Investors, developers and owners of contaminated land face increasing costs and potential financial losses for cleaning up their land - even if they were not the cause of the contamination. Moreover, after remedial studies have been undertaken and clean-up costs estimated, there is the real danger that costs can exceed initial estimates and jeopardize the financial viability of the business. These concerns often cause financial institutions to adopt an unusually cautious approach to lending money to property owners and developers as they can not only lose their investment but can also become liable for the full cost of clean-up in the event of the borrower's business becoming bankrupt. Having the ability to cap remediation costs is crucial to investors purchasing contaminated land as well as to current owners embarking on clean-up projects.
The Clean-Up Cost Cap product has been designed to minimize the risk and uncertainty associated with environmental remediation projects. It ensures funds will be available to complete a project if there are cost overruns as a result of pollution conditions, adjacent to or from the defined site location. Costs include removing pollutants originating from the area of the remedial plan. Additional optional coverage is also available for new found contamination that is discovered in the course of performing cleanup pursuant to the Remedial Plan at a covered location. The insurance program can be obtained on a straight risk transfer basis or combined with alternative risk funding options.
New owners are protected against a financial loss that could impair operations and profitability. For the existing owner, clean-up costs are set for budgetary purposes or for the purpose of attracting a buyer. The CCC also helps protect the financial health of the borrower and the value of the lender's collateral. All interested parties have the assurance that a mechanism is on place to provide funds to help complete remedial activities and ultimately helps maximize investment value of contaminated property.