The world of environmental insurance

By: Garris Thorntenson

If you are considering the purchase of a commercial property, the first thing you should do is check if it shows any signs of contamination by pollutants or toxic waste. The pollution problems could be caused by contaminated soil, underground water or by the building itself. The worse case scenario causes problems and harm to the estates or properties nearby as well. If that happens, the property owners might find themselves having to pay for cleaning up of the pollutants which might add up to be much more than the market price of the property. The owners might also be facing penalties which they didn't know about earlier in compliance with environmental safety laws and rulings.

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?

Most of the local, state or even federal environmental laws are still new and are constantly reviewed and changed. As new environmental laws are passed, it can be a challenge for current property owners or future buyers to keep track of the laws and regulations. But rest assured that only a few of the laws matter when it comes to developing a comprehensive 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.

Perhaps you feel that purchasing a new policy again would be hurtful towards your financial position. If that is the case, remember to review and read through your current Commercial General Liability (CGL) insurance policy. Some references can be found in past court cases that the statements found in Commercial General Liability policies covers charges regarding environmental problems or toxic harm, even though it was not openly made known by the insurance salesman. This trend of court cases has caused insurance companies to review and change the terms and conditions of their CGL policies so that it won't cover charges and payments regarding environmental problems and pollution.

With rising news coverage on the pollution problems and the large amount of money property owners have to pay for the damages and cleaning up, insurance companies have come up with policies which provide coverage especially for environmental damages and pollutions. This type of insurance will cover costs and damages resulting from pollution and contamination of toxic waste, damages and harm to the estate or physical harm to a third party, the cleaning-up bills of a third party's estate that is not considered the policy owner's estate, the cleaning costs of an estate that is not owned by any individuals but damaged by the policy holder’s estate, and finally the transportation costs of products or waste which have caused pollution and contamination problems.

There are even policies currently offered to those companies wanting to develop brownfields: these are most often under-used or abandoned contaminated sites. Without proper insurance coverage these sites would sit undeveloped due to the high liability and cost associated with the environmental clean-up or the risk that such clean-ups may later require.

In order to cut down the risks involved, check with the local authorities regarding the laws and regulations regarding the pollution and environment concerning commercially run estates. Take note on your potential accountability in financial terms and also the legal requirements if something should happen to the buildings and estates near your property. If you find the law decree hard to understand always seek help from a lawyer who is well versed in the field of environmental laws. By acquiring the necessary knowledge, you can then decide if you need to purchase an environmental insurance for your property.

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Garris Thorntenson is a general contractor and knows the importance of getting good protection with contractors insurance. One of the policies which he recommends is the environmental liability insurance and he recommends the experts at J6 insurance for their expertise in this very field.

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