Environmental and Pollution Insurance - Do You Need It?

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.

If you own the property or you used to, you will face the consequences of getting lawsuits from cases arising from property damage as well as personal injuries as a result of the pollutants that started from your property. Therefore, one must be prepared for this kind of situation.

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.

The two most well known of these laws are CERCLA (Comprehensive Environmental Response, Compensation and Liability Act of 1980), and the amendment, SARA (Superfund Amendments and Reauthorization Act of 1986). These are a federal funds set up to aid the clean-up of abandoned sites that have been polluted and to recover costs from potentially responsible parties.

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.

Recently, insurance companies decided to launch new insurance policies specially designed to cover for environmental risks of commercial properties. Some of the newly launched policies would include coverage in areas regarding risks of payments for property clean-up of pollutants, damages suffered to the properties of a third party or physical harm, claims from third party for the clean-up payments because of pollution caused by the policy owner's property which is not within the insured site and also risks for clean-up of properties which are not owned by anyone, and any payments accrued from third party's claim for payment of transportation costs of products which caused the pollution problems in their area.

If you are thinking of purchasing and developing a brownfield site, which means the commercial site that has been left undeveloped because of its excessive pollution problems, take note that there are insurance companies willing to offer you coverage for these areas. If there is no insurance coverage offered for these sites, this land may be left undeveloped since the risks of incurring clean-up costs and the further financial payments in penalties is too high.

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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