Very often insurance coverage is one of the primary qualifiers when selecting remediation contractors for your projects. But, how much do you really know and what does a one-page certificate really tell you? Besides the type of coverage (general liability, pollution liability, etc.) and the coverage limits, there are other factors to consider, some of which appear deeper in the policy itself.

For example, many such policies are written on a "claims-made" basis, meaning that the policy in place when the claim is brought must respond. Insurance written on an "occurrence" basis means that the policy in place when the event took place must respond. Thus, the availability of coverage on claims-made policy ends when the contractor cancels its insurance or ceases operations. Occurrence insurance continues to be available to the claimant as long as the insurance company is around. Of course, occurrence insurance holds a longer-term risk for the carrier, thus raising the premiums, but it is significantly more beneficial to the customer.

Further, many policies have restrictions and exclusions that are not shown on the certificates. Some exclude certain types of services, and others are based on the nature of the site. For example, a Superfund exclusion appears on many policies. Also, a large number of general liability policies have "absolute pollution exclusions," so if that company does not carry separate pollution liability policy, there would be no such coverage.

There is also a difference among policies with respect to how defense costs are handled. They can be either "inside" or "outside" the policy limits. If your contractor has a $1 million policy and attorney fees are considered inside the limits, the legal fees can burn up much of the available claim-payment money. For example, if the attorney costs are $300,000.00, that would really only leave you with $700,000.00 in available coverage.

If your project is large and complex, it may be advisable to review the full policy rather than merely a certificate of coverage to ensure that you are comfortable with the insurance portion of your prequalification process.

AWT is not attempting to project ourselves as an insurance expert, but we present the above based on our experience. For expert guidance on insurance issues the agencies and carriers should be contacted directly. AWT would be glad to provide the names and phone numbers of our providers.