What is Environmental Insurance?

Environmental insurance provides an organization with peace of mind for those unexpected, and sometimes very costly, environmental issues. The placement of environmental insurance is a cost-effective tool that gives contractors, property owners and financial institutions the ability to transfer the risk of environmental exposures, rather than assume them.

Environmental insurance can serve as a financial asset by:

• Providing balance sheet protection
• Enhancing investor confidence
• Reducing contingencies in both property transactions and existing portfolios
• Securing an owner’s or seller’s indemnity
• Providing assistance in or replacing additional environmental due diligence obligations

The basic components of any environmental insurance policy include the following:

• Third-Party Coverage for Bodily Injury and Property Damage Claims – This coverage pays for damages sustained by parties, other than the insured, for property damage and bodily injury caused by pollution conditions for which the insured is liable. Damages may include personal injury such as sickness, mental anguish and medical costs, or damages to natural resources such as fish habitat and groundwater. Damages may also be costs incurred to replace or repair another’s property or simply for the diminution in the property’s value.
• Coverage for Cleanup Costs – This coverage pays for the costs an insured must incur to address contamination for either new or pre-existing pollution conditions. Costs such as investigation, removal, treatment and monitoring of pollution conditions are included.
• Legal Defense Expense – This coverage pays for the insured’s legal costs incurred as a result of defending or settling a liability dispute for pollution whether claims are made by private third parties or the government.

Coverage enhancements, depending on your industry and specific-exposures, can include:

• Occurrence-based policy
• Defense expenses outside policy limits
• Contingent business interruption
• Disinfection and evacuation expenses
• Transportation and non-owned disposal sites
• Mold, asbestos and lead-based paint coverage