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Real Estate Environmental Site Liability: Is Your Company at Risk?
The Necessity of Real Estate Pollution and Environmental Liability Insurance
Types of Pollution and Environmental Liability
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Real Estate Environmental Site Liability: Is Your Company At Risk?
Property owners, real estate managers and developers face a host of environmental exposures that can be financially devastating to their companies.

When site ownership or operation exposes people or property to dangerous materials, the result can be severe financial damage and even bankruptcy. Often, these companies suffer because they do not have Real Estate Environmental Liability coverage.

The liability stems from the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), also known as Superfund. By making “potentially responsible parties” liable for releasing hazardous substances, an owner, operator or a developer is responsible for clean up costs for present pollution and even hazardous materials found onsite from prior use. To make matters more complicated, states have their own laws as well.

To put it simply, real estate owners, operators or developers can become “responsible parties” when property contamination happens.

Therefore, real estate environmental liability coverage is not just an option; it’s a business necessity. Generally, it covers bodily injury and third-party property damages from contamination at or from a site.

Specific policies can vary and be modified to insure business income exposures, development, transportation and “soft costs” from contamination. Risks can arise from contaminated property transactions, the remediation process or the work of environmental consultants and contractors who develop and execute remediation plans or non-owners operating on a site.
Specifically, these risks can include:
  • Discovering unknown environmental contamination, such as lead paint, asbestos or underground storage tanks that require cleanup.

  • Realizing the remediation plan’s ineffectiveness, even when approved by regulators and/or selected by the owner in a voluntary cleanup. This requires additional remediation activities when contamination is discovered or from newly established cleanup standards.

  • Using or storing significant quantities of hazardous chemicals could have significant environmental liabilities including dry cleaners, gas stations, car repair facilities, factories and home repair retailers.

  • Renovating in one part of a facility while other sections remain operational can increase third-party contaminant exposure. This can also arise from demolition or removal of materials containing lead, asbestos and other hazardous substances or even by cleaning solvents or vapors or gasses emitted by newly installed materials.

  • Learning that commercial buildings have many enclosed spaces especially vulnerable to mold or Legionella, which can harm HVAC, plumbing and indoor air quality. Even a single release of pollutants can adversely affect customers, workers, residents and delivery persons, which yields extensive claims.
  • Being found responsible for damage to natural resources.

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