The liabilities of the land
Liberty Legal Indemnities (LLI), a subsidiary of the Lloyd's managing agency Liberty Syndicate Management (LSM), has launched Landpro, a new scheme that can protect policy holders against new liabilities arising in respect of contaminated land that has been remediated. The concept has been developed by LSM in conjunction with BCD Underwriting Agency and follows the Government's environmental liability legislation set out under Part IIA of the Environmental Protection Act 1990.
The Act provides a framework for the identification and assessment of contaminated sites and for determining who should pay for remediation. It establishes a "chain of liability" whereby, if the original polluter cannot be found, then the responsibility for the remediation costs could pass to the present owner or occupier of the land. Although the legislation should be in force by December 1999, those with interest in land should be aware that the Act will be retrospective and retroactive, and will therefore apply to situations that already exist.
Liberty Landpro will encourage re-development of brownfield sites in line with this government thinking, with a view to protecting such interested parties as housing associations and developers who will want any new builds and existing developments, as well as the directors, officers and employees acting on behalf of the company, to be safeguarded from a requirement to pay for future remediation costs.
Suitability for use
The legislation supports the concept of "suitability for use", so liabilities could arise, for example, where land has been, or is to be, converted from heavy industrial use to office, retail or residential uses. Therefore, for new and existing developments, the developer company, along with its directors and officers, and the purchaser, could be deemed liable to pay for remediation should a contamination problem reoccur. Furthermore, the subsequent achievable purchase value of such properties may be dramatically affected. Liberty Landpro can cover such an outcome, as Rupert Daniell of BCD explains: "If a remediated contamination problem were to re-surface during the policy term, the insured would be covered in respect of any remediation costs to resolve the problem, and in some cases will be indemnified in respect of a loss in sale value, resulting directly from that second round of clean-up being required.
"For the assessment of a particular risk the underwriters will require copies of all the environmental reports and remediation strategies that have been carried out, or are intended, and it may be necessary for an environmental consultant acting on behalf of the insurer to review these documents. A reclamation strategy therefore will not necessarily be imposed by the insurers and plans already in place would not automatically be disregarded."