Insurers typically write Pollution on nonadmitted paper, so underwriters can manuscript coverage to a policyholder’s particular needs.

The various policies can cover Mold and Business Interruption, though some insurers add those coverages by endorsement. In addition, some policies are transferable.

“There’s a lot of flexibility built into [policies] that certainly didn’t exist 10 years ago,” says Bruce Kranz, senior vice president of Environmental risk at brokerage Hylant Group.

For example, after years of being able to secure Environmental insurance covering only underground storage tanks, Hospital Corp. of America (HCA)—the largest U.S. hospital corporation—now has “broad” premises coverage tailored specifically for the health-care industry, says Shirley Fuller Cooper, HCA’s assistant vice president of insurance.

A major recent trend is a desire among carriers to shorten coverage periods. Unlike years ago, when buyers could purchase 20- and 30-year policies, insurers now offer three-, five- or 10-year policies. (Insurers do not like writing 10-year policies, but demand for it persists. Many lenders will not fund transactions unless borrowers secure those long-term policies, brokers note.) Financial institutions still can obtain Lender’s Liability protection from Zurich and XL Group, but most underwriters have stopped writing it. The product covers lenders if borrowers default on loans for property that later is found to be contaminated. The policies typically cover the lesser of the remaining value of the loan or the costs to remediate the property.

But lenders also can find protection as additional insureds on Environmental policies written for companies with real estate holdings. If a policyholder defaults on its bank loan, then its insurer will move the lender up to the first position on the policy.

Losses have virtually killed insurers’ appetite these days for Cleanup Cost Cap coverage for contractors. The coverage responds when a contractor’s cost to remediate a contaminated site exceeds the original estimate.

“We’ve seen capacity for that completely disappear over the last 24 months,” says Chris Smy, managing director and global practice leader for Marsh’s Environmental practice.

The problem: The product essentially allowed contractors to underbid projects with the assurance they still could turn a profit by purchasing a Cost Cap policy, insurance-market experts explain.

Some insurers also have stopped writing Underground Storage Tank coverage, “and others are looking at their book” to determine whether the risk is profitable, Smy says. “That’s something to watch.”

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