environmental Strategist®, between the lines: Illicit Abandonment is an environmental exposure, which most commercial real estate lessors don’t think about.
Let me digress, back in 2008 when the economy tanked, we received a call from an insurance agent who explained his client had a leased facility and the tenants went out of business. When the client went to inspect their property, they found raw materials stored in 55 gallon drums, totes and other storage containers, which were left behind by the bankrupt tenant. None of the containers were leaking or causing an environmental liability, but to rent the building out the owner had to get rid of the raw materials and it cost more than $80,000. That is a simple example of illicit abandonment and this exposure can be covered with pollution liability insurance.
The article below talks about refurbishing of containers, such as 55 gallon drums, and the environmental exposures it creates for workers and neighbors to business those refurbish containers. The article also talks about how most containers they receive have some residual product left in the containers.
When you see a facility like the one in this picture, which stores old containers outside over an unsealed surface, over time residuals will leak out and contaminate the ground and ground water. Under federal law the owner of the property is ultimately responsible for the environmental condition of their property. What if the contamination migrates onto a neighboring property?
What the article does not talk about is the huge environmental exposure storage and use of 55 gallon drums, totes, buckets… creates for businesses that use them. How does the business buy the raw materials; FOB point of shipment, or FOB point of delivery? Do they store them in a secure area with secondary containment?
As your client’s professional risk manager, do you go out and inspect their rental properties to make sure a tenant is not creating an environmental exposure for your insured? What is the tenant’s strategy to meet the environmental indemnification contained in the lease agreement they signed?
Is the tenant’s financial assurance strategy to go out of business if they create an environmental liability, and leave the property owner with an illicit abandonment exposure?
Working with Environmental Risk Managers we can coach you and your client’s on better managing and transferring their environmental exposures.
ERMI Sales Strategy: Every time you go out and inspect a client’s tenant, it creates a potential new sales opportunity for you with the tenant. While serving your client’s better, you are also creating a great opportunity to increase your sales. Win /Win!!!!!
https://projects.jsonline.com/news/2017/2/15/chemicals-left-in-barrels-leave-many-at-risk.html