Concrete and Paving Insurance Gaps After You Buy

The gaps worth checking first sit in the endorsements, not on the declarations page. Look for exclusions for silica dust, pollution and buried utilities, an indemnity clause the policy only partly backs, no coverage for the cost of redoing your own work, and trucks or equipment sitting on the wrong policy. This guide is for the buyer who has the core policies in place (the first guide in this series covers them) and wants to find what the seller's program may not cover.

The short answer

Liability policies do not generally pay to redo your own defective work. They respond to injury or damage to other people and their property.
Expect general liability to exclude most pollution. Ask whether the policy also carries a total pollution exclusion, a silica exclusion or an underground property damage exclusion. Silica and underground exclusions can each be added by a separate endorsement, so check the endorsement schedule, not just the declarations page.
A customer's indemnity clause can promise more than your policy backs. Compare the clause with the policy wording.
Whether a given policy has any of these exclusions is carrier and form specific. The only way to know is to read the form list and ask in writing.

Why do gaps show up after you buy a concrete or paving contractor?

This is a mobile, heavy trade. Crews work on other people's property, near traffic and buried utilities, with trucks, rollers and mixers, and what they build stays behind for years. The seller's policies were built around the seller's jobs, the seller's contracts and, often, the seller's habits. That may have fit well. It may not fit the work you plan to win, the customers you plan to add or the lender you now answer to.

The standard forms also give carriers a menu of exclusion endorsements. Which ones are attached varies by carrier, so no article can tell you your policy has them. It can tell you which to look for. For the general method see the gaps new owners find in any business and exclusions that quietly kill coverage.

Which gaps should a new concrete or paving owner check for?

Eight gaps, how to spot each and the usual fix
Gap	How to spot it	The usual fix
Cost to redo your own defective work	Look for the policy's exclusions for damage to your own work. The usual liability form is built for injury and damage to other people and property, not repairs to your own work, and its wording can respond differently when a subcontractor did the work. An endorsement can take that difference away	Quality control and subcontractor management. Ask whether that endorsement is on the policy, whether it can come off, and what the policy does pay when a subcontractor's work fails
Silica or silica-related dust exclusion	An endorsement on the liability form list that excludes injury from breathing silica dust, related property damage and cleanup	Ask the carrier about removing it or placing the risk with a market that does not attach it, and document your dust controls
Pollution exclusion	Many liability forms already exclude most pollution claims, with exceptions that vary by form. The standard form is reported to keep a few narrow ones, for example some fuel or hydraulic fluid escaping from mobile equipment, and a total pollution exclusion endorsement can remove them. Read the actual exclusion wording on your form list. Fuel, hydraulic fluid, asphalt products and wash water are the usual exposures	Price a separate contractors pollution policy and read the auto policy's pollutant wording. If a distributor truck hauls liquid asphalt or fuel, also ask whether the auto policy's pollution wording and any pollution endorsements a contract names match what you haul
Underground property damage exclusion	An endorsement that excludes damage from explosion, collapse and underground hazards for scheduled operations	Ask for it to be removed or bought back for excavation and sub-base work, and keep locate records
Narrow contractual liability	An endorsement that limits which promises to cover someone else's losses (indemnity clauses) the policy will back, often to leases, easements and a few other agreements	Compare each customer indemnity clause with the policy, ask for the endorsement to be removed, and ask your attorney which indemnity promises are enforceable in your state
Mixer truck classed the wrong way	The mixer is not on the auto schedule because someone assumed it was mobile equipment	Confirm in writing how every truck and machine is treated, including rollers and pavers hauled on trailers, and schedule the trucks
Equipment valued at actual cash value	The floater or property policy shows actual cash value or a low stated amount	Move to replacement cost or agreed value, and match the lender's requirement
Design work with no professional coverage	The liability policy excludes design and engineering services, but you specify mixes, drainage or pavement sections	Ask about contractors professional liability, usually written claims-made

Each row names a concept, not a promise that your policy has it. The names of the endorsements vary, and an endorsement can be added at renewal without anyone calling you.

Is the work the seller already finished covered?

Completed operations coverage responds to injury or damage that happens after the work is finished. It carries its own aggregate limit, separate from the general aggregate. Under the standard form, "your work" means work done by you or on your behalf, and it has no matching words for a company whose business you acquired. So whether your policy answers a claim about the seller's pre-closing pavement is unclear. It depends on the deal structure and the policy wording. The seller's own occurrence policies from the years the damage occurred may also respond, depending on the deal and the state. See completed operations claims from the seller's past jobs and who covers old claims in a stock or asset deal.

A hypothetical example. Eighteen months after closing, the owner of a commercial lot paved before closing reports ponding and early cracking and demands repair plus payment for lost use of the lot. Assume, for illustration only, that tearing out and repaving costs $120,000 and the failed drainage also floods a neighboring unit for $30,000. The $120,000 to redo your own work is generally not what liability insurance pays for. The $30,000 of damage to other property may be a covered claim, if the right policy period responds. And because the pavement went down before closing, the purchase agreement may decide whether the seller shares the cost. Those three answers set whether the money comes from an insurer, the seller or your cash flow.

Whether defective work with no other damage counts as covered property damage depends on the state and the policy wording, and exclusions for your own work and for loss of use of property that is not physically injured often apply. Ask your broker and counsel.

Do silica, pollution and buried-line exclusions really matter?

They matter because each one lines up with a known part of the work.

Silica. Cutting, drilling, grinding and jackhammering concrete and pavement release fine silica dust, and illness can surface years later. The Occupational Safety and Health Administration (OSHA) construction rule sets an exposure limit of 50 micrograms per cubic meter over eight hours and lists required controls for saws, drills, jackhammers, grinders and milling machines. Workers' compensation usually answers an employee's occupational illness. The liability exclusion matters for claims by others. Ask the seller how crews actually cut slabs.
Pollution. Concrete washout and spill control are recognized stormwater practices. Federal rules treat construction that disturbs one acre or more as regulated stormwater, with exceptions such as some routine maintenance, and which agency issues the permit depends on the state. Ask the state agency and an environmental professional what applies to your sites. A rinse of a mixer chute that reaches a storm drain is an environmental and a contract problem before it is an insurance claim. See the pollution review.
Buried lines. Excavating for a sub-base near unmarked utilities is a classic property damage claim. Utility locate records are your first defense and your first document if a line is cut.

Asphalt fumes are a separate question. The National Institute for Occupational Safety and Health reviewed the evidence in 2000, found irritation of the eyes, nose and throat linked to paving fumes and called the human cancer evidence limited. The review is old, so ask a safety professional what current guidance says.

How do I find these gaps in my own policies?

Ask the carrier or broker for the complete policy and the forms and endorsements schedule for every liability, auto and umbrella policy.
Search the form list for the concepts in the table: silica, pollution, underground, contractual liability, subcontractor work and professional services.
Ask the seller how crews cut slabs, rinse mixer chutes and locate utilities before digging, and match those answers to the silica, pollution and underground rows above.
Ask three written questions. Which exclusions apply to my work? Can any be removed? What do you recommend instead?
Read one customer contract and one lease beside the policy, line by line. Contracts that require coverage you do not have shows how.
Give your broker the equipment list, truck list and a summary of the work you plan to take on, so the answers fit the future company.

An umbrella may follow the general liability form or carry its own exclusions, which can be broader. Ask for the umbrella's own form list and ask whether it follows the underlying policy on silica, pollution and contractual liability.

Which problems are not insurance gaps at all?

Delay damages, held retainage, prevailing wage disputes and a lapsed license are mostly contract, surety and compliance questions, and a bond is not insurance for you because the surety expects to be repaid. Plan cash for them separately; the contracts, licenses and bonds guide owns that detail. If you want a second pair of eyes on the endorsements, Morrow can review the policies you inherited.

Keep reading

Frequently asked questions

Does my insurance pay to redo concrete or asphalt that fails?

Generally not. Liability insurance is built for injury to people and damage to other property, not the cost of repairing your own defective work. An endorsement can also change how the policy treats work your subcontractors performed, so ask your broker to explain that in writing.

How do I know if my policy has a silica exclusion?

Read the forms and endorsements schedule on the general liability policy, and ask the carrier in writing. A silica exclusion is a separate endorsement, so it may not appear on the declarations page. Workers' compensation is a different policy and usually responds to an employee's work-related illness.

Is a concrete washout spill a liability claim or an environmental violation?

It can be both, and many liability policies exclude most pollution claims. Ask whether you have separate pollution coverage, and review your contract and stormwater permit obligations with the right professionals.

Do I need to tell my insurer when I take on design-build work?

Ask before you sign. General liability policies often exclude design and engineering services, and a separate contractors professional liability policy may fit. Describe the work in the application so that the insurer's view matches what you do.

Is the seller's coverage for work done before closing still available to me?

It depends on the deal structure, the state and the policy wording. Older occurrence policies may respond to damage that occurred during their periods, but access is not automatic. Ask deal counsel and your broker before you assume it.

References

Just bought a business? Get your insurance reviewed.

Send Morrow the declarations pages, loss runs and key contracts you inherited. Morrow can review them against the business you bought, flag gaps and request quotes where it makes sense. Any new terms depend on carrier underwriting.

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This article is general information, not legal, tax or financial advice, and not a coverage determination. Coverage depends on the actual policy wording, carrier underwriting, your purchase agreement and your contracts. Ask your attorney and accountant about deal and legal questions.

Coverage Gaps New Concrete and Paving Owners Find, and the Fixes