Recently, our agent presented us with a new business account for an insured who was entering into a long-term agreement to lease a small island of approximately 75 acres in a nearby port. The island has ten buildings that have been there for roughly fifty years and had been used for a number of industrial operations, mainly for industrial metal fabrication and painting. The insured intends to operate the facilities on the island as an industrial fabrication and painting business.

Account Details and Requirements

The contract the insured is entering into requires they carry Environmental Impairment Liability (EIL) coverage for the entire island for new conditions only with a limit of five million per incident with a ten million dollar aggregate. They had to name the company that owns the island as an Additional Named Insured as well as hold them harmless in the event of a claim. The coverage had to be in place in time for the insured to take possession of the island and run for up to 5 years after the termination of the lease contract.

Approaching the Marketplace

With a full submission, a copy of the contract, a Phase I Report, and all the requirement  items in mind Beacon Hill approached the marketplace and started conversations about the account with our carrier partners who specialize in offering EIL coverage. The location of the risk and the nature of the insured’s operations caused many carriers to decline.  With 50 years of industrial use and the water exposure, many carriers could not handle the risk. Even with us only needing new conditions, the exposure to prior pollutants that could not be defined caused carriers to decline. The limits and contractual needs also drove off a few markets as they could not match what was needed. In the end we had three carriers willing to offer terms.

Presenting Options to the Insured

We presented a $5,000,000/$10,000,000 limit with a $50,000 deductible for New Conditions including Transportation Pollution Liability, Non-owned Disposal Site coverage, and all the usual enhancements given under broad form Site Pollution coverage. The carrier offered a 1-year term for $28,800 and a 5-year term for $74,400 on non-admitted paper.

We presented this to the agent and explained that the insured would have to keep coverage in place and that when or if they give up the lease they would have to continue to purchase the coverage for five years after to remain within the agreement of the contract. Ultimately the insured and the lease holder purchased the 5-year policy term. Multi-year policies lock the rate in place and the multiplier makes the per year cost to the insured more appealing.  

Working With an Environmental Broker for Challenging Accounts

Although this was a unique account—with challenges ranging from the size of the site to the exposures associates with several industrial buildings—Beacon Hill’s access to the environmental marketplace and product knowledge was crucial to finding the right solution for this insured. The agent and insured were pleased with the efficiency of the overall process and Beacon Hill’s ability to meet the needs of such a complex industrial site. When working on industrial accounts, the quality of the coverage form, carrier reputation & strength, and the support from a qualified environmental broker are key factors to writing a great account.