You need general liability, plus contractors pollution liability with mold covered, because that is the claim your general liability policy is written to deny. Most water restoration companies also add workers comp, commercial auto, coverage for their drying equipment, and coverage for customer belongings they store. Who this is for: owners of water damage, flood, and sewage cleanup and drying companies.
The short version
- Your general liability policy excludes mold and excludes sewage. Those are two of the biggest claims a water restoration job creates.
- Contractors pollution liability is the policy that pays them. Make sure mold and bacteria are covered, and check whether mold has a lower cap.
- If you store or move a customer's belongings, general liability will not pay for damage to them. Coverage for property in your care is a separate add-on.
- You also need workers comp for your techs, commercial auto for your trucks, and coverage for your air movers and dehumidifiers.
- Illustrative cost for a small water restoration firm is about $3,000 to $9,000 a year for pollution coverage at a $1,000,000 limit, on top of your general liability.
Why isn't my general liability policy enough for water restoration?
Because the two things a wet job creates most often, mold and contaminated water, are the two things nearly every general liability policy is written to exclude. Keep your general liability policy for a slip and fall at the job. It will not pay for the claims below.
| Where it is | What it means in plain English |
|---|---|
| Fungi or bacteria exclusion (CG 21 67), a separate page | No payment for mold or bacteria claims. This is the page that decides mold, and mold is the claim water restoration firms see most. |
| Pollution exclusion in the standard policy (CG 00 01) | Insurers treat sewage and Category 3 water as contaminants and deny those claims. Courts in some states have disagreed, so your choice is to pay a lawyer or pay the bill. |
| Care, custody, or control exclusion | No payment for damage to a customer's property you are holding or working on, such as belongings you packed out and stored. |
What does pollution coverage add for a water restoration company?
The policy is called contractors pollution liability, which is coverage for fumes, dust, spills, or mold caused by your work. For a water restoration firm it usually pays for:
- Mold and bacteria claims, including mold that appears after you leave, which is the claim owners fear most.
- Sewage and Category 3 water cleanup, tear-out, and the illness claims that follow.
- Bodily injury and property damage to customers and tenants from a release your work caused.
- Legal defense. On most pollution policies, defense comes out of the limit rather than on top of it the way general liability defense does. Ask which way your quote is written.
If you also test, inspect, or sign off that a home is dry and clean, add professional liability. Being wrong about a reading is not a pollution claim, it is a mistake in your professional work, and a different policy pays it.
What about the customer's belongings I pack out and store?
That is a real gap for restoration firms and general liability does not fill it. When you take a customer's furniture, electronics, or documents to your warehouse, the law calls you the holder of that property. Coverage for property in your care, sometimes sold as a customers goods add-on, pays if those items are damaged, lost, or stolen while you have them. See whether your restoration company needs coverage for customer belongings for how to size the limit.
What are the other policies a water restoration company needs?
| Policy | What it does for you |
|---|---|
| Workers comp | Pays medical bills and lost wages when a tech is hurt, and pays if an employee sues you. |
| Commercial auto | Covers your vans, box trucks, and trailers, and the truck-mounted extraction units on them. |
| Equipment coverage | Covers your air movers, dehumidifiers, and moisture meters at a job, in transit, or stolen from a truck. Your building policy does not follow equipment off site. |
| Contractors pollution liability | Pays the mold and contaminated water claims general liability denies. |
How much does insurance cost for a water restoration company?
These numbers are illustrative. Your revenue, state, water categories, and claims history set the real price. The figures below are for the pollution policy only, and sit on top of your general liability, auto, and workers comp.
| Business | Illustrative annual pollution cost, $1,000,000 limit |
|---|---|
| Owner plus 1 to 4 techs, residential water and drying | $3,000 to $5,000 |
| 5 to 15 techs, water, sewage, and mold work | $4,500 to $7,500 |
| 15 or more techs, large loss and commercial work | $6,500 to $12,000 |
See how to find cheaper pollution coverage.
How do I buy it and how long does it take?
Through a broker. Stand-alone pollution and equipment policies come from specialty insurance companies that do not sell online. Plan on 2 to 10 business days, a short application, and your claims history report, which is called your loss runs.
What this looks like in real life
Illustrative example. It is typical of what we see and is not a promise of how any specific situation would be handled.
The setup: A water restoration company in Texas with seven techs handles a burst supply line in a two story home. They extract the water, set air movers, and pack out the family's furniture to their warehouse. They carry general liability, auto, and workers comp, but no pollution or customer property coverage.
What went wrong: Ten days later the homeowner reports mold spreading behind the baseboards in a room the crew had signed off as dry. At the same time, a pipe bursts at the restoration company's own warehouse and soaks the packed-out furniture.
What it cost: The claim comes to about $58,000. The general liability insurer denies the mold under the fungi and bacteria exclusion, and denies the damaged furniture under the care, custody, or control exclusion. Without pollution coverage or customer property coverage, the owner pays roughly $58,000 himself.
The fix: For water restoration firms, mold and the customer's stored belongings are the two most likely large claims, and both sit outside general liability. Price pollution and customer property coverage before a job forces the issue.
Frequently asked questions
Q: What insurance does a water damage restoration company need?
General liability, plus contractors pollution liability with mold and bacteria covered, because that is the claim general liability denies. Most firms add workers comp, commercial auto, equipment coverage, and coverage for customer belongings they store.
Q: Does my restoration insurance cover mold that shows up after I leave the job?
Your general liability policy will not, because of the fungi and bacteria exclusion. Contractors pollution liability usually will, including mold that appears after the job. Check whether the policy caps mold at a lower amount than the rest of the limit.
Q: Is sewage cleanup a pollution claim or a general liability claim?
Insurers usually treat sewage and Category 3 water as pollutants and deny those claims under general liability. Courts in some states have disagreed, so the safe answer is to carry contractors pollution liability that names this work.
Q: Do I need coverage for the furniture and belongings I store for customers?
Usually yes. General liability will not pay for damage to property in your care, so damage to packed-out belongings falls on you unless you add coverage for customer goods. Size the limit to the most you would ever hold at one time.
Q: Are my air movers and dehumidifiers covered by my building policy?
Usually not once they leave your building. Equipment that travels to jobs is covered by an equipment floater, which is a type of inland marine policy that follows the gear off site, in transit, and against theft from a truck.
Q: Do I need pollution coverage if I only do drying and never touch sewage?
In most cases yes, because mold is the driver, not sewage. A slow leak you dry can still grow mold behind a wall, and that claim is excluded by general liability whether or not you ever handled contaminated water.
How Morrow helps
Morrow is a licensed independent commercial insurance brokerage that works with contractors and trades every day. Pricing pollution coverage with mold, equipment coverage, and coverage for customer belongings for water restoration firms is a routine part of what we do.
- Free contract review. Send us the contract or bid documents and we mark up the insurance section in plain English, whether or not you buy anything from us.
- Free, instant certificates. Clients issue their own certificates of insurance online in about a minute, any hour, any day, at no charge.
- Markets you cannot reach online. One application, shopped across many insurance companies for general liability, workers comp, auto, umbrella, and pollution coverage.
One more thing. This article is general information and is not legal advice or a statement of coverage. Your contract and your policy wording control in every case. Requirements vary by customer, by state, and by insurance company, so have a licensed advisor review your own contract and your own policy before relying on any of it.
Last updated: Reviewed by the Morrow commercial lines team. Last updated September 2026.