With the rise in 100 year floods, natural disasters and excessive rain, water damage is on everyone's mind when it comes to their business. If you've ever had to deal with water damage in a building, you already know that the next big concern is mold. If you are a property owner or work with property - like a plumber or a contractor - you may assume that if mold arises, your client falls ill and it can be linked back to you; your Commercial General Liability (CGL) will cover the fees and damages for you. That's not necessarily the case when it comes to business insurance in Canada.

Beware of this water-related risk excluded by CGL

Source: https://www.canadianunderwriter.ca

Commercial brokers should make sure they are aware of exclusions in CGL policies that would prevent their clients from being covered if they are sued in connection with an incident involving asbestos or mold, Irin Bakhtiar, an environmental specialist with Zurich Canada, said last week in an interview.

This is because CGL policies tend to exclude losses arising from mold and asbestos.

Say for example your client is a construction contractor and builds or renovates a building. Suppose six months after a construction job is complete, a water leak results in mold and the contractor is found to be ultimately responsible.

The contractor could "be paying out of pocket for some very high severity losses," Bakhtiar suggested in an interview with Canadian Underwriter.

For coverage to apply, she said, "you would have to have a pollution policy that would be able to cover mold." On top of that, the broker would have to offer a 'completed operations period' long enough to cover an event that happens well after the contractor left the construction site. "The CGL usually wouldn't cover it," Bakhtiar said

For property owners "mold is a huge issue," Bakhtiar warned. "Let's say you are a real estate company, you own an apartment building and your tenants are getting sick," she said. In that case, the company could be sued for bodily injury. "You would not have that coverage typically under a CGL policy."

Many commercial insurance clients "don't yet realize that they have exposures there, or they underestimate the exposures that they have," Bakhtiar added.

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If either of the scenarios discussed above could apply to you, you should definitely consider additional coverage. At Foxquilt, our expert brokers are dedicated to making sure you have the right business insurance coverage in Canada for your needs. You can even join up with other business owners for group insurance savings at Foxquilt.

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