When an HVAC system fails, it may create challenges for businesses and homeowners, causing excess moisture, leaks, and indoor air quality problems. HVAC contractors can be liable for any harm caused by improper installation, poorly placed or excessive air intake vents, badly designed ductwork, or ineffective maintenance or inspection. Claims, including legal representation, fines & cleanup costs, and human health risk can be unpredictable.

• In Texas, a jury awarded a family $3.1 million to be paid by a residential homebuilder, roofing contractor, and heating and ventilation contractor due to toxic mold caused by poor construction and a failed HVAC system.
• Seattle Children’s Hospital, ventilation issues led to patient infections, at least six deaths and subsequent multi-million dollar legal settlements.
• A building in  Chicago has faced fines of $10,000 a day, predicted to reach $12 million for utilizing an HVAC system that raises the temperature of the Chicago River. The building held property insurance with four companies and tried to pass on the expenses, but the court upheld the decision, citing the pollution exclusion.

A Closer Look at Environmental Concerns for HVAC Insureds

The following are some of the potential environmental hazards that may contribute to pollution conditions from the work that HVAC contractors perform:

Operational

• Designing or installing systems that cause leaks, stoppages or overflows, which can eventually lead to moisture accumulation and mold.
• Designing or installing systems where the ducts are not large enough or diffusers are in the wrong locations or they are dirty. This can cause inefficient performance which may lead to cold spots on the interiors of buildings. This may result in a cycle of moisture accumulation/ condensation and the opportunity for microbes to grow and spread throughout a building.
• Designing or installing systems that are not properly vented. Today’s energy efficient standards have minimized the introduction of outside ventilation. Because of this, mechanical ventilation now has to be introduced which makes for a more complicated balance of HVAC systems. If ventilation is not addressed properly, Indoor Air Quality (IAQ) contaminants such as mold, dust, or carbon monoxide may be introduced throughout a building.
• Automatic thermostats or climate control devices are often in areas that are not occupied on a regular basis. This may cause an IAQ problem to go unnoticed for a long time if these apparatus are not checked and maintained regularly.

Exacerbating existing conditions

• Not testing for back drafting of combustion appliances which may be a source of carbon monoxide in a building.
• Not maintaining screens, grills, or air filters on which mold or other IAQ contaminants may accumulates and be dispersed throughout a building.
• Disturbing areas which contain asbestos (ex. Boilers) or lead (older painted structures) during the course of installation or maintenance of HVAC systems.

Contaminants brought to the site by the contractor

• Using disinfectants, sanitizers, pesticides, or other types of antimicrobial products to treat the surfaces of HVAC systems when those products were not intended to be used in HVAC systems.  Many of these products have not been evaluated by regulators for HVAC use and the potential exposures and risks to building occupants from these chemicals is not clear.
• Spills of disinfectants, sanitizers, pesticides or other types of antimicrobial products brought to the job site
• Spills of fuels used as alternative energy sources from tanks.

Disposal of waste

• Disposing of refrigeration equipment, air conditioners or dehumidifiers which still contain refrigerants such as chlorofluorocarbons (CFCs) and hydrochlorofluorocarbons (HCFCs) to solid waste landfills or metal recycling facilities.  Under federal regulations, as the entity that is disposing of these appliances, HVAC contractors, may be held responsible for not complying with local or state environmental regulations governing the disposal of these appliances.
• Disposing of old HVAC systems contaminated with mold growth and not discarded in a way that minimizes the dispersion of mold spores.
• Spills of materials used for HVAC work during transportation on the way to jobsites or leaving jobsites, such as cleaners (ex. Acetone, etc.), equipment containing refrigerants or antimicrobial products.

Transportation

• Overturns and spills during transportation of chemicals brought on site such as cleaners, solvents, fuels or refrigerants.
• Overturns and spills during transportation of job site waste materials such as asbestos containing materials, paint that contains lead or HVAC components contaminated with dust or mold.

Owned Premises Exposures

• Spills at HVAC contractors’ premises of chemicals, solvents, fuels or refrigerants store for use at job sites.
• Spills of waste materials temporarily stored at HVAC contractors’ premises such as asbestos waste, paint containing lead or HVAC components contaminated with dust or mold.

HVAC firms also have professional exposures

Design Work

Many firms provide true design services as part of their corporate profiles. This can range from doing all of the design work for the project, doing some design work relative to an aspect of the HVAC system, or simply having a perceived responsibility to comment on design aspects they know to be poorly developed. The last element is the most difficult to control and manage for HVAC firms.

Jobsite Modifications

HVAC contractors are often presented with installations that do not work exactly as planned. In these situations, contractors will often tweak the specs while at the jobsite to make the system work. Malfunctions arising from these changes create a direct professional responsibility for the contractor.

Supervision of Contractors

Proper selection and supervision of subcontractors is a professional exposure most contractors share that is generally excluded from CGL and basic CPL policies. For contractors that may need to outsource certain parts of a job, the exposure can be significant.

Insurance Solutions for HVAC Contractors

• Contractors Pollution & Professional (including Mold)
• Site Pollution Liability
• Transportation Pollution Liability Coverage
• Non-owned Disposal Site Coverage

_________________________

The right coverage is so important for HVAC contractors, who are increasingly susceptible to claims and litigation following pollution incidents. For more information or to discuss an account, contact the PartnerOne Environmental Team today.