This post was written by George Thomas.
Persons looking to buy or sell businesses or real estate are often stymied by suspected environmental liabilities, but overlook environmental insurance as a possible solution. A product that has been around for decades, environmental insurance can protect buyers and sellers from unknown (and, in some limited cases, known) pollution that pre-dates an acquisition and can protect a buyer from pollution liabilities arising from future operations.
Environmental liability coverage typically covers remediation costs, bodily injury, property damage, and related legal costs, with optional additional coverages usually available. Standard general liability and property insurance excludes most losses connected to pollution, so separate environmental liability coverage is needed to cover pollution and related risks.
If environmental insurance is desired in a transaction, it is best to start the underwriting process as early as possible to keep on track for closing. Buyers should also retain an environmental consultant to prepare a Phase I environmental site assessment for each facility to be covered by the policy, as a Phase I is usually an underwriting requirement.