Emerging Options in Environmental Insurance

Abstract

By paying a one-time insurance premium, many people involved with contaminated real estate have used environmental insurance to quantify and transfer the risk associated with environmental contamination. Quantification of environmental risk is especially important when the property in question has known contamination, and at properties now referred to as Brownfields properties. As the market for environmental insurance grows, the cost of these policies is becoming more affordable, and under appropriate circumstances, can be attractively priced, especially when purchased on a portfolio basis or on a per project aggregate basis. Further, there are currently insurance policies available to suit various different players in the real estate arena—owners, landlords, tenant, buyers, sellers, lenders, and environmental consultants. For environmental consultants, environmental insurance may enable more competitive bids, obviating the need to transfer an unquantifiable risk onto the client.