Tag: Teaming

  • ERMI Business Professional Series Realtors

    Licensed Real Estate Professionals have a duty to perform their services with a level of care which is established by contract and prevailing standards of conduct in their field.  The fact is, Realtors have professional duties to disclose material facts of which encompass environmental exposures / liabilities.

    Today’s, transparent business environment, means real estate professionals must be aware of the evolution of their E&O liability loss exposures.  Claims under E&O often include allegation of failure to disclose or misrepresentation on a transaction.

    Historically, Realtors have relied upon “Environmental Indemnifications” in buy sell agreements.  The vast majority in the private sector have been slow to implement financial assurance requirements because they have been falsely content that contracts utilized are iron clad.  What we have learned is “Environmental Indemnifications” in buy / sell agreements may not be worth the paper they are written on if not backed by a financial assurance strategy.

    Governmental financial assurance requirements have been around for decades.  For example, when I began working with pollution insurance in the 1980’s we were selling primarily to asbestos / lead abatement / remediation contractors because the government required them to have Contractors Pollution Liability insurance to perform their remedial services.  Industrial and hazardous waste haulers must evidence transportation pollution liability insurance coverage in force before they can move any waste.  Owners of regulated underground storage tanks must evidence financial assurance before they can put any product into a storage tank and the list goes on.

    You may ask, why has the real estate profession been so slow to react?  Answer: Lack of environmental education.  That is where Insurance Professionals add their value in teaming with Professional Realtors.  By coaching Realtors on better protect their E&O exposure while assuring they are dealing with cleaner and greener real estate, backed by a financial assurance strategy.

    To understand why “Best Practices” for realtors means moving beyond traditional environmental indemnifications / site assessments to possessing a working knowledge of managing and transferring environmental exposures, we first must be on the same page about a few environmental facts.

    1. What is a “Pollutant”? If you look at a Buy / Sell Agreement they generally describe a Pollutant as smoke, vapors, soot, fumes, acids….  However, due to the way courts and insurance companies have responded to lawsuits and insurance claims, environmental Strategist™ (eS) has developed a definition that is easier to understand.  eS define a “Pollutant” as a material, substance or product, introduced to an environment for other than its intended use or purpose.”  In other words, something that ends up where it does not belong can be a Pollutant.  eS have examples where fresh water, milk, cheese, fruit, beer and more have all been defined as a “Pollutant”.
    2. A leading source of E&O claims against real estate professionals is failure to disclose potential environmental liabilities. From Sick building Syndrome, (i.e. mold, Legionella, vapor intrusion, asbestos, lead paint, category 3 water…), storm water runoff, natural resource damages, leaking aboveground or underground storage tanks, Renovation Repair & Painting Rule, meth labs… the list goes on.  Pollution insurance can protect against these environmental exposures and much more.
    3. Every real estate transaction presents its unique set of environmental exposures and has changed the way Realtor’s must address environmental financial assurance for their client’s.
    4. eS research has determined that fewer than 50% of Phase I Site Assessments are accurate. eS has heard from environmental professionals who feel in excess of 80% of Phase I site Assessments are inaccurate.  Also, environmental due diligence (Phase I, Phase II…) as part of meeting the innocent landowner defense only protects the real estate owner from the government.  Impacted non-governmental third parties can still file suit.  Note:  In Phase I Site Assessments when investigating who neighbors are that could have contamination going onto a subject property, environmental engineers do a minimum of a 2-mile radius search.  Pollution insurance can protect against third party liabilities.
    5. Illegal disposal of waste in the United States is a tens of billions of dollars a year industry and real estate, especially vacant real estate, is a popular place to illegally dispose of waste. Pollution insurance can protect against illegal disposal of waste.
    6. In the United States there are more than 250,000 known leaking underground storage tanks. How many don’t we know about?  Leaking underground tanks can and do cause Pollutants to go onto neighboring properties.  Pollution insurance can protect property owners if third parties contaminate their property.

    Professional realtors need to know if they are selling / purchasing an asset or environmental liability.

    Educating realtors on managing and transferring environmental exposures will better protect their E&O exposure while driving the sales of pollution liability insurance.  Why is this critical?  Environmental exposures can be a deal killer and realtors not proactively addressing environmental exposures may find their professional liability insurance at risk of a claim when a client discovers an environmental liability on property the realtor sold. 

    Environmental Insurance Products to Meet Financial Assurance on Real Estate Transactions

    Overlooked Benefits of Environmental Liability Insurance

    Unlike other liability exposures impacting commercial real estate owners, pollution losses are not a frequency risk, but rather a severity risk. Because all commercial real estate owners have environmental exposures, consideration needs to be given to the economies of scale afforded with environmental liability insurance as part of your risk transfer strategy, versus self-insurance.

    Furthermore, most commercial real estate owners only consider the remediation costs associated with a pollution event. However, often the clean-up costs are far less than other costs that can arise from an environmental loss.

    Overlooked Benefits of Environmental Liability Insurance:

    1. Defense Costs: Environmental liabilities are relatively new and very litigious.  Even if you do nothing wrong you can still get named in a suit and must expense defense costs i.e. legal fees, environmental investigations, etc.
    2. Claim Management: All policies come with specialists to assist you in handling a claim.  Who oversees communications, public relations, emergency response, government compliance, financial management, third party claims for bodily injury, property damage, natural resource damages….?
    3. Third Party Liability: Most the time the cost to clean up the environmental problem/s is far less than the associated claims that come in from third parties for bodily injury, property damage and business interruption.  You need to look at your client’s and neighbors that can be impacted if you or a sub-contractor/vendor cause an environmental loss.

    Environmental Liability Insurance Coverages

    Property Transfer Coverage:  When buying or selling property there can be unknown preexisting environmental conditions. Since environmental due diligence (All Appropriate Inquiry (AAI), a Phase I or Phase II survey, Baseline Environmental Assessment (BEA)….), cannot guarantee uncovering all potential environmental liabilities, insurance companies have created property transfer insurance. This coverage protects the new owner or any party with an insurable interest, against unknown environmental conditions that may be discovered during the policy period, that were not caused by the new owner.

    This coverage not only helps to keep the property at its maximum value, it will assist the purchaser in being able to secure the necessary financing to complete their transaction.  Real estate owners and developers who use this product as part of their risk transfer strategy often find they can negotiate with the seller to share the cost and negotiate a better mortgage rate than if they did not have property transfer coverage.  You can cover multiple locations on a single policy.

    Mergers, Acquisitions & Pollution Protection (MAPP):  Combining Representations & Warranties Insurance w/ Pollution Liability Insurance to keep your company’s growth & value on course.

    Key to any acquisition is the correct valuation and effective due diligence and MAPP operates as a backstop against issues that the diligence or valuation processes may not be able to identify.

    As a financial assurance mechanism for M&A’s, pollution liability insurance has become part of “Best Practices”.  Representation & Warranties (R&W) insurance is proving its value for M&A’s much the same as pollution liability insurance has.

    R&W insurance is designed expressly to provide insurance coverage for the breach of a representation or a warranty contained in a Buy / Sell Agreement, in addition to or as a replacement for all or most of the seller’s contractual representations and warranties.

    As we have learned from environmental indemnifications in transactional documents, if there is not a pre-determined financial assurance mechanism in place, the environmental indemnification the seller agrees to may not be worth the paper the agreement is written on.  With MAPP, Environmental Risk Managers, Inc. (ERMI) has raised the bar on financial assurance for M&A deals.

    The insurance industry has learned that one out of every four M&A deals has at least one claim of a breach of the reps and warranties.  In the past, the response has been let’s try to negotiate around the problem.  Unfortunately, negotiating often is expensive, time consuming and rarely brings about the most desirable outcomes for the parties involved.

    MAPP delivers a cost-effective way to transfer R&W and pollution liabilities to a financially stable third party.

    Environmental Impairment Liability (EIL):  EIL is for commercial real estate owners susceptible to economic loss caused by pollution that actually, or allegedly originated from their property.  Sometimes referred to as pollution legal liability, this coverage is for those who own, operate, lease, or have any other insurable interest in real property and/or the operations. Coverage can be written to cover preexisting conditions and/or new conditions.

    Coverage can include third party bodily injury and property damage along with business interruption and extra expense, on and off site clean-up costs, legal defense expenses, non-owned disposal sites, transportation and more. EIL can be offered on multiyear terms.  Sewer lines and pump/lift stations can be covered by EIL.  Most EIL policies cover above ground storage tanks up to a certain size.  You can also cover multiple locations on a single policy.

    Transportation Pollution Liability: Generally, Business Auto or Truckers policies will exclude pollution losses arising from spills or releases of transported cargo. Broadened auto pollution liability (typically Form CA 9948) affords coverage during the loading, unloading and transportation, for a spill, release or sudden upset and over turn of transported cargo.  Whether it’s building materials or business supplies, you need to strategize on your exposure to transportation.  How are goods received?  FOB point of Shipment or FOB point of delivery?  Do not be confused by thinking the MCS-90 endorsement is auto pollution liability coverage.

    Underground Storage Tanks

    Storage tank financial responsibility requirements ensure that owners/operators of underground storage tank systems have the ability to financially handle a release from the tank system. The responsibility encompasses the ability to pay funds for corrective action and third party bodily injury and property damage from non-sudden and sudden and accidental releases from a regulated underground tank system.

    Real estate owners with a financial responsibility strategy dependent upon state UST funds need to regularly confirm fund solvency and length of time it will take to get reimbursed.  If part of your business strategy depends upon the state tank fund, you are putting the future success of your business in the hands of the state.  You need to strategize on “just how strong is your business” if you are putting its future in the hands of your state government.

  • ERMI Business Professional Series Realtors

    Licensed Real Estate Professionals have a duty to perform their services with a level of care which is established by contract and prevailing standards of conduct in their field.  The fact is, Realtors have professional duties to disclose material facts of which encompass environmental exposures / liabilities.

    Today’s, transparent business environment, means real estate professionals must be aware of the evolution of their E&O liability loss exposures.  Claims under E&O often include allegation of failure to disclose or misrepresentation on a transaction.

    Historically, Realtors have relied upon “Environmental Indemnifications” in buy sell agreements.  The vast majority in the private sector have been slow to implement financial assurance requirements because they have been falsely content that contracts utilized are iron clad.  What we have learned is “Environmental Indemnifications” in buy / sell agreements may not be worth the paper they are written on if not backed by a financial assurance strategy.

    Governmental financial assurance requirements have been around for decades.  For example, when I began working with pollution insurance in the 1980’s we were selling primarily to asbestos / lead abatement / remediation contractors because the government required them to have Contractors Pollution Liability insurance to perform their remedial services.  Industrial and hazardous waste haulers must evidence transportation pollution liability insurance coverage in force before they can move any waste.  Owners of regulated underground storage tanks must evidence financial assurance before they can put any product into a storage tank and the list goes on.

    You may ask, why has the real estate profession been so slow to react?  Answer: Lack of environmental education.  That is where Insurance Professionals add their value in teaming with Professional Realtors.  By coaching Realtors on better protect their E&O exposure while assuring they are dealing with cleaner and greener real estate, backed by a financial assurance strategy.

    To understand why “Best Practices” for realtors means moving beyond traditional environmental indemnifications / site assessments to possessing a working knowledge of managing and transferring environmental exposures, we first must be on the same page about a few environmental facts.

    1. What is a “Pollutant”? If you look at a Buy / Sell Agreement they generally describe a Pollutant as smoke, vapors, soot, fumes, acids….  However, due to the way courts and insurance companies have responded to lawsuits and insurance claims, environmental Strategist™ (eS) has developed a definition that is easier to understand.  eS define a “Pollutant” as a material, substance or product, introduced to an environment for other than its intended use or purpose.”  In other words, something that ends up where it does not belong can be a Pollutant.  eS have examples where fresh water, milk, cheese, fruit, beer and more have all been defined as a “Pollutant”.
    2. A leading source of E&O claims against real estate professionals is failure to disclose potential environmental liabilities. From Sick building Syndrome, (i.e. mold, Legionella, vapor intrusion, asbestos, lead paint, category 3 water…), storm water runoff, natural resource damages, leaking aboveground or underground storage tanks, Renovation Repair & Painting Rule, meth labs… the list goes on.  Pollution insurance can protect against these environmental exposures and much more.
    3. Every real estate transaction presents its unique set of environmental exposures and has changed the way Realtor’s must address environmental financial assurance for their client’s.
    4. eS research has determined that fewer than 50% of Phase I Site Assessments are accurate. eS has heard from environmental professionals who feel in excess of 80% of Phase I site Assessments are inaccurate.  Also, environmental due diligence (Phase I, Phase II…) as part of meeting the innocent landowner defense only protects the real estate owner from the government.  Impacted non-governmental third parties can still file suit.  Note:  In Phase I Site Assessments when investigating who neighbors are that could have contamination going onto a subject property, environmental engineers do a minimum of a 2-mile radius search.  Pollution insurance can protect against third party liabilities.
    5. Illegal disposal of waste in the United States is a tens of billions of dollars a year industry and real estate, especially vacant real estate, is a popular place to illegally dispose of waste. Pollution insurance can protect against illegal disposal of waste.
    6. In the United States there are more than 250,000 known leaking underground storage tanks. How many don’t we know about?  Leaking underground tanks can and do cause Pollutants to go onto neighboring properties.  Pollution insurance can protect property owners if third parties contaminate their property.

    Professional realtors need to know if they are selling / purchasing an asset or environmental liability.

    Educating realtors on managing and transferring environmental exposures will better protect their E&O exposure while driving the sales of pollution liability insurance.  Why is this critical?  Environmental exposures can be a deal killer and realtors not proactively addressing environmental exposures may find their professional liability insurance at risk of a claim when a client discovers an environmental liability on property the realtor sold. 

    Environmental Insurance Products to Meet Financial Assurance on Real Estate Transactions

    Overlooked Benefits of Environmental Liability Insurance

    Unlike other liability exposures impacting commercial real estate owners, pollution losses are not a frequency risk, but rather a severity risk. Because all commercial real estate owners have environmental exposures, consideration needs to be given to the economies of scale afforded with environmental liability insurance as part of your risk transfer strategy, versus self-insurance.

    Furthermore, most commercial real estate owners only consider the remediation costs associated with a pollution event. However, often the clean-up costs are far less than other costs that can arise from an environmental loss.

    Overlooked Benefits of Environmental Liability Insurance:

    1. Defense Costs: Environmental liabilities are relatively new and very litigious.  Even if you do nothing wrong you can still get named in a suit and must expense defense costs i.e. legal fees, environmental investigations, etc.
    2. Claim Management: All policies come with specialists to assist you in handling a claim.  Who oversees communications, public relations, emergency response, government compliance, financial management, third party claims for bodily injury, property damage, natural resource damages….?
    3. Third Party Liability: Most the time the cost to clean up the environmental problem/s is far less than the associated claims that come in from third parties for bodily injury, property damage and business interruption.  You need to look at your client’s and neighbors that can be impacted if you or a sub-contractor/vendor cause an environmental loss.

    Environmental Liability Insurance Coverages

    Property Transfer Coverage:  When buying or selling property there can be unknown preexisting environmental conditions. Since environmental due diligence (All Appropriate Inquiry (AAI), a Phase I or Phase II survey, Baseline Environmental Assessment (BEA)….), cannot guarantee uncovering all potential environmental liabilities, insurance companies have created property transfer insurance. This coverage protects the new owner or any party with an insurable interest, against unknown environmental conditions that may be discovered during the policy period, that were not caused by the new owner.

    This coverage not only helps to keep the property at its maximum value, it will assist the purchaser in being able to secure the necessary financing to complete their transaction.  Real estate owners and developers who use this product as part of their risk transfer strategy often find they can negotiate with the seller to share the cost and negotiate a better mortgage rate than if they did not have property transfer coverage.  You can cover multiple locations on a single policy.

    Mergers, Acquisitions & Pollution Protection (MAPP):  Combining Representations & Warranties Insurance w/ Pollution Liability Insurance to keep your company’s growth & value on course.

    Key to any acquisition is the correct valuation and effective due diligence and MAPP operates as a backstop against issues that the diligence or valuation processes may not be able to identify.

    As a financial assurance mechanism for M&A’s, pollution liability insurance has become part of “Best Practices”.  Representation & Warranties (R&W) insurance is proving its value for M&A’s much the same as pollution liability insurance has.

    R&W insurance is designed expressly to provide insurance coverage for the breach of a representation or a warranty contained in a Buy / Sell Agreement, in addition to or as a replacement for all or most of the seller’s contractual representations and warranties.

    As we have learned from environmental indemnifications in transactional documents, if there is not a pre-determined financial assurance mechanism in place, the environmental indemnification the seller agrees to may not be worth the paper the agreement is written on.  With MAPP, Environmental Risk Managers, Inc. (ERMI) has raised the bar on financial assurance for M&A deals.

    The insurance industry has learned that one out of every four M&A deals has at least one claim of a breach of the reps and warranties.  In the past, the response has been let’s try to negotiate around the problem.  Unfortunately, negotiating often is expensive, time consuming and rarely brings about the most desirable outcomes for the parties involved.

    MAPP delivers a cost-effective way to transfer R&W and pollution liabilities to a financially stable third party.

    Environmental Impairment Liability (EIL):  EIL is for commercial real estate owners susceptible to economic loss caused by pollution that actually, or allegedly originated from their property.  Sometimes referred to as pollution legal liability, this coverage is for those who own, operate, lease, or have any other insurable interest in real property and/or the operations. Coverage can be written to cover preexisting conditions and/or new conditions.

    Coverage can include third party bodily injury and property damage along with business interruption and extra expense, on and off site clean-up costs, legal defense expenses, non-owned disposal sites, transportation and more. EIL can be offered on multiyear terms.  Sewer lines and pump/lift stations can be covered by EIL.  Most EIL policies cover above ground storage tanks up to a certain size.  You can also cover multiple locations on a single policy.

    Transportation Pollution Liability: Generally, Business Auto or Truckers policies will exclude pollution losses arising from spills or releases of transported cargo. Broadened auto pollution liability (typically Form CA 9948) affords coverage during the loading, unloading and transportation, for a spill, release or sudden upset and over turn of transported cargo.  Whether it’s building materials or business supplies, you need to strategize on your exposure to transportation.  How are goods received?  FOB point of Shipment or FOB point of delivery?  Do not be confused by thinking the MCS-90 endorsement is auto pollution liability coverage.

    Underground Storage Tanks

    Storage tank financial responsibility requirements ensure that owners/operators of underground storage tank systems have the ability to financially handle a release from the tank system. The responsibility encompasses the ability to pay funds for corrective action and third party bodily injury and property damage from non-sudden and sudden and accidental releases from a regulated underground tank system.

    Real estate owners with a financial responsibility strategy dependent upon state UST funds need to regularly confirm fund solvency and length of time it will take to get reimbursed.  If part of your business strategy depends upon the state tank fund, you are putting the future success of your business in the hands of the state.  You need to strategize on “just how strong is your business” if you are putting its future in the hands of your state government.

  • TEAMing with Electrical Contractors

    Continuing with our environmental risk management series for contractors, you will find attached an environmental Risk Assessment (eRA) for Electrical Contractors.

    We’ve developed eRA’s for over 80+ classes of business to get you and your clients on the same page about the environmental exposures impacting their operations.  We send our eRA’s in a Word format, so you can cut and paste them into a marketing presentation that compliments your agencies marketing program.

    Our partner agencies find utilizing the eRA’s is an excellent way to leverage their insurance sales through educating the client about the fiscal realities of pollution protection.  It genuinely does have a measurable impact to their bottom line and strategic financial planning.

    The eRA’s come in three parts:

    1. Review of environmental exposure impacting your insured.

    2. Environmental loss examples

    3. Environmental insurance coverage’s that are appropriate for the insured to consider.

    The goal is to educate your insured, so they can make the best decisions for their business. If your insured sees value and elects to further pursue environmental insurance coverage, we’re here to make your job easier by utilizing our network and expertise to market your client’s submission and supply you with the best coverage options.

    What is a Pollutant?

    Any material, substance, liquid, product, etc… which is introduced into an environment for other than its intended use / purpose. Fresh water, cheese, and milk have all been classified as pollutants by Insurance Carriers under various circumstances.

    Many non-environmental contractors assume that claims arising from operations are covered by the general liability policy. However, claims resulting from a “pollution incident” are excluded from most general liability policies, which leaves many of these contractors exposed to potentially uncovered claims. What pollutants are impacting your business?

    Environmental Exposures Impacting Electric Contractors

    May include, but are not limited to; Vapor intrusion;  Lead;  Asbestos;  Mold;  Storm water runoff;  Impacting underground utilities;  Spills from mobile storage tanks;  Ground water contamination;  Puncturing unknown underground storage tanks;  Silica;  No auditing of waste handling and disposal companies;  Natural resource damages;  Defense costs for nuisance claims;  Electrical failure that leads to a pollution loss;  and more…

    Environmental Loss Examples

    1. While installing new overhead electrical lines, an electrical contractor had a subcontractor sinking the new utility poles. The subcontractor hit an underground sewer line with an auger spilling sewage into a neighboring stream. Through contractual liability, the electrical contractor was responsible for the actions of the subcontractor. Cleanup of spilled sewage and repair of the sewer line was in excess of $175,000.
    2. An electrical contractor removed ductwork from a hospital’s HVAC system. It was later determined that the ductwork was home to a dangerous fungus. The dismantling activities and the on-site storage of dismantled ductwork caused the fungus to spread into the hospital. Patients became infected with the fungus; some were even critically infected. The contractor was found liable for the spread to the fungus and faced bodily injury and property damage claims in excess of $1 million.
    3. An electrical control panel error recorded an open valve as closed resulted in a release of thousands of pounds of chlorine gas into the atmosphere. The leak was detected only after several employees and local residents became ill. These same employees and residents later filed claims against both the facility and the electrical contractor that performed the installation. Total cost of the claim forced the contractor to file bankruptcy, and eventually put them out of business.
    4. While working on a historical property, an electrical contractor used a hole saw to cut through a wall. Unknown to the contractor, the saw inadvertently disturbed and released asbestos-containing insulation material. The contractor had to pay cleanup costs for the asbestos fibers released throughout the building, costing in excess of $40,000.
    5. An electrical contractor upgraded the odor control equipment at a poultry plant. However, the upgrades were performed incorrectly, which resulted in total failure of the odor control unit. Neighbors filed claims alleging Bodily Injury and diminution of Property Value. In the end, the electrical contractor had to re-do the job, costing them additional time, labor, and parts for which they received no compensation.
    6. A utility contractor had to pay cleanup costs and business interruption expenses in excess of $500,000 when they ruptured and unmarked petroleum pipeline.
    7. An electrical contractor was using an aboveground storage tank (AST) to store gasoline for his trucks and equipment. One morning, they discovered that vandals had shot a hole in the tank, releasing thousands of gallons of gasoline from the AST. This spill was the subject of a Government-mandated excavation and disposal of the contaminated soils. Cost of the cleanup exceeded $75,000.

    Overlooked Benefits of Environmental Liability Insurance

    Because environmental losses are a severity risk, rather than a frequency risk, the majority of Electrical contractors lack the financial strength to self-insure their potential environmental liabilities. Since every Electrical contractor has notable environmental exposures, consideration to the economies of scale afforded with environmental liability insurance as part of your risk transfer strategy, versus self-insuring.

    Furthermore, most commercial insureds only consider the remediation costs associated with a pollution event. However, often times the clean-up costs are far less than other costs that often arise from the loss.

    Three Overlooked Benefits of Environmental Liability Insurance:

    1. Defense Costs: Environmental liabilities are relatively new and very litigious.  Even if you do nothing wrong you can still get named in a suit and have to expense defense costs i.e. legal fees, environmental investigations, etc.
    2. Claim Management:  All policies come with specialists to assist you in handling a claim.  Who is in charge of communications, public relations, emergency response, government compliance, financial management, third party claims for bodily injury, property damage, natural resource damages….?
    3. Third Party Liability: The majority of the time the cost to clean up the environmental problem/s is far less than the associated claims that come in from third parties for bodily injury, property damage and business interruption.  You need to look at your client’s and neighbors that can be impacted if you or a sub-contractor/vendor cause an environmental loss.

    Environmental Liability Insurance Coverages

    Contractors Pollution Liability (CPL)

    Contractors Pollution Liability (CPL) insurance protects the insured should they cause or exacerbate an environmental condition while performing their contractor services.  CPL protects the insured for covered operations performed by or on behalf of the insured, while operating away from any premises they own, rent, lease or occupy.

    CPL can be offered on a claims made or occurrence basis.  Coverage can be written on a job specific basis, or on a blanket basis to cover all the work performed by the insured.  Most policies can be endorsed to cover transportation pollution liability.

    Contractors incorporating CPL coverage as part of their risk transfer strategy, drive their growth and profits by marketing the benefits CPL coverage affords in reducing job interruption due to environmental issues.

    Environmental Impairment Liability (EIL)

    EIL is for contractors that own, rent, lease, operate or have any other insurable interest in real property (a fixed site facility such as a shop, batch plants, cement manufacturing/mixing plant….) that can be susceptible to pollution liabilities that actually or allegedly originated from the insured property.

    Coverage can include: Pre-existing unknown pollution, new pollution conditions, first party on-site clean up, third party bodily injury, property damage, business interruption and extra expense, off site cleanup costs, legal defense expenses, transportation pollution liability, offsite disposal coverage….  Multi year term policies can be negotiated.

    Transportation Pollution Liability

    Generally, Business Auto or Truckers policies will exclude pollution losses arising from spills or other releases of transported cargo. Transportation pollution liability affords coverage during the loading, unloading and transportation, for a spill, release or sudden upset and over turn of transported cargo.

    Underground Storage Tanks

    Financial responsibility requirements ensure that owners and operators of underground storage tank systems have the ability to financially handle a release from an underground storage tank. The responsibility encompasses the ability to pay funds for corrective action and third party bodily injury and property damage from non-sudden and sudden and accidental releases from a regulated underground tank system.

    Incidental Professional Liability

    Professional exposures are generally excluded from General Liability and monoline Contractors Pollution Liability policies. In the course of their normal operations, contractors face all types of professional exposures. They may make slight adjustments on the provided plans to get the job done properly, they may supervise subcontractors, or provide other recommendations which could potentially be questioned in the event of a claim. In the event of a professional claim, will your insurance provide coverage?

    ERMI, so much more than a wholesaler, we are your TEAM member for all things environmental.

  • TEAMing with Accountants to Drive Insurance Sales

    Offering assurance on a client’s financial position is the foundation of an Accounts business model.  The Accounting profession offers various levels of assurance from an Audited financial statement, Reviewed or Compilation.

    After going through their defined process, Accounts offer an opinion whether the financial statements are accurate and free of material misstatements.  The Accountants work is designed to enhance the degree of confidence regarding a client’s financial position.

    Government regulation has and continues to have, a huge impact upon the Accounting profession.  Environmental government regulations such as SOX, SAB 92 Ruling, FIN 47, GASB 49…, can have major impacts on an Accountant’s work.  Make a mistake and an Accountants E&O can take a hit.

    Not only must accountants attest to the fairness and accuracy of recorded environmental exposures, but they must be aware of possible unknown environmental liabilities.  As environmental exposures and related costs grow in dollar size and public awareness, Accounting Professionals must be prepared, in some cases required, to incorporate environmental impacts into financial reports and decisions.

    In today’s transparent business environment, the problem created by a traditional Accountant’s work, is not making sure there is a financial assurance mechanism in place to backstop potential environmental liabilities.  One environmental liability can render an Account’s work not worth the paper it’s written on unless there is an environmental financial assurance mechanism.

    As more accountants understand the environmental financial assurance gap not addressed in their work, I am sure most will make environmental financial assurance part of every Audit, Review or Compilation.

    The correlation to this is the transformation banks made to their business model in the 1990’s, once they understood how environmental due diligence granted them the Lender Liability Defense for collateralized properties.  It took numerous times where a client’s environmental problem became a banks environmental problem, before banks woke up to the reality of the environmental gap created by their lending practices.

    Just to make sure we are on the same page, Environmental Financial Assurance is nothing new, it’s been around for decades.  Under Federal law, regulated Underground Storage Tanks Owners must evidence financial assurance to put fuel in their tanks.  Industrial and hazardous waste haulers must evidence financial assurance before they can move one load of waste.  Asbestos and lead abatement contractors must evidence financial assurance before they can remediate asbestos or lead.  Landfills must evidence financial assurance before they can accept any waste….

    There are various forms of environmental financial assurance, i.e. Bond, Letter of Credit, Insurance, Monies in Escrow, Captive, Risk Retention Group….

    As with banks, Accountants have learned, when it comes to environmental liabilities, a client’s environmental problem can become the Accountants problem.  As part of “Best Practices”, Accountants must incorporate coaching their clients on the value an environmental financial assurance mechanism (Bond, Letter of Credit, Environmental Insurance, Monies in Escrow…) adds to their business model.

    Environmental financial assurance mechanisms also help to reduce the reputational risk associated with environmental liabilities while protecting the Accountants bottom line.

    In today’s transparent business environment, Accountants must have a working knowledge of managing and transferring their client’s environmental exposures as part of “Best Practices” or face prosecution, reputational risks and / or extinction.  I can remember when there were the “Big 8” Accounting firms.

    Environmental Coaching Tips For Adding Accountants To Your TEAM

    1. What is a “Pollutant”?  You need to make sure Accountants have a clear understanding of what a “Pollutant” is.  If you look at an environmental indemnification in a contract, it generally describes a Pollutant as smoke, vapors, soot, fumes, acids….  However, due to the way courts and insurance companies have responded to lawsuits and insurance claims, environmental Strategist™ (eS) has developed a definition that is easier to understand.  eS define a “Pollutant” as a material, substance or product that gets introduced to an environment for other than its intended use or purpose.” In other words, something that ends up where it does not belong can be a Pollutant.  eS have examples where fresh water, milk, cheese, fruit, beer and more have all been defined as a “Pollutant”.
    2. Every business is impacted by environmental exposures.
    3. Environmental liabilities tend to be a severity versus frequency issue.
    4. Environmental Accounting is one of the fastest growing fields in the Accounting profession. This is partly due to Government regulations.  Environmental accounting attempts to assure that current accounting methods are not contributing to or offering misleading signals.  e.  Is a business’s success achieved at the expense of the environment or does the success of a business make a net contribution to the betterment of our environment?  Environmental accounting looks to balance or at least upgrade the dangers caused by current accounting methods and reduce misleading signals in their Accounting profession.

    A correlation to this is the Federal Government coming out with “All Appropriate Inquiry”, to upgrade the ASTM Phase I, II… site assessments.  We must remember; environmental issues are relatively new to business and society, so we must expect as we grow and learn more, that change is inevitable.  As I like to say, “Change is the only constant, in the environmental industry”.

    ERMI TEAM building strategy:  Start by working with Environmental Accountants or Accounting firms that incorporate environmental accounting because they are coached up on the value environmental financial assurance offers their client’s.  Like most business professionals, Accountants like to work with client’s that can pay their accounting bill.  My experience is, most Accounts are not aware of the various environmental insurance products available and the financial assurances they afford.

    1. When it comes to environmental liability insurance as a financial assurance mechanism, three often overlooked benefits offered in policies are:
    2. Defense Costs: Environmental liabilities are relatively new and very litigious.  Even if you do nothing wrong, you can still get named in a suit and must expense legal fees.  Environmental insurance policies cover defense costs.
    3. Claim Management: All policies come with specialists to assist you in handling a claim.  Who’s in charge of communications, public relations, emergency response, government compliance, financial management, third party claims for bodily injury, property damage, natural resource damages….?
    4. Third Party Liabilities: The majority of the time the cost to clean up the environmental problem/s is far less than the associated claims that come in from third parties for bodily injury, property damage and business interruption.

    Environmental Liability Insurance For Accountants To Coach Their Client’s

    Since every business is impacted by environmental exposures, consideration needs to be given to the economies of scale afforded with environmental liability insurance, versus other financial assurance instruments or self-insuring.

    Environmental Impairment Liability (EIL)

    EIL is site pollution coverage for property owners susceptible to economic loss caused by pollution that actually or allegedly originated from scheduled properties of the insured.  Sometimes referred to as Pollution Legal Liability (PLL), this coverage is for those who own, operate, lease, or have any other insurable interest in real property and/or the operations. Coverage can be written in a variety of ways addressing unknown preexisting conditions or new conditions.  Coverage can include third party bodily injury and property damage along with business interruption and extra expense, on and off-site cleanup costs, legal defense expenses, non-owned disposal sites, transportation and more. EIL can be offered on multiyear terms.  Most EIL policies cover above ground storage tanks up to a certain size.  Scheduled Underground Storage Tanks can be covered on EIL policies.  You can cover multiple locations on a single policy.

    Property Transfer Coverage

    When buying or selling property there can be unknown preexisting environmental conditions. Since environmental due diligence (Phase I, Phase II…), cannot guarantee uncovering all potential environmental liabilities, insurance companies have created property transfer insurance. This coverage protects the new owner or any party with an insurable interest, against unknown environmental conditions that may be discovered during the policy period, that were not caused by the new owner.

    This coverage not only helps to keep the property at its maximum value, it will assist the purchaser in being able to secure the necessary financing to complete their transaction.  You can cover multiple locations on a single policy.  Coverage is generally written on a multi-year term (i.e. 3, 5, 7… years).

    Mergers, Acquisitions & Pollution Protection (MAPP)

    Key to any acquisition is the correct valuation and effective due diligence and MAPP operates as a backstop against issues due diligence or valuation processes may not be able to identify.

    As a financial assurance mechanism for M&A’s, pollution liability insurance has become part of “Best Practices”.  Representation & Warranties (R&W) insurance is proving its value for M&A’s much the same as pollution liability insurance has.

    R&W insurance is designed expressly to provide insurance coverage for the breach of a representation or a warranty contained in a Buy / Sell Agreement, in addition to or as a replacement for all or most of the seller’s contractual representations and warranties.

    MAPP delivers a cost-effective way to transfer R&W and pollution liabilities to a financially stable third party.

    Brownfield Redevelopment Insurance

    Today, more than ever, Federal, State and local governments are creating incentives for redevelopment of Brownfield sites. These are properties that due to actual or perceived contamination are sitting idle or underutilized. Through Brownfield redevelopment these properties can be cleaned up and put back on the tax rolls.

    The basic purpose of this insurance is to protect the owners, purchaser or investors against known or unknown environmental conditions. Brownfield redevelopment insurance can be structured in a variety of ways. Besides the financial assurance mechanism, contractor’s pollution liability, transportation, off-site disposal, cost cap insurance, post remediation coverage and much more can be addressed. The important thing to remember about Brownfield redevelopment coverage is that it is customized for each project.

    Contractors Pollution Liability (CPL)

    Contractors Pollution Liability (CPL) insurance protects the insured should they cause or exacerbate an environmental condition while performing their contractor services.  CPL protects the insured for covered operations performed by or on behalf of the insured, while operating away from any premises they own, rent, lease or occupy.

    CPL can be offered on claims made or occurrence basis.  Coverage can be written on a job specific basis, blanket basis to cover all the work performed by the insured or Owner Controlled.  Most policies can be endorsed to cover transportation pollution liability, mold, lead, and asbestos, defense outside the limits, off-site disposal coverage, and more. Contractors incorporating CPL coverage as part of their risk transfer strategy, drive their growth and profits by marketing the benefits CPL coverage affords in reducing job interruption due to environmental issues.  A major environmental liability exposure faced by all contactors lies in who they are doing business with.  If there is an environmental loss at a job site, innocent contractors can and do get named in lawsuits.  Do your subs/vendors have CPL insurance if they cause an environmental loss?

    Home Depot, Wal-Mart and many more, have paid multimillion dollar fines for contractors they hired that caused environmental liabilities.  They now require CPL for contractors doing work for them to avoid paying on liabilities created by their vendor contractors.

    Professional Liability

    The absolute pollution exclusion in a standard commercial general liability policy excludes sudden and accidental, and gradual pollution losses due to the release of “solid, liquid, gaseous, or thermal irritants or contaminants, including smoke, vapor, soot, fumes, acid, alkalis, chemicals and waste”….  Engineering firms who work in solving environmental exposures faced by their clients need to have coverage for negligent acts, errors or omissions that may result in damages caused by pollution conditions.

    There are various ways coverage can be written to protect the engineering firm and their clients. Professional liability on a standalone basis or professional liability including general liability (GL) is available. For engineering firms that may also get involved in doing hands on work at the job site, they can add to the coverage contractors pollution liability (CPL) insurance, (refer to contractors pollution liability insurance for more details). Coverage for the professional liability is done on a claims made basis. For the GL and CPL, coverage can be on a claims made or occurrence form basis.

    You have to also keep in mind there are contractors that in the performance of their work may act in a consultants or engineers capacity. You need to make sure you offer your client the broadest program available to meet their business model.

    Transportation Pollution Liability (TPL)

    Generally, Business Auto or Truckers policies will exclude pollution losses arising from spills or other releases of their cargo. Broadened auto pollution liability (typically Form CA 9948) affords coverage during the loading, unloading and transportation, for a spill, release or sudden upset and over turn of transported cargo.  Make sure you do not confuse the MCS-90 endorsement as being TPL coverage, it is not and the insurance carrier reserves the right to subrogate back against the insured for cost to clean up a release of the transported cargo.

    Coaching up Accountants how pollution insurance can protect their client’s, while better protecting their E&O and bottom line, will drive the sales of your insurance products.

  • TEAMing with Accountants to Drive Insurance Sales

    Offering assurance on a client’s financial position is the foundation of an Accounts business model.  The Accounting profession offers various levels of assurance from an Audited financial statement, Reviewed or Compilation.

    After going through their defined process, Accounts offer an opinion whether the financial statements are accurate and free of material misstatements.  The Accountants work is designed to enhance the degree of confidence regarding a client’s financial position.

    Government regulation has and continues to have, a huge impact upon the Accounting profession.  Environmental government regulations such as SOX, SAB 92 Ruling, FIN 47, GASB 49…, can have major impacts on an Accountant’s work.  Make a mistake and an Accountants E&O can take a hit.

    Not only must accountants attest to the fairness and accuracy of recorded environmental exposures, but they must be aware of possible unknown environmental liabilities.  As environmental exposures and related costs grow in dollar size and public awareness, Accounting Professionals must be prepared, in some cases required, to incorporate environmental impacts into financial reports and decisions.

    In today’s transparent business environment, the problem created by a traditional Accountant’s work, is not making sure there is a financial assurance mechanism in place to backstop potential environmental liabilities.  One environmental liability can render an Account’s work not worth the paper it’s written on unless there is an environmental financial assurance mechanism.

    As more accountants understand the environmental financial assurance gap not addressed in their work, I am sure most will make environmental financial assurance part of every Audit, Review or Compilation.

    The correlation to this is the transformation banks made to their business model in the 1990’s, once they understood how environmental due diligence granted them the Lender Liability Defense for collateralized properties.  It took numerous times where a client’s environmental problem became a banks environmental problem, before banks woke up to the reality of the environmental gap created by their lending practices.

    Just to make sure we are on the same page, Environmental Financial Assurance is nothing new, it’s been around for decades.  Under Federal law, regulated Underground Storage Tanks Owners must evidence financial assurance to put fuel in their tanks.  Industrial and hazardous waste haulers must evidence financial assurance before they can move one load of waste.  Asbestos and lead abatement contractors must evidence financial assurance before they can remediate asbestos or lead.  Landfills must evidence financial assurance before they can accept any waste….

    There are various forms of environmental financial assurance, i.e. Bond, Letter of Credit, Insurance, Monies in Escrow, Captive, Risk Retention Group….

    As with banks, Accountants have learned, when it comes to environmental liabilities, a client’s environmental problem can become the Accountants problem.  As part of “Best Practices”, Accountants must incorporate coaching their clients on the value an environmental financial assurance mechanism (Bond, Letter of Credit, Environmental Insurance, Monies in Escrow…) adds to their business model.

    Environmental financial assurance mechanisms also help to reduce the reputational risk associated with environmental liabilities while protecting the Accountants bottom line.

    In today’s transparent business environment, Accountants must have a working knowledge of managing and transferring their client’s environmental exposures as part of “Best Practices” or face prosecution, reputational risks and / or extinction.  I can remember when there were the “Big 8” Accounting firms.

    Environmental Coaching Tips For Adding Accountants To Your TEAM

    1. What is a “Pollutant”?  You need to make sure Accountants have a clear understanding of what a “Pollutant” is.  If you look at an environmental indemnification in a contract, it generally describes a Pollutant as smoke, vapors, soot, fumes, acids….  However, due to the way courts and insurance companies have responded to lawsuits and insurance claims, environmental Strategist™ (eS) has developed a definition that is easier to understand.  eS define a “Pollutant” as a material, substance or product that gets introduced to an environment for other than its intended use or purpose.” In other words, something that ends up where it does not belong can be a Pollutant.  eS have examples where fresh water, milk, cheese, fruit, beer and more have all been defined as a “Pollutant”.
    2. Every business is impacted by environmental exposures.
    3. Environmental liabilities tend to be a severity versus frequency issue.
    4. Environmental Accounting is one of the fastest growing fields in the Accounting profession. This is partly due to Government regulations.  Environmental accounting attempts to assure that current accounting methods are not contributing to or offering misleading signals.  e.  Is a business’s success achieved at the expense of the environment or does the success of a business make a net contribution to the betterment of our environment?  Environmental accounting looks to balance or at least upgrade the dangers caused by current accounting methods and reduce misleading signals in their Accounting profession.

    A correlation to this is the Federal Government coming out with “All Appropriate Inquiry”, to upgrade the ASTM Phase I, II… site assessments.  We must remember; environmental issues are relatively new to business and society, so we must expect as we grow and learn more, that change is inevitable.  As I like to say, “Change is the only constant, in the environmental industry”.

    ERMI TEAM building strategy:  Start by working with Environmental Accountants or Accounting firms that incorporate environmental accounting because they are coached up on the value environmental financial assurance offers their client’s.  Like most business professionals, Accountants like to work with client’s that can pay their accounting bill.  My experience is, most Accounts are not aware of the various environmental insurance products available and the financial assurances they afford.

    1. When it comes to environmental liability insurance as a financial assurance mechanism, three often overlooked benefits offered in policies are:
    2. Defense Costs: Environmental liabilities are relatively new and very litigious.  Even if you do nothing wrong, you can still get named in a suit and must expense legal fees.  Environmental insurance policies cover defense costs.
    3. Claim Management: All policies come with specialists to assist you in handling a claim.  Who’s in charge of communications, public relations, emergency response, government compliance, financial management, third party claims for bodily injury, property damage, natural resource damages….?
    4. Third Party Liabilities: The majority of the time the cost to clean up the environmental problem/s is far less than the associated claims that come in from third parties for bodily injury, property damage and business interruption.

    Environmental Liability Insurance For Accountants To Coach Their Client’s

    Since every business is impacted by environmental exposures, consideration needs to be given to the economies of scale afforded with environmental liability insurance, versus other financial assurance instruments or self-insuring.

    Environmental Impairment Liability (EIL)

    EIL is site pollution coverage for property owners susceptible to economic loss caused by pollution that actually or allegedly originated from scheduled properties of the insured.  Sometimes referred to as Pollution Legal Liability (PLL), this coverage is for those who own, operate, lease, or have any other insurable interest in real property and/or the operations. Coverage can be written in a variety of ways addressing unknown preexisting conditions or new conditions.  Coverage can include third party bodily injury and property damage along with business interruption and extra expense, on and off-site cleanup costs, legal defense expenses, non-owned disposal sites, transportation and more. EIL can be offered on multiyear terms.  Most EIL policies cover above ground storage tanks up to a certain size.  Scheduled Underground Storage Tanks can be covered on EIL policies.  You can cover multiple locations on a single policy.

    Property Transfer Coverage

    When buying or selling property there can be unknown preexisting environmental conditions. Since environmental due diligence (Phase I, Phase II…), cannot guarantee uncovering all potential environmental liabilities, insurance companies have created property transfer insurance. This coverage protects the new owner or any party with an insurable interest, against unknown environmental conditions that may be discovered during the policy period, that were not caused by the new owner.

    This coverage not only helps to keep the property at its maximum value, it will assist the purchaser in being able to secure the necessary financing to complete their transaction.  You can cover multiple locations on a single policy.  Coverage is generally written on a multi-year term (i.e. 3, 5, 7… years).

    Mergers, Acquisitions & Pollution Protection (MAPP)

    Key to any acquisition is the correct valuation and effective due diligence and MAPP operates as a backstop against issues due diligence or valuation processes may not be able to identify.

    As a financial assurance mechanism for M&A’s, pollution liability insurance has become part of “Best Practices”.  Representation & Warranties (R&W) insurance is proving its value for M&A’s much the same as pollution liability insurance has.

    R&W insurance is designed expressly to provide insurance coverage for the breach of a representation or a warranty contained in a Buy / Sell Agreement, in addition to or as a replacement for all or most of the seller’s contractual representations and warranties.

    MAPP delivers a cost-effective way to transfer R&W and pollution liabilities to a financially stable third party.

    Brownfield Redevelopment Insurance

    Today, more than ever, Federal, State and local governments are creating incentives for redevelopment of Brownfield sites. These are properties that due to actual or perceived contamination are sitting idle or underutilized. Through Brownfield redevelopment these properties can be cleaned up and put back on the tax rolls.

    The basic purpose of this insurance is to protect the owners, purchaser or investors against known or unknown environmental conditions. Brownfield redevelopment insurance can be structured in a variety of ways. Besides the financial assurance mechanism, contractor’s pollution liability, transportation, off-site disposal, cost cap insurance, post remediation coverage and much more can be addressed. The important thing to remember about Brownfield redevelopment coverage is that it is customized for each project.

    Contractors Pollution Liability (CPL)

    Contractors Pollution Liability (CPL) insurance protects the insured should they cause or exacerbate an environmental condition while performing their contractor services.  CPL protects the insured for covered operations performed by or on behalf of the insured, while operating away from any premises they own, rent, lease or occupy.

    CPL can be offered on claims made or occurrence basis.  Coverage can be written on a job specific basis, blanket basis to cover all the work performed by the insured or Owner Controlled.  Most policies can be endorsed to cover transportation pollution liability, mold, lead, and asbestos, defense outside the limits, off-site disposal coverage, and more. Contractors incorporating CPL coverage as part of their risk transfer strategy, drive their growth and profits by marketing the benefits CPL coverage affords in reducing job interruption due to environmental issues.  A major environmental liability exposure faced by all contactors lies in who they are doing business with.  If there is an environmental loss at a job site, innocent contractors can and do get named in lawsuits.  Do your subs/vendors have CPL insurance if they cause an environmental loss?

    Home Depot, Wal-Mart and many more, have paid multimillion dollar fines for contractors they hired that caused environmental liabilities.  They now require CPL for contractors doing work for them to avoid paying on liabilities created by their vendor contractors.

    Professional Liability

    The absolute pollution exclusion in a standard commercial general liability policy excludes sudden and accidental, and gradual pollution losses due to the release of “solid, liquid, gaseous, or thermal irritants or contaminants, including smoke, vapor, soot, fumes, acid, alkalis, chemicals and waste”….  Engineering firms who work in solving environmental exposures faced by their clients need to have coverage for negligent acts, errors or omissions that may result in damages caused by pollution conditions.

    There are various ways coverage can be written to protect the engineering firm and their clients. Professional liability on a standalone basis or professional liability including general liability (GL) is available. For engineering firms that may also get involved in doing hands on work at the job site, they can add to the coverage contractors pollution liability (CPL) insurance, (refer to contractors pollution liability insurance for more details). Coverage for the professional liability is done on a claims made basis. For the GL and CPL, coverage can be on a claims made or occurrence form basis.

    You have to also keep in mind there are contractors that in the performance of their work may act in a consultants or engineers capacity. You need to make sure you offer your client the broadest program available to meet their business model.

    Transportation Pollution Liability (TPL)

    Generally, Business Auto or Truckers policies will exclude pollution losses arising from spills or other releases of their cargo. Broadened auto pollution liability (typically Form CA 9948) affords coverage during the loading, unloading and transportation, for a spill, release or sudden upset and over turn of transported cargo.  Make sure you do not confuse the MCS-90 endorsement as being TPL coverage, it is not and the insurance carrier reserves the right to subrogate back against the insured for cost to clean up a release of the transported cargo.

    Coaching up Accountants how pollution insurance can protect their client’s, while better protecting their E&O and bottom line, will drive the sales of your insurance products.

  • TEAMing with Attorney’s To Drive Insurance Sales

    Of all the “business professionals” (i.e. attorney’s, accountant’s, banker’s, realtor’s, environmental engineers) we are highlighting in the ERMI TEAMing with “Business Professionals” series, attorneys represent the lowest hanging fruit for insurance professionals to TEAM with.

    There are several reasons for this which we will cover in this competitive environmental intelligence but mainly, attorneys tend to specialize in specific areas of law, i.e. general business, estate planning, bankruptcy, patent / trademark, environmental, criminal, international, employee, civil…  This means an attorney is well versed in their specific area of law but possess very little knowledge about assisting their clients to manage and transfer their environmental exposures.  Note:  As highlighted in Series #1, TEAMing With “Business Professionals”, every business and individual is impacted by environmental exposures.

    Historically, once an environmentally reactive business / individual calls their attorney to assist them with an environmental liability, the attorney brings in their firm’s environmental specialist to address the issue.  This business model will generally lead to some form of litigation and what attorney’s clients have learned over the years about environmental litigation is its very time consuming, stresses resources and desired results are generally not achieved

    Insurance professionals are not going to fix a broken business model overnight, but you can fill a huge gap in most attorney’s work, lack of financial assurance to backstop their legal documents.  In today’s business environment, the name of the game for attorney’s is avoid litigation to grow their client base and business.  Insurance professionals are armed with an arsenal of products to assist attorneys to grow their business model.

    The bottom line, today’s transparent business environment has changed the way Attorney’s must address environmental exposures impacting their client’s which means opportunity for insurance professionals.

    Note:  Education is a vital component to building a TEAM relationship with “Business Professionals”.  Throughout the ERMI “Business Professionals” series we will offer coaching tips to assist you in building your relationships with “Business Professionals”.

    ERMI TEAM Relationship Coaching Tip:  In some contracts, attorney’s will require financial assurance to backstop indemnifications contained in the contract.  They will generally achieve this utilizing standard property and casualty and environmental insurances with coverage being evidenced by a certificate of insurance.  The problem this strategy presents in relation to environmental insurance is, an environmental insurance policy will not be issued without the insurance carrier first receiving a completed and signed “warranty” insurance application.  In general terms the application will state that the environmental insurance policy is being issued based upon the signed “warranty” application and that the application will become part of the policy.  The application goes on to say at the time of a loss if it’s discovered the application is not accurate, the insurance carrier can deny coverage.  Without first confirming the “warranty” application is accurately filled out the certificate of insurance may not be worth the paper it is written on and the same is true for the attorney’s financial assurances contained in the contract.  Coaching attorneys to understand warranty applications will fill a gap in their financial assurance strategy in contracts and a gigantic hole in their E&O exposure.

    To support the above statements let’s look at another example.  For years, attorneys have utilized environmental indemnifications in real estate Buy / Sell Agreements, mergers and acquisitions and many other legal instruments.  Generally speaking, attorneys feel content with addressing potential environmental exposures by simply utilizing environmental indemnifications in legal instruments and not backing them up with a financial assurance mechanism (i.e. bond, letter of credit, monies on deposit, insurance).

    Today we know the problems created by this mindset and the fact that environmental indemnifications are a very cursory way of addressing environmental exposures in legal transactions.

    ERMI TEAM Relationship Coaching Tip:  Environmental insurance policies pay for defense costs.  Do you think an attorney would rather collect their fees from a financially solvent insurance carrier or a client that just found out they have contaminated half their towns drinking water?

    For decades, our Federal Government has utilized financial assurance requirements for asbestos and lead abatement contractors, regulated underground storage tanks, hazardous & industrial waste haulers, Landfills…, so why not more attorney’s?

    Insurance professionals have a variety of financial assurance products to assist attorneys to reduce their E&O exposure, one of which is pollution liability insurance.  TEAMing with ERMI will allow you access to the full menu of the environmental insurance products offered by the major environmental insurance carriers.

    ERMI TEAM Coaching Tip:  Talking points with attorney’s.

    To understand why “Best Practices” for attorneys means moving beyond their current litigious business model to possessing a working knowledge of managing and transferring environmental exposures, we first must be on the same page about a few environmental facts.

    1. What is a “Pollutant”? If you look at an environmental indemnification in a contract, it generally describes a Pollutant as smoke, vapors, soot, fumes, acids…..  However, due to the way courts and insurance companies have responded to lawsuits and insurance claims, environmental Strategist™ (eS) has developed a definition that is easier to understand.  eS define a “Pollutant” as a material, substance or product that gets introduced to an environment for other than its intended use or purpose.” In other words, something that ends up where it does not belong can be a pollutant.  eS have examples where fresh water, milk, cheese, fruit, beer and more have all been defined as a “Pollutant”.
    2. Law firms generally utilize specially trained environmental attorney’s to address their client’s environmental exposures when in reality their biggest environmental exposures are with their other legal specialist’s i.e. general business, health, international, labor, estate planning, merger & acquisition, real estate…. In short, nearly every attorney must possess a working knowledge of proactively addressing their client’s environmental exposures.  TEAMing with ERMI insurance professionals can do this.  In short, you become the law firms backroom environmental risk manager on managing and transferring their client’s environmental exposures.
    3. Historically, attorneys have made their money by addressing past environmental problems such as asbestos, lead, mold and so much more. This reactive approach has cost attorneys time, resources, client relationships and much more.  TEAMing with ERMI we can coach attorney’s on proactively managing and transferring their client’s environmental exposures to increase productivity and profits while reducing their E&O exposure.
    4. The inability of at fault parties to meet environmental indemnifications in contracts is a reputational and liability risk for attorney’s. Attorneys not practicing environmental “Best Practices” may find their E&O insurance at risk of claims from disgruntled client’s.

    ERMI TEAM Coaching Tip:  You would be amazed how many contracts Environmental Risk Managers (ERMI) reviews that an attorney constructed requiring the wrong pollution insurance.  On almost a weekly basis ERMI will assist an attorney with correcting their contract to make sure the proper pollution insurance is being requested and put into place.  TEAMing with ERMI we can make sure your legal TEAM members are not opening themselves up to an E&O exposure by requesting the improper environmental insurance.

    Today’s business environment is demanding attorneys know if their work is preserving an asset or creating an environmental liability for their client and themselves.  Insurance professionals TEAMing with attorney’s to manage and transfer the attorney’s clients environmental exposures will position themselves as a trusted advisor and strategic partner while driving the sales of their insurance products.

    In Environmental Risk Managers “Business Professionals” Series #3 we will strategize on TEAM building with Bankers / Financial Institutions.

  • TEAMing with Attorney’s To Drive Insurance Sales

    Of all the “business professionals” (i.e. attorney’s, accountant’s, banker’s, realtor’s, environmental engineers) we are highlighting in the ERMI TEAMing with “Business Professionals” series, attorneys represent the lowest hanging fruit for insurance professionals to TEAM with.

    There are several reasons for this which we will cover in this competitive environmental intelligence but mainly, attorneys tend to specialize in specific areas of law, i.e. general business, estate planning, bankruptcy, patent / trademark, environmental, criminal, international, employee, civil…  This means an attorney is well versed in their specific area of law but possess very little knowledge about assisting their clients to manage and transfer their environmental exposures.  Note:  As highlighted in Series #1, TEAMing With “Business Professionals”, every business and individual is impacted by environmental exposures.

    Historically, once an environmentally reactive business / individual calls their attorney to assist them with an environmental liability, the attorney brings in their firm’s environmental specialist to address the issue.  This business model will generally lead to some form of litigation and what attorney’s clients have learned over the years about environmental litigation is its very time consuming, stresses resources and desired results are generally not achieved

    Insurance professionals are not going to fix a broken business model overnight, but you can fill a huge gap in most attorney’s work, lack of financial assurance to backstop their legal documents.  In today’s business environment, the name of the game for attorney’s is avoid litigation to grow their client base and business.  Insurance professionals are armed with an arsenal of products to assist attorneys to grow their business model.

    The bottom line, today’s transparent business environment has changed the way Attorney’s must address environmental exposures impacting their client’s which means opportunity for insurance professionals.

    Note:  Education is a vital component to building a TEAM relationship with “Business Professionals”.  Throughout the ERMI “Business Professionals” series we will offer coaching tips to assist you in building your relationships with “Business Professionals”.

    ERMI TEAM Relationship Coaching Tip:  In some contracts, attorney’s will require financial assurance to backstop indemnifications contained in the contract.  They will generally achieve this utilizing standard property and casualty and environmental insurances with coverage being evidenced by a certificate of insurance.  The problem this strategy presents in relation to environmental insurance is, an environmental insurance policy will not be issued without the insurance carrier first receiving a completed and signed “warranty” insurance application.  In general terms the application will state that the environmental insurance policy is being issued based upon the signed “warranty” application and that the application will become part of the policy.  The application goes on to say at the time of a loss if it’s discovered the application is not accurate, the insurance carrier can deny coverage.  Without first confirming the “warranty” application is accurately filled out the certificate of insurance may not be worth the paper it is written on and the same is true for the attorney’s financial assurances contained in the contract.  Coaching attorneys to understand warranty applications will fill a gap in their financial assurance strategy in contracts and a gigantic hole in their E&O exposure.

    To support the above statements let’s look at another example.  For years, attorneys have utilized environmental indemnifications in real estate Buy / Sell Agreements, mergers and acquisitions and many other legal instruments.  Generally speaking, attorneys feel content with addressing potential environmental exposures by simply utilizing environmental indemnifications in legal instruments and not backing them up with a financial assurance mechanism (i.e. bond, letter of credit, monies on deposit, insurance).

    Today we know the problems created by this mindset and the fact that environmental indemnifications are a very cursory way of addressing environmental exposures in legal transactions.

    ERMI TEAM Relationship Coaching Tip:  Environmental insurance policies pay for defense costs.  Do you think an attorney would rather collect their fees from a financially solvent insurance carrier or a client that just found out they have contaminated half their towns drinking water?

    For decades, our Federal Government has utilized financial assurance requirements for asbestos and lead abatement contractors, regulated underground storage tanks, hazardous & industrial waste haulers, Landfills…, so why not more attorney’s?

    Insurance professionals have a variety of financial assurance products to assist attorneys to reduce their E&O exposure, one of which is pollution liability insurance.  TEAMing with ERMI will allow you access to the full menu of the environmental insurance products offered by the major environmental insurance carriers.

    ERMI TEAM Coaching Tip:  Talking points with attorney’s.

    To understand why “Best Practices” for attorneys means moving beyond their current litigious business model to possessing a working knowledge of managing and transferring environmental exposures, we first must be on the same page about a few environmental facts.

    1. What is a “Pollutant”? If you look at an environmental indemnification in a contract, it generally describes a Pollutant as smoke, vapors, soot, fumes, acids…..  However, due to the way courts and insurance companies have responded to lawsuits and insurance claims, environmental Strategist™ (eS) has developed a definition that is easier to understand.  eS define a “Pollutant” as a material, substance or product that gets introduced to an environment for other than its intended use or purpose.” In other words, something that ends up where it does not belong can be a pollutant.  eS have examples where fresh water, milk, cheese, fruit, beer and more have all been defined as a “Pollutant”.
    2. Law firms generally utilize specially trained environmental attorney’s to address their client’s environmental exposures when in reality their biggest environmental exposures are with their other legal specialist’s i.e. general business, health, international, labor, estate planning, merger & acquisition, real estate…. In short, nearly every attorney must possess a working knowledge of proactively addressing their client’s environmental exposures.  TEAMing with ERMI insurance professionals can do this.  In short, you become the law firms backroom environmental risk manager on managing and transferring their client’s environmental exposures.
    3. Historically, attorneys have made their money by addressing past environmental problems such as asbestos, lead, mold and so much more. This reactive approach has cost attorneys time, resources, client relationships and much more.  TEAMing with ERMI we can coach attorney’s on proactively managing and transferring their client’s environmental exposures to increase productivity and profits while reducing their E&O exposure.
    4. The inability of at fault parties to meet environmental indemnifications in contracts is a reputational and liability risk for attorney’s. Attorneys not practicing environmental “Best Practices” may find their E&O insurance at risk of claims from disgruntled client’s.

    ERMI TEAM Coaching Tip:  You would be amazed how many contracts Environmental Risk Managers (ERMI) reviews that an attorney constructed requiring the wrong pollution insurance.  On almost a weekly basis ERMI will assist an attorney with correcting their contract to make sure the proper pollution insurance is being requested and put into place.  TEAMing with ERMI we can make sure your legal TEAM members are not opening themselves up to an E&O exposure by requesting the improper environmental insurance.

    Today’s business environment is demanding attorneys know if their work is preserving an asset or creating an environmental liability for their client and themselves.  Insurance professionals TEAMing with attorney’s to manage and transfer the attorney’s clients environmental exposures will position themselves as a trusted advisor and strategic partner while driving the sales of their insurance products.

    In Environmental Risk Managers “Business Professionals” Series #3 we will strategize on TEAM building with Bankers / Financial Institutions.