Tag: Contractors

  • Discussion – Cost vs Value of Environmental Insurance for Contractors

    In response to our article last week on Environmental Insurance as an Investment. we received tremendous feedback. Thank you everyone who joined in on the conversation. Here is one of the many responses/questions we received. We thought this was well worth sharing along with our response. Thanks for reading and please keep the questions and comments flowing!

     I believe you make excellent sales points. The client still needs to realize the actual cost of Environmental Insurance vs. the size of the jobs available that require it. I also agree that it’s a nice “value add” when bidding on jobs that do not require it, but it would be hard to measure how often that puts you over the top. How does the cost break out for Environmental Insurance?

    Environmental Risk Managers Response (by Parker Bunbury) –Great points and thank you for the feedback. Minimum premiums for CPL coverage with $1MM limits start at just $2,500 for both annual and project specific policies. Premiums are rated off of revenues and the type of work being done. The premium for a pollution liability insurance policy versus the policies face value costs the insured fractions of a cent on the dollar.

    A situation that I come across too frequently is contractors being reactive with their environmental coverage’s as opposed to proactive, resulting in increased costs for the contractor. Many times by going with an annual policy instead of project specific policies we are able to cut costs substantially for the contractor. Also, while only some of their jobs require coverage, the insured is faced with numerous exposures and potential environmental losses on a daily basis in all of their work (see www.estrategist.com or our ERA for Contractors for more information)

    As you eluded to, contractors are finding CPL coverage requirements in SOME of the contracts they win (This is a trend that is becoming standard practice and only increasing in it’s application nationwide). As a result, when a contractor wins a job requiring CPL coverage they tend to have their agent get them a “Project Specific Policy” for that job. Minimum premiums as I mentioned earlier are $2,500 for $1MM limits, whether the coverage is project specific or annual. Each job the contractor wins that requires coverage, they are getting another “Project Specific Policy” to meet contractual requirements for coverage. If the contractor took a proactive approach there is potential for the contractor to realize substantial savings in terms of premium.

    Here’s a simple example – let’s say a contractor doing $5MM in revenue annually wins 4 contracts annually that require CPL coverage. That’s 4 “Project Specific Policies” at $1m limits, $2,500 a piece if the contractor handles coverage re-actively which results in $10,000 in premium. Interestingly, if the contractor was proactive about their environmental coverage’s, and purchased an annual policy that would cover them for all of their work, they would be paying around $5,000 in premium. In this particular instance, a savings of over 50%. Obviously there are variables involved and each contractor is unique, but my point is when insureds are proactive about their environmental exposures and managing them, there is the opportunity for them to save money while gaining value. The value provided by having coverage in place for all of their work is an essential need for the majority of businesses in our country, as the average environmental loss would put most small businesses out of business. With 98% of U.S. businesses being small businesses (100 employees of less).

  • Reputational Risk for Contractors

    environmental Strategist, between the lines:  We often talk about the reputational risk associated with environmental crimes, see the example below and as if it’s not bad enough to get caught, then you have the EPA putting this out on a nationwide notification.

    What about the exposure to a property owner of a pre-1978 structure who hires a contractor like HarenLaughlin Construction Company to work on a rental dwelling?  I can only image there is an ambulance chasing attorney looking to bring suit against the property owner that exposed tenants to lead.

    For more on RRP regulations go to www.estrategist.com.

    HarenLaughlin Construction Company of Lenexa, Kan., to Pay $27,286 Penalty for Failure to Use Lead-Safe Work Practices and Notify Property Owner of Lead RisksRelease Date: 06/05/2013

    Environmental News
    FOR IMMEDIATE RELEASE

    epa(Lenexa, Kan., June 5, 2013) – HarenLaughlin Construction Company, of Lenexa, Kan., has agreed to pay a $27,286 civil penalty to settle allegations that it failed to use proper lead-safe work practices during the renovation of a multifamily property built in 1922 at 811 E. Armour Boulevard., Kansas City, Mo., in violation of the Renovation, Repair, and Painting (RRP) rule. It also failed to notify the property owner about lead-based paint risks before the company or its subcontractors performed renovation work at the site.

    Under the agreement, HarenLaughlin will complete a supplemental environmental project valued at $24,500 to remove lead-based paint from the nearby Valentine Apartments, at 3560 Broadway Street, Kansas City, Mo. HarenLaughlin will pay the remaining $2,786 in the form of a cash penalty.

    According to an administrative consent agreement and final order filed by EPA Region 7 in Lenexa, Kan., HarenLaughlin was legally required to use proper lead-safe work practices during the renovation of the Armour Boulevard property, including posting signs, notifying the public, and placing plastic sheeting to minimize the spread of lead-based paint chips. HarenLaughlin also failed to provide owners of the property with an EPA-approved lead hazard information pamphlet, known as the Renovate Right pamphlet, before starting renovations. The Renovate Right pamphlet helps homeowners and tenants understand the risks of lead-based paint, and how best to minimize these risks to protect themselves and their families.

    The RRP rule requires that general contractors and subcontractors that work on pre-1978 dwellings and child-occupied facilities are trained and certified to use lead-safe work practices. This ensures that common renovation and repair activities like sanding, cutting and replacing windows minimize the creation and dispersion of dangerous lead dust. EPA finalized the RRP rule in 2008 and the rule took effect on April 22, 2010.

    This enforcement action addresses RRP rule violations that could result in harm to human health. Lead exposure can cause a range of adverse health effects, from behavioral disorders and learning disabilities to seizures and death, putting young children at the greatest risk because their nervous systems are still developing.

    ERMI utilizes environmental Strategist™ Brand resources to assist our agents to sell more insurance.

  • Environmental Insurance Is An Investment!!!!!

    June 5, 2013

    by Chris Bunbury

    I was contacted by an insurance professional that represents a client whose business obtains their work predominantly through bidding for jobs.  Over the past few years the insured has been more limited on work they can bid because more and more jobs are requiring them to have pollution insurance coverage.  The insurance professional told me his insured did not have pollution coverage because they were sure it was going to cost too much.

    That is when the light went off, the insurance industry has marketed their products in such a way, insureds for the most part look at insurance as an expense or as a way to finance a loss.

    Generally speaking that is an accurate way to look at insurance.  But there are some insurance products that are an investment and they allow those who invest in them to gain a leg up and benefit, not just be made whole.  In many circumstances environmental insurance is an investment that allows the investor to gain benefit and grow while better protecting their business assets.

    I shared the following with the insurance professional: “The insured is looking to buy environmental insurance because more and more jobs are requiring the pollution coverage in order to get work.  By investing into an environmental insurance policy the insured can use it as a marketing tool while also being able to bid on jobs requiring the coverage.  On the other end of the spectrum, for jobs they bid that do not require pollution coverage, they can add value by pointing out to a prospective client why they should require vendors performing this class of work to have pollution coverage.  Not only will this help to eliminate competitors it will increase the opportunity to get work.  Both ways, investing into environmental insurance, is a win win for the insured and the pollution coverage is assisting the insured to grow their business.  Pollution insurance is not an expense but part of “Best Practices” and in many instances a strategic investment in a business’s ability to grow and be successful.”

  • Cement Manufacturer Agrees to Reduce Harmful Air Emissions at Colorado Plant


    WASHINGTON— April 19th: The U.S. Environmental Protection Agency (EPA) and the U.S. Department of Justice (DOJ) announced today that CEMEX, Inc., the owner and operator of a Portland cement manufacturing facility in Lyons, Colo., has agreed to operate advanced pollution controls on its kiln and pay a $1 million civil penalty to resolve alleged violations of the Clean Air Act (CAA). 

    “Today’s settlement will reduce harmful emissions of nitrogen oxides, which can have serious impacts on respiratory health for communities along Colorado’s Front Range,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance.  “Cutting these emissions will also help improve environmental quality and visibility in places like Rocky Mountain National Park.”

    “The settlement is part of the Justice Department’s continuing efforts, along with the EPA, to bring significant sources of air pollution within the cement manufacturing sector into compliance with the Clean Air Act.” CEMEX

    The Department of Justice , on behalf of EPA, filed a complaint against CEMEX alleging that between 1997—2000, the company unlawfully made modifications at its Lyons plant that resulted in significant net increases of nitrogen oxide (NOx) and particulate matter (PM) emissions. The complaint further alleges that these increased emissions violated the CAA’s Prevention of Significant Deterioration and Non-Attainment New Source Review requirements, which state that companies must obtain the necessary permits prior to making modifications at a facility and install and operate required pollution control equipment if modifications will result in increases of certain pollutants.

    As part of the settlement, CEMEX will install “Selective Non-Catalytic Reduction” (SNCR) technology at their Lyons facility, which is an advanced pollution control technology designed to reduce NOx emissions. This will reduce their NOx emissions by approximately 870 to 1,200 tons of NOx per year. The initial capital cost for installing SNCR is approximately $600,000 and the cost of injecting ammonia into the stack emissions stream, a necessary part of the process, is anticipated to be about $1.5 million per year.

    The settlement is part of EPA’s national enforcement initiative to control harmful air pollution from the largest sources of emissions, including Portland cement manufacturing facilities.

    NOx emissions may cause severe respiratory problems and contribute to childhood asthma. These emissions also contribute to acid rain, smog, and haze which impair visibility in national parks. CEMEX’s facility is located within 20 miles of Rocky Mountain National Park, and its emissions may contribute to visibility impairment and to the nitrogen pollution problem that is affecting the park’s vegetation, water quality, and trout populations. Air pollution from Portland cement manufacturing facilities can also travel significant distances downwind, crossing state lines and creating region-wide health problems.

    More information about the settlement: http://www.epa.gov/enforcement/air/cases/cemex-lyons.html

    More information about EPA’s national enforcement initiative: http://www.epa.gov/compliance/data/planning/initiatives/2011airpollution.html

  • EPA Takes Action Against Violators of the Lead Renovation, Repair and Painting Rule

    FOR IMMEDIATE RELEASE

    May 2, 2013

    EPA Takes Action Against Violators of the Lead Renovation, Repair and Painting Rule

    WASHINGTON – Today, EPA announced 17 enforcement actions for violations of the Lead Renovation, Repair and Painting rule (RRP).

    The RRP rule protects homeowners and tenants from dangerous lead dust that can be left behind after common renovation, repair, and painting work. It requires that contractors and subcontractors be properly trained and certified, and use lead-safe work practices to ensure that lead dust is minimized. Lead exposure can cause a range of health effects, from behavioral problems and learning disabilities to seizures and death, putting young children at the greatest risk because their nervous systems are still developing.
    “Using lead-safe work practices is good business and it’s the law,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “EPA is taking action to enforce lead rules to protect people from exposure to lead and to ensure a level playing field for contractors that follow the rules.”

    The enforcement actions address serious violations of the RRP rule, including fourteen actions where the contractor failed to obtain certification prior to performing or offering to perform renovation activities on pre-1978 homes, where lead is more likely to be present. Other alleged violations included failure to follow the lead-safe work practices, which are critical to reducing exposure to lead-based paint hazards.

    The 17 enforcement actions listed below include 14 administrative settlements assessing civil penalties of up to $23,000. These settlements also required the contractors to certify that they had come into compliance with the requirements of the RRP rule. Additionally, EPA filed three administrative complaints seeking civil penalties of up to the statutory maximum of $37,500 per violation. As required by the Toxic Substances Control Act, a company or individual’s ability to pay a penalty is evaluated and penalties are adjusted accordingly.

    Enforcement actions:

    •    Groeller Painting, Inc. of St. Louis, Missouri.
    •    Albracht Permasiding and Window, Co. of Omaha, Nebraska.
    •    Midwest College Painters, LLC of Bloomfield Hills, Michigan.
    •    ARK Property Investments, LLC of Richmond, Indiana.
    •    Henderson & Associates Services of Largo, Florida.
    •    Home Resources Management, LLC of Columbia, Tennessee.
    •    Camaj Interiors & Exteriors of Jacksonville, Florida.
    •    Cherokee Home Improvements, LLC of Church Creek, Maryland.
    •    Window World of Harford located in Belair, Maryland.
    •    EA Construction and General Contracting of West Chester, Pennsylvania.
    •    Roman Builders of Morton, Pennsylvania.
    •    Accolade Construction Group, Inc. of New York, New York.
    •    PZ Painting of Springfield, New Jersey.
    •    Creative Renovations of Brooklyn, New York.
    •    Reeson Construction of Webster, New Hampshire.
    •    New Hampshire Plate Glass Corporation of Portsmouth, New Hampshire.
    •    CM Rogers Handyman of Manchester, New Hampshire.

    For More Information : http://www.epa.gov/enforcement/waste/cases/lrrp050213.html

    http://www2.epa.gov/lead/renovation-repair-and-painting-rule-frequent-questions-march-26-2012