By: Eileen Escudero Wisor, New Day Underwriting Managers LLC
New and potentially costly concerns come to the surface for redevelopment and property transactions.
Long time in the making, EPA released its final vapor intrusion guidance document in June 2015. Vapor intrusion is the migration of hazardous vapor from contaminated soil or groundwater into the indoor air of an overlying structure.  It can be harmful to human health, negatively impact property value and increase environmental liabilities. This is relevant to site redevelopment and/or transaction of formerly contaminated properties where an insured property overlays the source of contamination.
While not binding, EPA’s guidance may translate to higher remediation costs and risk with respect to any real estate transaction. It could also increase liabilities as the guidance may serve to establish a standard of care with respect to potential vapor litigation.
While penalization may not come in the form of civil action, fine or penalty, it may come in the form of a government re-opener where a Potentially Responsible Party (PRP) will be hit with unexpected costs for issues they believed to be resolved. As carriers are seeing (and paying) increased PLL claims from re-openers, trends indicate these types of risks will now be heavily underwritten or even excluded thereby increasing a PRP’s out of pocket exposure with respect to vapor remediation.
To ensure you provide your client with the optimal insurance solution, take the time to partner with a broker or intermediary that has the knowledge and resources to place the best coverage possible to meet your client’s needs and interests.