Share purchase transactions (EHS issues)—environmental insurance

The following Environment practice note provides comprehensive and up to date legal information covering:

  • Share purchase transactions (EHS issues)—environmental insurance
  • When is environmental insurance appropriate?
  • What type of policy?
  • Information requirements
  • Timing issues

Share purchase transactions (EHS issues)—environmental insurance

When is environmental insurance appropriate?

Environmental insurance may need to be considered in the following situations:

  1. an environmental report identifies significant concerns regarding contamination

  2. there is stalemate in environmental indemnity negotiations

  3. there are concerns over the covenant strength of the indemnifying party

  4. insurance is required by funders, tenants or to help the saleability of a high risk site

See Practice Note: Environmental insurance—when is it needed?

What type of policy?

The usual type of insurance in share purchase transactions is a ten-year fixed site policy often called an Environmental Impairment Liability (EIL) Policy or Premises Pollution Lability (PPL) Policy. This can protect the insured parties against regulatory action or third party claims relating to onsite and offsite contamination, nature resource damage, clean-up costs, consequential losses and legal defence costs. An environmental indemnity in the share purchase agreement (SPA), environment deed or lease can be added as an Insured Contract.

If remediation work or construction is planned, a Contractors Pollution Liability (CPL) policy may need to be considered.

See Practice Notes: Environmental insurance—types, Environmental

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