Account Profile: A Site Pollution Account with Limited Historical Information

By Stephen Holcombe, Assistant Vice President

We recently received a submission for an insured that was looking for Site Pollution Liability for a property they had just purchased. The property is currently vacant but was previously a warehouse/industrial facility located in a suburban metro area. Our insured had done some due diligence prior to purchase and had a Phase 1 environmental study completed at the location. Our agent’s goal was to see if they could obtain historical coverage and new conditions coverage moving forward after the purchase.

After having a discussion with the agent, it was revealed that the insured was planning to develop the property into a new construction apartment building complex. We discussed the timeframe for project completion, expectations for coverage, and if the insured was going to do any further environmental site assessments at the site prior to starting the new construction phase of the project. The agent was unsure if a Phase 2 environmental report was completed but was going to look into it. A Phase 2 report would give us a more detailed look at the site, as it provides a subsurface look at the property.  This was one of the key components we would need in order to provide coverage.

Working with limited information

At this point we had received some feedback from a couple of our key Site Pollution markets. Their questions involved seeing project development specs, asking if there had been any Phase 2 environmental reports completed at the site, and what policy term length the insured would require.  We also discussed coverage limitations. Some of our markets did not want to provide coverage during the construction phase or would have to limit specific coverage during time of construction. Some had more detailed questions of construction plans involving subsurface work, number of units, and were requiring a Phase 2 study to be completed.

Beacon Hill and the agent both understood that we would need to obtain additional information and assessments on our end to help make the carrier more comfortable and still provide coverage to protect the insured. Our retail agent was able to secure a Phase 2 report that was completed prior to the sale. However, it was limited in the area of the property where soil sampling was completed and did not provide a complete enough evaluation of the property. Nonetheless, it still provided a positive picture of the property and nothing alarming was discovered, so the Phase 2 (along with more detailed construction plans) were enough for us secure a few quote options for the insured. Since we still only had a partial look at the property from a subsurface standpoint, some carriers were still hesitant to quote the account.

The outcome

Beacon Hill was able to get a multi-year term that provided historical and new conditions coverage moving forward. The carrier provided coverage during construction, as well as Mold coverage once the insured received their certification of occupancy. There was one drawback to the terms—the carrier provided options at a higher deductible because of the limited information regarding the Phase 2 report.  Our carrier noted that with a more detailed Phase 2, they may be able to lower the deductible and reduce the premium.

In the end, our insured decided to wait until a more detailed Phase 2 report was completed. With this more in-depth analysis, we were able to improve the terms for the insured. Information is key when it comes to tailoring Site Pollution coverage to meet your clients’ needs, especially in a niche market where specialty underwriters can easily choose to pass on an account if they aren’t completely comfortable writing it. Without a completed Phase 2, the above situation may not have been successful.

For more information on submission requirements, or to discuss a specific account, please contact us.