Construction defect claims due to the growth of microbial matter, like mold or legionella bacteria, are at a record high. Cases of Legionnaires’ disease, for example, have increased 800 percent increase since 2000, according to the Centers for Disease Control (CDC).1

Microbial matter cases often result in costly, complex claims of bodily injury and property damage, generating high remediation and restoration costs. Particularly susceptible are legacy plumbing and ventilation systems as well as facilities without an active facility water management plan, which includes regular bacteria testing.

The first party most often sued in cases involving microbial matter is the building owner, who will investigate the source of the contamination. When this investigation points to a contractor or sub-contractor who made an error during construction – faulty workmanship or construction defect, leaving something not properly flashed, waterproofed or sealed - the owner will name that contractor in the lawsuit. Federal and state agencies can levy fines and penalties as well. Together, these can lead to significant legal costs and reputational harm for all businesses involved.

Microbial contamination liability can be managed by properly documenting field work, including the right indemnification language in your contracts and retaining the right contractor’s pollution policy.

  1. Document your work. More and more contractors are requiring their field managers and sub-contractors to document proper work by taking pictures and videos to prove proper sequencing and craftsmanship. Whether it’s masonry or ventilation work, field workers often find it hard to stop and take pictures while working. For these cases, third-party construction quality assurance and risk management companies will also provide this as a service.
  2. Don’t give away too much in your contracts. Use indemnity language in your contracts up the chain of command to limit your liability on projects. Some contractors or sub-contractors will limit their liability to a dollar amount, or for specific perils.
  3. Retain a comprehensive Contactor’s Pollution Policy. Unlike building owners and operators who purchase a site-specific policy for each facility, contractors must retain a Contractor’s Pollution Policy which indemnifies them for liability on all sites in which they are working. This coverage must be negotiated by your broker specifically to name mold, microbial matter, fungi, viruses and legionella as covered pollutants, and should provide coverage for:
    • Third-party injury and property damages
    • Remediation expenses
    • Civil fines and penalties
    • Public relations costs in the event of an outbreak
    • Legal defense expenses
    • Transportation and disposal of infected materials
    Because there is no standard form for environmental coverage, properly negotiating the Contractor’s Pollution Policy is critical to it covering your business’ unique for specific perils risks and liabilities.

Contact your HUB environmental expert to find out how you can protect your business from the threat of microbial matter as a result of construction defects.


1 https://www.tmc.edu/news/2019/12/recent-legionnaires-disease-outbreaks-raise-concerns/