Legionnaires' Disease Coverage? Time to Check Policies

With major Legionnaires' Disease outbreaks striking victims this summer in New York, and most recently in Illinois and California, you would think building owners, engineers and contractors would be checking their insurance policies.

“There have been a flurry of phone calls from brokers to see if their clients have coverage for Legionnaires',” says Jeff Slivka, chief operating officer of New Day Underwriting Managers, a specialty intermediary for construction-related professional liability and environmental liability insurance.

If you are in the HVAC business, “it’s definitely something the contractor should be concerned about,” says Mike Young, a vice president in Los Angeles for Marsh, the brokerage firm. “A lot of these sort of claims originate from HVAC systems.”

Legionnaires' Disease is a type of pneumonia caused by bacteria that thrive in warm water. The legionella bacteria reach human respiratory systems via  mist from evaporative cooling towers or ventilation systems. The bacteria can be found everywhere, including potable water supplies. The U.S. Center for Disease Control & Prevention recently pointed out that while most of the 8,000 to 18,000 U.S. cases reported each year come from nonpotable water systems, several hundred cases are contracted from the mists emitted by showerheads and water faucets.

Not surprisingly, personal injury attorneys advertise for clients who have contracted the illness.

As far as insuring the risks, pollution for contractors is a “high-severity, low-frequency event,” says Laura Wagner, vice president for pollution and professional lines for XL Catlin.

Carriers handle bacteria differently, says Wagner. Some include legionella bacteria in the definition of a pollutant within the policy, some will endorse it into the coverage and some won’t cover it at all, she says.

Brokers say Legionnaires' Disease is usually not covered without an endorsement and that the cost of coverage varies but isn’t very high. Jeff Cavignac, president of Sacramento-based broker Cavignac & Associates, says a larger contractor can buy $5 million of coverage for $1.25 per $1,000. Slivka syas $1,500 will buy a million dollars worth of coverage

That’s a far cry from 25 years ago, when coverage to that limit might have cost as much as $25,000.

--with reporting by Scott Van Voorhis