Insurance for Lead Based Paint Claims

By Jeff DeHaan, CPCU

On April 22, 2010, the United States Environmental Protection Agency (USEPA) began enforcing a regulation aimed at preventing lead poisoning. All contractors performing renovation, repair or painting projects that disturb lead-based paint in pre-1978 homes, child care facilities and schools must be certified and follow lead-safe work practices. Firms must be certified and renovators must be trained. The fine for non-compliance by the EPA is $32,500 per violation, per day.

While the new regulation does not mandate insurance coverage for the contractor, the exposures are still present. Your work could cause lead poisoning. Your General Liability insurance excludes coverage for lead liability. Pollution Liability gives you the protection you need. Montgomery & Graham provides Contractors Pollution Liability insurance that offers broad, innovative pollution coverage, which includes lead, asbestos, and toxic drywall coverage for small, medium and large contracting accounts.

Suits against contractors have received no publicity for two reasons: there are far fewer of them and none have reached a jury. In cases where homeowners sued a contractor for lead poisoning, the suit was settled out of court. But with lead safe work rules changing, such suits are now likely to be based on the charge that the work done in the course of a renovation project disturbed lead-based paint, releasing toxic dust into the air, which was then not contained or cleaned and resulted in lead poisoning.

Poisoning would be proved by a blood test. Though comparatively few such suits have been filed, it’s likely, say attorneys familiar with the lead issue, that there will be more as homeowners become aware of the issue and as law firms that specialize in class action suits take note.

“There will be much more litigation,” says D.S. Berenson, of Johanson Berenson LLP, which represents many home improvement companies. “It will take a few years to start growing. I expect lawsuits will focus less on medical damages, more on failure to comply with lead safe work practices, failure to be certified, failure to give out pamphlets. That will all be brought up as part of the typical contract dispute where the contractor gets into a fight over payment with the consumer and the consumer’s lawyer.”

And even if your company is EPA-certified to remove lead paint safely and practices lead-safe renovation, there is nothing to prevent a homeowner from filing a suit. Lead-safe certification and practices only make it less likely that such a suit would prevail. In the event of a negotiated settlement or a verdict for punitive and other damages, you wouldn’t be covered by your general-liability insurance.

If you want more information, contact Jeff DeHaan, President of Montgomery & Graham Property & Casualty—a benefits partner of the HBA of Metropolitan Portland at 971-327-5793.

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