Managing risks for asbestos exposure
There have been huge asbestos-related payouts in the US and other countries in recent years. Minimising the risks involved with asbestos exposure has to be considered by all businesses within their risk management strategies..
The vast majority of buildings built in Australia before the 1980s contain significant amounts of asbestos products. We all know the building material ‘fibro’. Just about all fibro before 1986 contains Asbestos.
These asbestos products have caused people to develop asbestosis and mesothelioma.
Some 700 new cases of mesothelioma are diagnosed in Australia each year, according to the Asbestos Diseases Research Institute.
In recent years, the focus by the media has been on the company James Hardie, which was one of a number of businesses involved in the manufacture, distribution and mining of asbestos and producing its related products, such as building materials, insulation, pipes and brake linings.
Through a special compensation fund, James Hardie and its subsidiaries have been providing millions of dollars’ worth of compensation for victims of its operations since the 1980s.
There are two critical exposures that must be considered.
Establishing that the asbestos illness arose from a specific exposure to asbestos is most difficult. Once the cause has been established, then the compensation calculations are relatively academic but expensive.
However, with some asbestos-related diseases having a latency period of up to 40 years, the uncertainty of future claims is a major concern to insurers. It will therefore be difficult for asbestos victims to pursue the producers like James Hardie and CSR, but that could mean claims now over the next 10 to 20 years.
Some of these claims will be baseless or simply not true. However, significant investigative, legal and medical costs will be incurred before liability is rejected. Then there will be some substance to the balance of the claims and it will be interesting to see how a court will apportion damages. They could do this on a time exposure basis or simply allocate all damages to the party which can afford to pay which is likely to be the asbestos liability underwriter.
Removal of asbestos
Insurers also have to account for the actual extraction of the asbestos material. Insurers have to ensure that asbestos contractors and others are properly accredited and licensed; and that the asbestos is properly identified and removed in a ‘safe’ fashion in accordance with specified regulations. The material must be then transported to an EPA-controlled environment such as a waste recycle station or landfill site.
Contractors must have a general liability cover under a specific dedicated occupational liability policy setup as well as cover taken out for their own employees.
A commercial operator has to be qualified to remove two types of asbestos:
There are specific policies available for industrial, commercial and residential asbestos removal. Then there is the procedural expectation, which deals with the method of removal and transportation.
But, the bottom line is any asbestos removal – whether at an industrial, commercial or residential site – should not proceed with without the relevant insurance cover and appropriate accreditation and qualifications.
The Insurance Option
Asbestos risks are an on-going and long term problem. Claims can take years to manifest but remedial clean up work is more immediate but the consequences of whether the clean up was adequate may not be seen for years. With general liability being “loss occurring”, any claim will hone in on the date the work was performed rather than when a claim is made.
If instead you simply provide reports or advice about whether a building has Asbestos or not, how to handle it or have it removed, you will then also have a Professional Indemnity exposure. Professional Indemnity is a “Claims Made” cover so even though the advice may have been given many years before or over a period of time, it is when it is clear that a loss has been suffered and a claimant then advises the Professional they are planning to take action against them for the wrong advice given, that a policy responds. It is the policy in force at the time they are advised they are being claimed against which responds. So a professional has the advantage of always making sure their sums insured reflect current Court Awards and settlements in this area. Unfortunately in General Liability cover, the sum insured in place 30 years ago may be far from adequate to settle a claim today and the Trades person may then need to dip into their own savings to top up a settlement. “Claims Made” general liability policies do exist.
The disadvantage of a “claims made” cover is that you must “run off” the risk even if you have retired or closed the business. This means maintaining a minimum cover for many years as very few asbestos issues are ever Statute barred.
Check the Asbestos Remover has the right policy
It is important to carefully check the wording of liability policies held by tradesman and not just whether they are licenced to undertake asbestos work.
Most standard public liability policies in Australia have limited or no cover for asbestos. While a Tradesman may be licenced to undertake asbestos work, they may not be adequately insured. Usually there is a specific exclusion in the policy for Asbestos. To write this exclusion back in, it either has to be a specific wording covering Asbestos work or an Endorsement amending the Asbestos exclusion. Such an endorsement would be listed on the policy schedule. Certificates of Currency do not always list such endorsements so ask that it is specifically mentioned in such documents. At best, ask which insurer as most will have access to their wordings on the Internet.
Fines and penalties
Civil penalties can easily ruin a business too. Occupational health and safety fines can be as high as $550,000 and environmental fines as high as $5.5 million. But existing public liability and professional indemnity policies would most likely exclude coverage for fines and penalties.
Clients would need to ensure their entire business was covered against potential statutory fines and penalties. These can be covered by separate cover though the extent of the Acts covered will vary from policy to policy.
Any Trades person or professional dealing in this risky and complicated area can benefit by talking to a skilled and knowledgeable Insurance Broker who can assist with managing these risks and finding the right cover to suit. CPR Insurance Services is definitely one that can assist you with these risks.
Remember that you need a General Liability cover with the highest possible limits due to the claims taking 10 to 30 years to make from victims. A Professional Indemnity cover for those just providing advice, inspections, audits and other associated reports can benefit from a “Claims Made” policy which means a more up to date sum insured.
If hiring any Asbestos Remover or Asbestos consultant, make sure they have the right cover in place as mainstream or standard insurance contracts specifically exclude anything to do with bodily injury or property damage relating to Asbestos.
Remember also that matters relating to asbestos are an Occupational Health and Safety as well as an Environmental Law issue where breaches can result in large fines under various Statutes. This applies whether or not you specifically perform work with Asbestos. It also applies to Home Renovators, Tradesman such as Electricians and Plumbers needing to drill into walls that may contain asbestos. They will then have to hire an asbestos remover to clean up any mess and apart from an exclusion in their policy making this not covered, will unlikely have cover for such Fines and Penalties.
So with any Asbestos issue, insulate yourself instead and call us for our advice.
As CPR Insurance are experts who will save you!