For commercial real estate owners and developers, building a better real estate insurance program hinges on the inclusion of coverage that protects them against the myriad environmental risks they face every day.
Whether their business involves building and managing condominiums, office buildings, or mixed-use properties, commercial real estate owners and developers regularly encounter exposures stemming from a range of situations and activities such as poor indoor air quality in multifamily apartment structures and office and hospitality buildings (where contamination can spread through water and ventilation systems, leaking furnaces and chimneys, and much more, leading to what is termed “Sick Building Syndrome”); storage of hazardous materials (e.g., fossil fuels, oils and lubricants, pesticides, or chlorine); tenants’ activities and operations (which can use or store significant amounts of dangerous chemicals) if not addressed in the terms of the lease agreement; undertaking renovations (which can release dangerous substances such as asbestos or lead, or release gasses or vapors via newly installed materials); or even simply acquiring property (which may shift the environmental liability for that property to the new owner, occupants, lenders, or investors). Because most standard General Liability policies exclude coverage for many of these exposures, a robust Environmental Insurance program is essential in order to fill in the gaps.
What Is at Stake
The financial consequences of these risks can compound and threaten the very existence of owners and developers, especially since many environmental liabilities are assumed, retained, or transferred in the course of doing business: third-party lawsuits; unanticipated cleanup costs; assessment of regulatory fines and penalties; decline in property values; loss of rental income; even reputational damage can occur and cause financial loss.
Environmental Insurance at Work
To prevent these losses, Environmental Insurance coverage can be tailored to offer protection that addresses myriad sources of past, current, and future environmental loss claims (including preexisting known and unknown environmental liabilities), including potentially catastrophic environmental events associated with daily operations; coverage for mold liability and cleanup; inadequate containment, storage, transport, disposal, loading and or/unloading of construction debris, hazardous chemicals or other potentially dangerous materials; and protection against business interruption loss triggered by a pollution occurrence.
Many aspects of commercial real estate owners and developers’ operations—from hazardous material storage to property acquisitions, tenant operations to renovations, air quality issues and much more—have the potential to result in considerable financial loss. That’s why it is key for these firms to work with insurance professionals who are experienced in assessing the specific needs of a property owner. RPS provides real estate insurance solutions for real estate owners and developers, with programs that can be crafted to include protection for the common liability risks that these firms must contend with. Please contact us for more information.