Give this article to your insurance agent and tell them that you work at Category 3 water job sites. Insurance coverage solutions for virtually all sources of Category 3 water-related losses are readily available in the environmental insurance marketplace and have been for more than seven years. However, if your insurance agent has never heard of Category 3 water, it would be impossible for them to recognize the effects of the fungi/bacteria exclusion on your business liability insurance.
Every IICRC-certified water damage restoration contractor knows Category 3 water is classified as Category 3 because it is grossly contaminated with fungi, bacteria or other pollutants. However what no one seems to know – especially insurance agents/brokers and claims adjusters – is that universal exclusions in property and liability insurance policies for losses “related to” fungus/bacteria automatically apply to Category 3 water losses. Insurance coverage gaps for losses associated with Category 3 water must be filled using the same risk mangement tools and environmental insurance products created for fungi/mold risks in 2003.
If a restoration job involves the clean-up or assessment of a minute quantity of Category 3 water, any loss arising from the job site – like a fire caused by the contractor – can be excluded through the effects of universal fungi/bacteria exclusion in insurance policies. Even carpet cleaners are running completely bare on a job where a single speck of Category 3 water was cleaned up.
Category 3 water automatically triggers two different exclusions in insurance policies:
- The pollution exclusion
- The fungi/bacteria exclusion
IICRC-certified professional water restoration technicians have learned in their certification courses that there are three categories of water. The information below is taken directly from the S500 Standard:
- Category 1: Originates from a sanitary source
- Category 2: Contains significant contamination
- Category 3: Is grossly contaminated and can contain pathogenic, toxigenic or harmful agents
“Contaminates” is an operative word in pollution exclusions universally found in property and liability insurance policies. Many of the contaminants referenced in the definition of Category 3 water in the S500 Standard technically trigger both pollution exclusions and fungus/bacteria exclusions.
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