Any cover you want

In July it is expected that Statutory Guidance, relating to the Environmental Protection Act 1990 (implemented via the Environment Act 1995), will come into force and initiate the new statutory regime for the identification and remediation of contaminated land. The legislation creates various concepts such as 'Class A' or 'Class B' 'appropriate person' ie an individual or organisation deemed responsible for bearing the cost of remediation. But, are you prepared for the potential financial consequences? Remember, employees, directors and officers of a corporate body can also be pursued in their personal capacity for their own acts or omissions.

If you are adequately insured against the new regime, including its retrospective and retroactive nature, then you are probably the exception. Unfortunately, many will be depending on their traditional commercial insurances which, almost without exception, exclude losses relating to gradual pollution. Any 'healthcheck' on your insurances needs to pay particular attention to covers such as 'General Liability', 'Professional Indemnity' and 'Directors & Officers'.

Specialist environmental insurances can often be underwritten to include such liabilities plus covers such as 'Clean-up Cost Cap' which deals with clean-up costs that are in excess of an agreed level.

However, the policy mostly commonly used to protect the 'appropriate person' will be the Environmental Clean-up Policy which works on the simple basis that for a particular site the underwriter agrees what remediation, if any, needs to be carried out. (Agreeing general procedures in advance can speed this process especially where you wish to have blanket coverage on all sites.) Once remediation has taken place, the insurance becomes effective and the insurance will cut in if further remediation involving the original pollutants becomes necessary.

The core cover is commonly achieved by referring to the costs, necessarily incurred in order to comply with a remediation notice. Less commonly, the cover relates to further remediation, of the original conditions, irrespective of a remediation notice. The latter sounds a wider cover and this may have a knock-on effect on premiums. Only one underwriter offers the hope of some insurance against blight following the issue of a remediation notice.

The exclusions in these policies vary considerably but do not read too much into this. Some underwriters take the view that they need to exclude everything they wish to be outside the terms of the policy and others think there is no need to exclude what was not covered in the first place.

The number of years of insurance covered by these policies for a single premium is shown under 'Term'. Policies may include an extended 'Reporting Period which may prove useful if a potential claim is not immediately obvious. Limits vary from policy to policy and you have to compromise on the period of cover you or your business need, the 'Limits' and the premium that is likely to be charged.

Another matter to consider is the value of any 'Deductible/Excess' potentially this could play a significant role in keeping your premiums to a minimum. The same cannot be said for any 'Minimum Premium'. This is usually a device for excluding cases which underwriters feel are uneconomic.

The cost of these insurances is obviously an issue and the wider the cover the higher the premium . But developers, contractors and owners can often be covered together under one policy. If you become an 'appropriate person' of 'Class A' or 'Class B', they are insurances you cannot afford to be without. Do not become the 'appropriate person' without the appropriate insurance.