OWNER CONTROL INSURANCE PROGRAMSM
PROPERTY OWNERS AND ENVIRONMENTAL RISKS
Many property owners rely upon their contractors' insurance to protect them against environmental liabilities and damage to their property. However, this may not be enough.
A real estate owner may be held liable for property damage and bodily injury during and after an environmental clean up, asbestos abatement project, lead-based paint removal, or a simple underground tank removal.
Tenants, shoppers, building visitors or others who believe themselves harmed by a remediation activity can hold the building owner liable. In addition, an owner needs insurance against unintended property damage on the owner's property from a remediation project.
AN OWNER'S BIGGEST RISK: "ACTION OVER" CLAIMS
The biggest single risk to property owners is liabilities for injuries sustained by their remediation contractor’s employees. This exposure may not be covered by the contractors' insurance. Most owners believe that these claims, called "action-over" claims, will be covered by the contractors' workers compensation-but they are not.
Action-over claims result when a contractor's employee is injured on the job and sues the property owner directly. These claims often come after the contractor's employee has exhausted all available workers compensation benefits. Action-over claims often are filed years after the remediation project is complete. In addition, action-over claims are usually for large dollar amounts.
To be certain of adequate protection, a property owner must regularly monitor the contractor’s coverage and review insurance policies, certificates, endorsements, exclusions, limits and ratings.
To protect against action-over claims, owners often attempt to shift the liability back to their contractors through indemnification agreements. However, the contractors' insurance may fail to protect the owner.
PROBLEMS WITH INDEMNIFICATION AGREEMENTS
In some jurisdictions, the transfer of "action-over" liability back to the contractor is not allowed. In addition, the contractors' insurer may be unrated or unstable. Gaps in coverage may expose the owner to environmental liability, or fail to cover losses the owner may incur from the remediation activities. A contractor may let coverage lapse, or expend the aggregate limit on losses at another project.
The coverage itself may not be adequate. A contractor may have selected "claims made" insurance for remediation, which only covers claims reported during the policy period. A property owner; however; needs "occurrence-form" coverage or longer reporting periods, since injuries from pollution exposure, such as asbestos, may arise decades after exposure. The owner remains liable long into the future.
In short, an owner who depends upon the contractors' insurance coverage may be at risk. The owner takes on an administrative burden, which may still leave the owner vulnerable to "action-over" claims and additional claims regarding environmental risks and property damage.
A BETTER SOLUTION
Environmental Risk Agency MN's Owner Control Insurance Program offers owners a secure and efficient way to protect themselves from liabilities and losses that may arise from remediation projects. Our Owner Control Programs are available to cover environmental risks associated with environmental remediation, asbestos abatement, lead-based-paint remediation, and underground tank removal projects. Owner Control also has options that can protect an owner against "action-over" exposures.
Owner Control can be combined with other Environmental Risk Agency MN products, such as Remediation Stop LossSM or Asbestos in PlaceSM Insurance. Through a combination of coverages, the owner can be protected from liabilities that may arise before, during and after the remediation.
With our Owner Control insurance program, the owner purchases the insurance coverage in the name of the owner's company, and extends coverage to the contractors for their specific remediation projects. Thus, the contractors are covered-and the owner retains control of the insurance.
Owner Control insurance programs are available for large real estate portfolios and for single remediation projects. With Owner Control insurance program from Environmental Risk Agency MN,
- The owner's insurance is with solid, "A rated" insurance companies.
- The owner has control over the insurance and does not need to monitor contractors' coverage. The owner selects the deductibles, limits and policies.
- The owner's policy and its limits are always dedicated to the owner. With an Owner Control insurance program, the owner's limits cannot be expended on losses that originate at a contractor's other project.
- Owner Control coverage responds to the owner's needs for property damage and liability protection. Most importantly, coverage can be customized to respond to "action over" exposures.