Specialist re/insurer Beazley has launched a new environmental liability policy that protects banks and other lenders from pollution risks that could affect the value of property used as collateral for commercial loans.
In the event of a loan default due to environmental contamination, the site lender environmental asset protection (SLEAP) policy will cover either the estimated clean-up costs or the loan balance, based on which is lower.
Beazley will also pay clean-up costs for environmental contamination at properties owned by the lender as a result of a foreclosure.
Additionally, the coverage protects lenders against third party claims for clean-up, bodily injury, property damage, and defence costs associated with the collateral property at all stage of a commercial loan, regardless of whether it is in default.
“We have designed our new policy carefully to address a broad array of environmental exposures that can make lending against property perilous,” said Jayne Cunningham, Beazley’s environmental focus group leader.
“Contamination can be hard to detect and take years to emerge,” she added. “Through this coverage, we aim to give lenders peace of mind over the long term, regardless of the status of their loan.”
Beazley’s environmental liability team already offers a range of insurance products for commercial organisations including property owners and developers; industrial and commercial operations; general and specialty contractors; and the environmental services industry.