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REMEDIATION STOP LOSSSM COVERAGE

UNCERTAINTY CAN RUIN YOUR TRANSACTION, DEVALUE YOUR PROPERTY

Uncertainty in environmental remediation is a serious problem for property owners, developers and lenders dealing with a contaminated property.

Buyers question the ultimate cost to remediate the property-which may far exceed estimates. Owners are concerned that residual liability may further reduce the property's value and increase the owner's financial risk. Lenders fear that environmental regulations may tighten, increasing future liability.

Given these issues, owners can not sell the property because of the ambiguity concerning the true impact of the environmental problems. Likewise, lenders may be reluctant to finance real estate known to be environmentally impaired.

Consequently, real estate transactions and remediation projects can be delayed or scuttled. Deals are lost and the value of the real estate drops.

REMEDIATION STOP LOSS - THE SOLUTION

Environmental Risk Agency’s Remediation Stop Loss Insurance program quantifies the maximum cost of an environmental remediation project before the project begins. With our Remediation Stop Loss Coverage in place, all parties involved in the transaction can proceed with remediation, purchase or sale, or financing of the property, knowing the maximum possible cost of clean up in advance.

Our coverage protects the insured from expensive cost overruns by paying for remediation expenses that exceed the project's cost estimate beyond the self insured retention.

KINDS OF LOSSES COVERED

Environmental Risk Agency customizes its coverages to the specific concerns of the property and the transaction. Generally, Remediation Stop Loss Insurance is based on receiving a "No further action" status report from the appropriate regulatory agency - or the owner can select a specific clean up standard. Environmental problems that our program can cover include:

  • Changes in regulatory clean up standards

  • Discovery of additional contamination before and after remediation is complete

  • Failure of the remediation technique to achieve the required results

  • Ordinary construction cost overruns

EXAMPLE OF REMEDIATION STOP LOSS COVERAGE AT WORK

We normally recommend a policy limit equal to the initial clean up estimate. Policy terms are customized to extend beyond the projected time required to complete the project.

The following outlines Remediation Stop Loss Insurance at work on a $2 million clean up project. As this example illustrates, if a $2 million clean up encounters problems, the maximum cost to the insured is $2.4 million.

Estimated Cleanup Costs

$2,000,000

Self Insured Retention (the “deductible”)

$   200,000

Estimated premium for $2 million limit

$   200,000

Total cost to Insured if project incurs overruns

$2,400,000

With Remediation Stop Loss Insurance in place, the maximum cost to the insured is the sum of the remediation estimate, plus the self-insured retention, plus the policy premium. In the example of a $2 million remediation, the total possible cost is $2,400,000. Even if the project ends up costing double the original estimate, Remediation Stop Loss Insurance covers the cost overrun.

Our Remediation Stop Loss Insurance allows real estate owners and lenders to clearly quantify the cost and move ahead-whether they intend to buy, sell, remediate, develop or finance the property. The uncertainty is eliminated and the deal can proceed.

THE UNDERWRITING PROCESS

After a review of the remediation plans and protocols, our staff of engineers and insurance professionals will tailor a coverage program to the specifications of the remediation project, the needs of the transaction, and the concerns of the property owner


Environmental Risk Agency
Our ability to develop and blend coverages to meet the unique needs of real estate owners has made Environmental Risk Agency a leading provider of environmental insurance for the real estate industry.

Our environmental policies are written at competitive rates by top "A rated" insurance companies.

For further information about our insurance products or about Environmental Risk Agency please contact one of our officers:

Bozeman Montana Office - Coverage Area: Nation Wide

Steven L Hargreaves, President (click for Bio Info)
Environmental Risk Agency LLC
2515 White Bear Ave A-8 #510

Maplewood MN 55109
651-257-3350 direct
651-389-9255 fax
shargreaves@ericcompanies.com

Minneapolis /St Paul Office - Coverage Area: Nation Wide

Gregory Hargreaves, Vice President (click for Bio Info)
Environmental Risk Agency LLC
2515 White Bear Ave A-8 #510
Maplewood MN 55109
651-315-4596 direct
651-389-9255 fax
ghargreaves@ericcompanies.com

Marketing Region
Environmental Risk Agency distributes its innovative coverages throughout the United States. Coverages are also available to U.S. based clients for risks located in Europe and Asia.

Coverage Rating
Our environmental policies are written on the paper of top insurance companies, at competitive rates. Environmental Risk Agency policies are produced exclusively with domestic carriers that are "A" rated by the AM Best Company.