No Coverage, Period
Turns out most environmental consultants' E&O policies DO NOT provide real coverage.
I previously wrote about the absolute pollution exclusion problem in environmental contractor errors & omissions policies. In that piece, I explored how carriers can issue policies marketed for environmental consultants, only to exclude claims arising from pollution… you know, the contractor’s main exposure?
But I just reviewed a policy that proves the problem is far worse and more pervasive than even I realized.
This contractor didn’t just have an absolute pollution exclusion buried within the fine print of his policy. He had an absolute Bodily Injury/Property Damage exclusion too. With both of these exclusions…what exactly does this policy even cover?
And this was a policy he was able to purchase directly from a carrier — a carrier that, if you were to google “environmental contractor E&O,” is one of the first sponsored results you’ll see. A carrier that markets itself as a solution for environmental contractors. Yet their policies contain incredibly broad exclusions that carve out the very coverage the contractor is trying to purchase. And the carrier doesn’t have to disclose these gaps upfront. They can simply point to the fine print.
As an insurance professional who works to place my clients with good carriers providing real coverage, I cannot tell you how infuriating this makes me. Insurance professionals wonder why the insurance industry has such a bad rap, while simultaneously letting our peers sell absolute garbage.
Let me show you what I found.
What the Policy Actually Says
Professional liability policies follow a standard structure:
Insuring Agreement (what’s covered)
Conditions (duties and responsibilities)
Definitions
Exclusions.
That last section — Exclusions — is where carriers define what they’re NOT covering. It’s VERY, VERY important, as you’ll see below.
At the beginning of this particular contractor’s exclusions section, there’s a preamble that reads something like this:
“The Company shall not be obligated to pay Damages or Defense Costs for any Claim, or any loss arising directly or indirectly out of:”
This single sentence is doing a lot of work. It’s saying: “If a claim arises that is directly OR INDIRECTLY related to anything listed below, we’re out.”
Most insurance consumers do NOT appreciate the severity and the broadness of this type of policy language. It’s not “caused by.” It’s not “arising directly from.” It’s “directly or indirectly.” Anything connected, in any way, to the exposures listed in this section, and the carrier walks.
And what’s listed below?
Exclusion 1: Bodily Injury or Property Damage
“Any Claim alleging, arising out of, based upon, or in any way attributable to Bodily Injury or Property Damage, regardless of whether such Bodily Injury or Property Damage is caused by negligence, error, or any other act or omission.”
Exclusion 2: Pollution
“Any actual or threatened discharge, dispersal, release, or creation of any Pollutant on any property; or the clean up, removal, containment, treatment, detoxification, or neutralization of any Pollutant; or the existence of any Pollutant on any property; whether or not the pollution was sudden, accidental, gradual, or intentional, and regardless of whether the Insured caused or contributed to the pollution.”
An environmental contractor — someone who tests for pollutants, advises on contamination, and manages remediation — has a policy that excludes:
Claims involving bodily injury or property damage (natural consequence of contamination)
Claims involving pollution (their entire business)
So What Does This Policy Actually Cover?
This is the million dollar question. What does this policy actually cover if the main exposures from the business they’re insuring are carved out of the policy via the Exclusions section?
Now you might be thinking, “Lucas I agree that the policy language here might seem problematic, but it simply cannot be that a carrier could use policy language like that to get out of a reasonable claim. They underwrote the insured as an environmental contractor for crying out loud! There’s no way that, even if the carrier tried to deny a claim arising from these exposures, there’s no way that a court would side with the carrier! That would be a case of the carrier writing the insurance in bad faith.”
You are wrong, Mr. Contractor. Dead wrong.
The original article I cited (Which I highly recommend you read) is about such a case. A Site Assessor picked up a claim for making a costly error where they missed a bunch of pollutants on their client’s property. The contractor tendered the claim to the carrier who, you guessed it, denied it due to the pollution exclusion. Now the contractor took the same stance as you did, arguing the denial was preposterous since they were underwritten as a site assessor, a site assessor who reviewed properties for pollution conditions. AND INITIALLY THE COURT AGREED! The court said it would be “unconscionable” (their word) for the carrier to use their pollution exclusion to get out of this claim.
But then the carrier appealed. And with the affirmation of the Florida Supreme Court the appeals court overturned the initial ruling, stating that the pollution exclusion clearly and unambiguously barred coverage for claims arising from pollution.
“So they’re basically saying that carriers can write policies in bad faith then?!?!?!”
Interestingly the court commented on the “unconscionability” of using the pollution exclusion to deny a professional liability claim for an environmental contractor. It noted how the policy’s professional services description provided coverage for claims arising from OTHER professional services. If the insured was offering a DIFFERENT service, and a claim arose from THAT service, THEN potentially there COULD be coverage. Therefore the policy was not written in bad faith.
And in case you think using pollution exclusions in a broad manner was just a one time crazy ruling, no, unfortunately it’s a growing trend. Check out this case where a carrier got out of what most would consider a reasonable claim, all because stormwater is sorta kinda like pollutants, don’t you know?
They Can’t Keep Getting Away With This
Many contractors are blissfully ignorant that their policies contain escape hatches that allow their carriers to back out of claims. Claims the contractor assumes are covered.
But thankfully it doesn’t have to be this way.
If you’re an environmental contractor — a septic system installer, soil testing specialist, onsite wastewater designer, or excavation contractor doing contamination work — here are your options:
Option 1: Challenge Your Carrier
Contact your insurance agent and ask them directly: Does my policy contain absolute BI/PD exclusions? Does my policy contain absolute pollution exclusions? If the answer to either question is yes, push your carrier to carve back those exclusions for claims arising from your professional services. Some carriers will negotiate. Some won’t. But you won’t know unless you ask.
Option 2: Work With Your Agent to Find Better Coverage
Not all carriers structure their environmental contractor E&O policies this way. Better policies exist. The contractor who reached out to me and allowed me to review his policy? We found him a carrier with substantially better policy wording. No absolute BI/PD exclusion, and no absolute pollution exclusion. The coverage he thought he had actually does exist!
Your agent should know which carriers offer cleaner language. If they don’t, that’s a problem worth addressing.
Option 3: Reach Out Directly
If your agent isn’t responsive, or if you need a second opinion on your current coverage, reach out. I work closely with Stephen Quist, a retail agent who specializes in placing environmental contractors with carriers that actually provide the coverage they’re paying for. He’s helped contractors in your exact situation move into better policies.
You can also contact me through my website at 0omissions.com, or reach out to Stephen directly. Either way, we can review your current policy, identify the gaps, and discuss whether your current coverage is worth keeping or whether a replacement conversation makes sense.
The Bottom Line
Imagine being a septic system installer whose policy contains an absolute pollution exclusion.
Imagine being a soil testing contractor whose policy excludes claims arising from bodily injury and property damage claims. “But it’s an E&O claim!” “Sorry, it arose from BI/PD”.
Imagine being an onsite wastewater designer whose policy carves out coverage for the remediation work you advise clients to undertake.
Imagine being an asbestos abatement contractor whose policy excludes claims involving the hazardous materials you’re certified to remove. (Absolute asbestos exclusions are everywhere. I’m always shocked when I see a contractor with an asbestos exposure placed with a policy that excludes this coverage)
Imagine being a lead abatement contractor or mold remediation specialist with a policy that bars coverage for fungi, bacteria, or mold.
Imagine being a silica abatement contractor or radon mitigation specialist with a policy that excludes those specific substances entirely.
Imagine being a water restoration contractor whose policy contains a Category 3 water exclusion — the contaminated water you’re hired to remediate.
Imagine being an environmental site assessor whose policy excludes coverage when your testing error leads to contamination discovery.
Better coverage exists. The question is whether you’re placed with a carrier that actually provides it.”
Disclaimer: This analysis is provided for educational purposes only. The policy language examples contained herein are composites of standard E&O policy architecture and are not attributed to any specific carrier. The facts and case law referenced are drawn from publicly available court filings and legal precedent. This article does not constitute legal advice. Readers should not rely on this analysis as a definitive statement of applicable law in their jurisdiction or as coverage guidance specific to their policies. For coverage questions specific to your policy, consult qualified coverage counsel.
Until next time agents (and contractors!), stay bindin and grindin 🫡