When I speak to risk decision makers around protecting their business from Environmental exposures, there seems to be a lot of commonalities around relying on contract requirements to protect their own assets or investments. Whether these contracts are related to lease agreements, lender requirements or municipal approvals, it is important to keep the following in mind when identifying and managing risk.
1) Clearly outlining the responsibility of each party and what indemnities are in place by contract. If it's not in writing, it won't hold. There are enforced and legacy contracts being used without consideration around Environmental indemnity or insurance provision.
2) Evaluating your maximum loss potential and understanding what portion of your risk is adequately covered. Even if risk is transferred to a third party, with what certainty can you say they will rectify the issue or if their insurance program will respond to the loss or claim in its entirety?
2) Environmental Risk Transfer via Insurance Products - they come in all shapes and sizes. Conducting frequent insurance audits to review if the product being purchased truly protects you from what it is intended to do. There is a potential for coverage limitations, sublimits and site or activity specific exclusions. It is always best to protect your business with a tailored made insurance solution, even if your exposure is contingent.
4) Traditional P&C products offer little to no coverage around Environmental exposures. Coverage is typically limited to Third Party Bodily Injury and Property Damage with a discovery/reporting period. Majority of the Environmental claims happen over time and pertain to clean up costs, which are the core benefits of a standalone environmental insurance product.
As we continue to grow, Gallagher is here to help you protect your business and create impactful solutions.
Do you currently protect your business from Environmental risk? If not - let's have a chat.
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