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When it comes to commercial general liability (CGL) policies, one of the most important considerations is understanding what your policy does and doesn’t cover. One particular endorsement that often causes confusion is the Total Pollution Exclusion with a Building Heating, Cooling, and Dehumidifying Equipment Exception and a Hostile Fire Exception—known officially as CG 21 65 12 04.
This endorsement significantly limits your coverage when it comes to pollution-related incidents, but it also provides some important exceptions. Here’s a breakdown of what it means and how it might impact your coverage.
What Does the Total Pollution Exclusion Endorsement Do?
The primary function of the CG 21 65 12 04endorsement is to exclude coverage for claims related to pollution. Specifically, it excludes coverage for bodily injury or property damage caused by the release or discharge of pollutants into the environment. This can include chemicals, fumes, smoke, or hazardous waste.
In simple terms, if pollutants cause damage or injury, your insurance won’t cover it.
Two Key Exceptions to the Exclusion
While this endorsement might sound like it leaves you without coverage in pollution-related cases, there are two important exceptions where coverage will still apply:
1. Building Heating, Cooling, and Dehumidifying Equipment:
If someone is injured inside a building that you own, occupy, or rent, and the injury is caused by smoke, fumes, vapor, or soot from equipmentused to heat, cool, or dehumidify the building (or from water heating equipment for personal use), this injury will still be covered.
For example, if a building’s heating system malfunctions and releases fumes that cause harm to someone, this would be covered under this exception.
2. Hostile Fire:
If there is heat, smoke, or fumes from a hostile fire (a fire that is out of control), and it causes bodily injury or property damage, the insurance will cover the claim—unless the fire occurs at a site where pollutants are being handled or cleaned up.
This means that if a fire breaks out in an office building, and the resulting smoke harms people or property, the policy would likely cover it. However, if the fire occurs at a hazardous waste site, the exclusion still applies.
Additional Exclusions in the Endorsement
In addition to the general pollution exclusion, CG 21 65 12 04 also specifically excludes coverage for costs related to:
Responding to Pollution: Any government-mandated requests or orders requiring you to clean up, monitor, or test for pollution.
Government Lawsuits: Any claims or lawsuits filed by government authorities for damages related to pollution cleanup efforts.
This means that if you’re required by law to handle pollution issues—whether it’s testing, cleaning, or monitoring pollutants—your insurance policy won’t cover the costs.
Why Is This Important for Contractors and Business Owners?
If you’re a contractor, business owner, or anyone who deals with operations that might involve hazardous materials, understanding the Total Pollution Exclusion is critical. While pollution liability may not be your main concern, it’s easy to overlook situations where pollutants like smoke or fumes could impact your coverage.
Having this endorsement in place limits your liability in these areas, but it’s important to know when and where exceptions may apply—especially if you operate in an industry where fire or heating equipment is involved.
Conclusion
The CG 21 65 12 04 Total Pollution Exclusion endorsement is an essential modification to your commercial general liability policy that limits coverage for pollution-related claims. However, with key exceptions for building heating, cooling equipment, and hostile fires, there are instances where coverage still applies. Always review your endorsements carefully to understand the full scope of your policy, and talk to your insurance broker if you have concerns about pollution-related risks.
At Pascal Burke Insurance Brokerage, we specialize in contractor insurance. Our team is here to help you navigate the complexities of coverage, including key endorsements like the Total Pollution Exclusion. Let us help you protect your business so you can focus on what you do best—building the future.
