Environmental
We advocate early engagement in every policy to provide upfront, honest, and practical advice.
Environmental issues are not typically covered under Warranty & Indemnity (W&I) insurance and therefore environmental policies bridge the gap between Public Liability, Property, and W&I policies, specifically addressing pollution and environmental damage concerns.
Why do I need Environmental Insurance?
If your business faces legal liability, rectifying damages can be costly and pose risks to reputation. Resolving environmental issues swiftly and sensitively is crucial, and Environmental Liability cover can assist in addressing and rectifying any damage caused.
A separate environmental insurance policy is often required because public liability insurance typically excludes environmental liabilities, except for sudden, unintended, and unexpected pollution incidents.
Environmental Insurance Solutions we provide
Our coverage includes specific exclusions for known conditions, determined by the level of site characterisation and specific requirements from regulatory authorities. Typically, environmental policies will exclude fines and penalties, loss arising from a change of use, and, increasingly, PFAS contamination. We aim to remove exclusions or other qualifications of cover wherever feasible.
Key benefits
Our Environmental insurance is designed to mitigate the risks associated with pollution events and contaminated land, whether known or unknown, within the insurance market. It is relevant for buyers, sellers, targets (and other entities in non-M&A scenarios), providing financial security for losses stemming from breaches of environmental representations and warranties. This includes remediation costs and legal liabilities, such as refunds for clean-up expenses and claims for loss of business due to site operation limitations.
What our clients say
“A smooth W&I process on our transactions, whether acquiring or divesting, is paramount for LDC as an investor. We regularly work with the Paragon team, where given the choice, because their expertise and in-depth knowledge of the M&A insurance market enables them to achieve fantastic results in tight timeframes.”
“Their strong knowledge of how insurance solutions fit into M&A processes is second to none and the team has consistently provided invaluable contributions through the underwriting and policy negotiation phases showing their commitment to understanding the assets and specific issues involved.”
“As an M&A adviser we are always looking for partners who can assistant in reducing friction and complexity in transactions – helping to keep the focus on what really matters most to our clients. Having worked with a range of brokers in the space, the team at Paragon is a clear standout in developing fit-for-purpose insurance solutions and being trusted to deliver what they’ve promised. They are a pleasure to work with.”
Environmental FAQ’s
Costs, typically within a 0.4 – 3% range (increasing to 6% for sizable environmental exposures), depend on factors like the number and jurisdiction of insured locations, policy limit size, nature of underlying operations, underlying risk, and known contamination levels. Premiums are higher for known pollution conditions. Insurance premium tax and underwriting fees are additional charges.
A common policy period is 10 years for operational sites, but it may extend to 15 years depending on the risk extent, especially when specifically insuring an environmental indemnity.
The following information is valuable: Phase 1/Phase 2 Environmental Reports, Remediation Action Plan or Validation Report, Vendor/Buyer Due Diligence Assessments, Internal Environmental Self-Assessments, Environmental Audits, correspondence with relevant environmental regulators, and access to a virtual data room if possible.