Specialty Areas | Environmental | Clean-Up Cost Cap

Cleanup Cost Cap policies "cap," or put a limit on, the costs of a remediation project up to the limits of the policy. A Cleanup Cost Cap policy is designed to provide the policyholder, including the lender, with a tangible cost to cleanup and allow parties to quantify the amount of potential financial risk involved. Brownfield redevelopers also commonly use this product.

Standard Coverages Applied to Owner; Lenders and Sellers of the Property May Be Added:

• Cost Overrun: Protection over the anticipated cost of remediation up to the limits of the policy
• Remedial Action Plan: Becomes part of policy
• Costs associated with the RAP (i.e. electricity to run remedial equipment) become part of the policy.
• Unknown contamination, known contamination that is worse than anticipated, and unanticipated costs are covered (over the expected costs).

Practical Applications of Policy:

• Caps remediation costs
• Quantifies the cleanup of a known remediation project
• Allows buyers/sellers (and their lenders) to tangibly negotiate purchase price of property knowing the costs involved are capped
• Transfers financial risk of cost overruns

Required Information:

• Remedial Action Plan (and associated environmental reports)
• Completed Application
• Policyholder’s Financial Reports

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