Brownfield Redevelopment and Pollution Insurance Jay Halpin Branch Manager National Accounts AIG Env

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Brownfield Redevelopment and Pollution
InsuranceJay HalpinBranch Manager
National AccountsAIG Environmental
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General Overview

• Who is AIG Environmental?
• Pollution Legal Liability
• Cleanup Cost Cap
• Contractors Pollution Liability

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AIG Environmental

• AIG Environmental has been providing
  environmental insurance, claims management, and
  policyholder programs for more than 27 years
• AIG Environmental is the largest environmental
  insurer and the leader in product innovation
• AIG, Inc. is a leading international insurance
  and financial organization with assets of over
  1.022T (Sept. 30, 2008).

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Top Reasons Developers Do Not Purchase Pollution
Insurance

• Phase I/II included 3 shallow soil borings so
  site is characterized
• Their last Greenfield development did not need it
• The development budget is too tight
• They will just sue the Phase I consultant
• LLC w/o any assets to lose
• Not a lender requirement

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Common Misconceptions

• I have coverage under a General Liability or
  Builders Risk policy
• I havent had a loss in the past
• Coverage is limited not readily available
• Pre-existing conditions are excluded
• Excessive amounts of data are required
• Financial Institution cannot be covered as
  Insured
• 20 year policy terms available

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Pollution Legal Liability (PLL) Select

• PLL Select provides environmental coverage for
• On-site and/or off-site pollution conditions
• Pre-existing and/or new conditions
• Known and unknown pollution conditions
• Cleanup costs and/or 3rd party BI PD
• Defense costs
• Microbial Matter
• Transported cargo
• Non-owned locations

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On-Site vs. Off-Site
Cleanup, BI PD for off-site contamination
Cleanup, BI PD for contaminants on or under
the insured property

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Pre-Existing vs. New Conditions
Timeline of Coverage
New Conditions Commenced on or after the
Continuity Date
Continuity Date (Transaction Date)
Pre-existing Conditions Commenced prior to the
Continuity Date
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Clean-up Costs Coverage

• Coverage for investigation, removal, remediation
  of soil, groundwater, surface water, other
  contamination
• Pre-existing and new conditions
• Third-party claims
• On-site or Off-site coverage
• Includes defense costs

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Bodily Injury Property Damage

• 3rd party Claims for
• BI PD
• Pre-existing or New Conditions
• On-site and/or Off-site

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Microbial Matter Legionella Pneumophila

• Modify Definition of Pollution Conditions
• Classes of Business
• Commercial Real Estate
• Multi-family Residential and Condos
• Hospitals
• Schools

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Pollution Conditions from Transported Cargo
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Non Owned Locations
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Site Redevelopment
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Redevelopment Example

• A luxury apartment building gives new life to an
  old industrial building on the waterfront. With
  550,000 square feet of new space, the site offers
  341 apartments with an impressive array of
  amenities including a restaurant and a spa with a
  360 view.
• The developer invested over 60 million,
  including 7 million for environmental
  remediation.

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Another Example

• Design changes, environmental cleanup delay
  opening
• Design changes and complexities involved in
  cleaning industrial waste at the site of a
  planned new headquarters will delay completion of
  the center by a few months.
• The developer/owner had to clean up the former
  industrial land, removing soil that had been
  contaminated with diesel and other pollutants.
• Soil and water on the site were contaminated with
  mercury, lead, gasoline and diesel fuel.
• It was a more involved cleanup than anticipated.

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Cleanup Cost Cap (CCC)

• PLS does not cover cost of cleanup of known
  contamination
• CCC designed to cap the cost of cleanup
• Cleanup Costs exceed projected costs
• Off-site cleanup emanating from a covered site
• New found contaminants within remedial area
• Governmental change orders

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Combined PLL And CCC
Unknown
Site Boundaries
Cleanup Cost Cap
Pollution Legal Liability Select
Known
Unknown
Known But Not Actionable
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Contractors Pollution
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Contractor Environmental Exposures

• Failure to identify control contamination
• Unknown underground structures
• Inadequate ventilation
• Construction defect claims that lead to mold
• Lead paint and asbestos
• Mixing incompatible materials
• Subcontractor liability
• Transport and disposal of waste materials

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SUMMARY

• Pollution policies are viable methods to assist
  in property transactions
• Pollution policies can protect developer,
  landowner, seller, the lending institution
• CPL covers contractor exposures on 3rd party
  sites
• Multi-year policies are available
• Read the policy make sure you know what you are
  buying!

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• AIG Commercial Insurance is the marketing
  name for the domestic commercial property
  casualty insurance operations of American
  International Group, Inc. For additional
  information, please visit our website at
  www.aig.com. All products are written by
  insurance company subsidiaries of AIG Commercial
  Insurance Group, Inc. Coverage may not be
  available in all jurisdictions and is subject to
  actual policy language. Claims scenarios are
  presented for illustration only. Non-insurance
  products and services may be provided by
  independent third parties.
• AIG Commercial Insurance serves a wide range
  of customers from multinational and middle-market
  companies to non-profit organizations and small
  entrepreneurs. Its extensive product offerings
  include general and excess liability, property,
  management and professional liability, workers
  compensation, accident and health, environmental
  liability, and integrated global programs for
  multinational companies. AIG Commercial Insurance
  also maintains dedicated industry groups to serve
  the insurance needs of the aviation,
  construction, education, energy, financial
  institution, healthcare, marine and real estate
  sectors.