Environmental Risk and the Real Estate Industry

Matthew Slakoff, CIC, CRIS
Matt Slakoff - resized

If you work in or around the commercial real estate industry, you are probably familiar with terms such as the following:  Adaptive Reuse, Transit Oriented Development, Urban Infill, etc.  All of these terms relate to the concept of urban redevelopment.  Although these types of opportunities are exciting, they can also present a myriad of risk to the developer. When an owner decides to redevelop a property with previous uses, the risk profile of the project increases.  With obvious risks such as adjacent exposures, unhappy neighbors and pedestrian traffic, it may be easy to overlook a risk that can be the most significant.  That risk is the environmental risk from the soil.

So how can insurance help?

A specific insurance has evolved to help mitigate the financial risk associated with development of these types of projects.  The coverage is commonly known as Pollution Legal Liability (PLL).  This coverage can act as a valuable tool to help developers facilitate transactions and satisfy state and federal requirements.  Pollution Legal Liability can be crafted and negotiated to cover the following exposures:

  • 1st Party (Cleanup), 3rd Party coverage for both on and offsite cleanup
  • Known and Unknown Conditions/Contaminants
  • Regulatory “Reopener” coverage
  • Non-Owned Disposal Coverage
  • Transportation Coverage

Below is an informative link to an article on this subject by one of our agency’s strategic partners, New Day Underwriters.