When Do you Need Environmental Insurance

If you are currently in the market to buy, or currently own, any commercial real estate site, you should have it checked for pollution or possible contamination. The possible pollution could be from contaminated soil, ground water or structures; it can even potentially cause environmental damage to neighboring properties. In these cases, the property owners may find themselves facing clean-up costs that can sometimes exceed the value of the property. They might also end up paying for hidden costs associated with complying with environmental statutes and laws.

As the owner (or former owner), you could be responsible for contaminants that migrate to the neighboring properties. This includes personal injury and property damage that is caused by the release of pollutants (including emissions). So how do you ensure that your company is protected?

Many local, state, and federal environmental laws are in their infancy, most less than 20 years old. As the new laws are passed the “old” laws are continually amended. This will sometimes overwhelm a potential buyer: Don’t let this happen to you. With the hundred of laws out there, only a few are vital to improving your understanding of environmental liabilities.

One of the most well-known and important laws is CERCLA, which stands for Comprehensive Environmental Response, Compensation and Liability Act, where it is passed as an official law in the year 1980. Another revised and improved version of CERCLA is SARA, which stands for Superfund Amendments and Reauthorization Act) where it was authorized in the year 1986. There are currently a few active funds in the world today where the money is intended to help pay for the clean-up costs of deserted commercial sites that are too contaminated to be used and to cover the liability costs of the owner of the property.

A way to protect yourself from taking on the risks is to purchase an insurance policy which covers these damages and claims. You might feel that getting another new policy is too expensive and not feasible. If that is the case, you need to check your old Commercial General Liability (CGL) insurance policy to see if environmental damages are covered as some of them still do cover them. But take note that most CGL policies today do not cover for damages arising from pollution as a result of escalating lawsuits recently involving penalties for environmental issues.

Within the last few years, insurance companies have begun developing policies specifically designed to provide environmental coverage in regards to pollution or contamination. Some of these policies include: Providing coverage for certain types of on-site clean-ups, Property damage to personal property of third parties and bodily injuries, Clean-up costs for third party claims beyond the boundaries of the insured site and coverage for non-owned site cleanup costs, and third party claims arising from transportation of product or waste by vendors causing pollution conditions.

Insurance companies are also offering policies covering the potential risks of businesses wanting to purchase and further develop brownfields, which refers to commercial sites or areas which are abandoned halfway during their developments because of problems of environmental harm or pollution. Without insurance policies taking up the risks of these abandoned sites they will be left there for good since it is considered too risky for development and investment companies as possible lawsuits may cause severe financial drain later.

To prevent from taking on too much business risk, go over your country and local state’s law regarding pollution and environment. Take into account the amount you might have to pay and the general responsibility if you are found guilty of causing pollution harm and damage to the estates and properties located near you. If the laws are written in terms that you find hard to understand, you should look for help from lawyers who are knowledgeable in the field of environmental and pollution laws. You will then be able to decide if you need environmental insurance policies to help you in case of lawsuits in these areas.