The Problem: Waste left in place at brownfields sites must be subject to “institutional“ or “engineering controls.” IC’s are legal and administrative restrictions, such as deed restrictions and zoning regulations, on the use of or access to a site. EC’s are physical modification to the site such as caps or fences. Both IC’s and EC’s are designed to reduce or eliminate the potential for exposure to known pollution conditions/waste left in place. The problem is that these IC/EC’s come with their own liabilities because they must be monitored, maintained, and enforced in perpetuity. State laws are a little spotty in whether and how they require owners or operators of sites to monitor and maintain IC/EC’s. As a result, until recently most environmental insurers attached “failure to maintain” exclusions to their SPL policies in situations where IC/EC’s were part of a site remedy. Moreover, even if they would cover such liabilities, the policy periods never extended beyond 10 years.
The Solution: EIA has drafted/manuscripted coverage for IC/EC liabilities which can be attached to an SPL policy of an A+ rated insurer. The endorsement covers liabilities
arising out of the failure to maintain IC/EC’s, provided that an approved engineering company:
• Continually monitors the IC/EC’s for actual or potential breaches, alerts the insured and insurer to such breaches, and provides a plan to address the breaches
• Annually certifies that the IC/EC’s are consistent with the remedial plan and continue to be protective of human health and the environment.
The long-term aspect of this problem is addressed by an “automatic renewal” clause in the policy. In other words, if the insurer is in existence at the end of the 10 year period and is still writing SPL insurance, it will renew the policy for another 10 years.
EIA can supplement this insurance coverage with a 20 year structured settlement which will cover the costs of monitoring the IC/EC’s.
More sophisticated insurance tools are making it easier to protect your property.
Contaminated properties represent a huge investment opportunity, but much of it lies untapped because of environmental liability concerns. Anyone who buys property that is actually or potentially contaminated should consider insurance as a risk management option, and they should do so very early in the brownfield transaction process. Two types of insurance policies are now available that provide meaningful and inexpensive coverage to sites that are actually or potentially contaminated: the new pollution liability policy and the cleanup cost cap policy. It’s important to understand these policies and know how to use them most effectively as part of the contaminated-property transaction process. Click to read the full article…
Tailored Insurance Coverage for Post Remedial Risks
Environmental insurance policies have not kept pace with the increasing regulatory focus on post-remedial risk.
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