Environmental Impairment Liability Insurance

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Item Information

Remarks – Recommended Use of SACC Item

Use the following clause in contracts when Environmental Impairment Liability insurance is required. Environmental Impairment Liability insurance protects the Contractor against claims caused by gradual and sudden and accidental pollution damage to the environment as well as Bodily Injury and Property Damage to third parties.

There are four main types of Environmental Insurance coverage that may be carried by contractors depending on their operations. Contracting officers must insert one of the four types of insurance in paragraph 1 and 3 below:

  • Type 1: "Pollution Legal Liability - Fixed Site Coverage"
  • Type 2: "Contractors Pollution Liability"
  • Type 3: "Storage Tank Third Party Liability"
  • Type 4: "Contractors Professional Liability"

Whenever the liabilities of Canada and the Contractor with respect to the contract are difficult to separate, contracting officers must replace paragraph 3. (a) by the following option:

"Additional Named Insured: Canada is added as an additional named insured, but only with respect to liability arising out of the performance of the Contract."

Contracting officers must choose options (f) and/or (g) in paragraph 3 when applicable to their contract.

Depending on the services being provided by the Contractor (ex: non-hazardous operations), it is acceptable to simply use clause G2001C and include endorsement (r) Sudden and Accidental Pollution. However, it is important to note that Canada would have to discover the claim and report it within 120 hours for the coverage to respond.

Contracting officers must consult PWGSC Risk Management Advisory Services, at: NCR.RMIAS-SCGRA@pwgsc.gc.ca if the suggested limit of $1,000,000 per accident or occurrence is not considered adequate.

Legal text for SACC item

  1. The Contractor must obtain _______ (Contracting officers must insert one of the four types of environmental insurance coverage provided under the remarks section above) insurance, and maintain it in force throughout the duration of the Contract, in an amount usual for a contract of this nature, but for not less than $1,000,000 per accident or occurrence and in the annual aggregate.
  2. If the policy is written on a claims-made basis, coverage must be in place for a period of at least 12 months after the completion or termination of the Contract.
  3. The ________ (Contracting officers must insert one of the four types of environmental insurance coverage provided under the remarks section above) policy must include the following:
    1. Additional Insured: Canada is added as an additional insured, but only with respect to liability arising out of the Contractor's performance of the Contract. The interest of Canada as additional insured should read as follows: Canada, represented by Public Works and Government Services Canada.
    2. Notice of Cancellation: The Contractor will provide the Contracting Authority thirty (30) days prior written notice of policy cancellation or any changes to the insurance policy.
    3. Separation of Insureds: The policy must apply to each Insured in the same manner and to the same extent as if a separate policy had been issued to each.
    4. Contractual Liability: The policy must, on a blanket basis or by specific reference to the Contract, extend to assumed liabilities with respect to contractual provisions.
    5. Incidental Transit Extension: The policy must extend to losses arising from any waste, products or materials transported, shipped, or delivered via any transportation mode to a location beyond the boundaries of a site at which the Contractor or any entity for which the Contractor is legally liable is performing or has performed the operations described in the contract.
    (Contracting officers must insert the applicable options below and renumber accordingly.)
    1. Storage Tank Third-Party Liability - The policy must extend to off-site third party bodily injury and property damage due to releases from storage tanks (above and below ground). Coverage must include corrective action and clean-up due to releases from storage tanks.
    2. Litigation Rights: Pursuant to subsection 5(d) of the Department of Justice Act, S.C. 1993, c. J-2, s.1, if a suit is instituted for or against Canada which the Insurer would, but for this clause, have the right to pursue or defend on behalf of Canada as an Additional Named Insured under the insurance policy, the Insurer must promptly contact the Attorney General of Canada to agree on the legal strategies by sending a letter, by registered mail or by courier, with an acknowledgement of receipt.
      For the province of Quebec, send to:
      Director Business Law Directorate,
      Quebec Regional Office (Ottawa),
      Department of Justice,
      284 Wellington Street, Room SAT-6042,
      Ottawa, Ontario, K1A 0H8

      For other provinces and territories, send to:
      Senior General Counsel,
      Civil Litigation Section,
      Department of Justice
      234 Wellington Street, East Tower
      Ottawa, Ontario K1A 0H8

      A copy of the letter must be sent to the Contracting Authority. Canada reserves the right to co-defend any action brought against Canada. All expenses incurred by Canada to co-defend such actions will be at Canada's expense. If Canada decides to co-defend any action brought against it, and Canada does not agree to a proposed settlement agreed to by the Contractor's insurer and the plaintiff(s) that would result in the settlement or dismissal of the action against Canada, then Canada will be responsible to the Contractor's insurer for any difference between the proposed settlement amount and the amount finally awarded or paid to the plaintiffs (inclusive of costs and interest) on behalf of Canada.