kind. This article is also not intended to provide guidance as to how project parties should interpret their specific contracts or resolve contract disputes, as those decisions will need to be made in consultation with legal counsel, insurance counsel, and other professionals, and based upon a multitude of factors.  

[1] Pollution liability insurance, 4Pt1 Bruner & O’Connor Construction Law § 11:52.