Environmental Liability Transfer: An Overview and Current Trends in the Market

摘要

The transfer of environmental liabilities involves a contractual agreement whereby environmental risks are conveyed from a party responsible for the site conditions to an unrelated third party. In general, liability transfers can be placed into four categories:1. Transfer to environmental insurer 2. Fixed-price remediation/guaranteed remediation contracts3. Liability transfer for known and unknown environmental conditions 4. Contaminated property transferMost liability transfer programs involve the transfer of a cleanup obligation for a known environmental condition. Typically, the liability transfer contract will be supported by environmental insurance in the form of a cost cap policy. In addition, if the transaction involves the transfer of unidentified, unknown environmental conditions, then the contract will be supported by pollution liability insurance.The insurance coverages available in the market differ between insurers and also year-to-year. Furthermore, the policies are relatively complicated legal agreements and it is important for all parties involved in the transaction to understand what the policies are providing and the insured's obligations during the policy period.