When acquiring or divesting property, companies are increasingly concerned about potential environmental liabilities. With an increased number of high-profile cases related to these issues coming to light, companies are now more aware of the significant losses that can be involved, and as a result, more organizations have begun to leverage environmental liability coverage to limit exposures.

When a property is contaminated, the remediation (site cleanup), regulatory compliance and clearance, fines and penalties for violations, and potential third-party legal actions can cost tens-to-hundreds of thousands of dollars. With severe contamination cases, expenses can total tens of millions of dollars.

A company could be financially crippled to the point of bankruptcy if burdened with this level of loss, which is why more companies are employing environmental liability insurance.

New Web-based software programs have been specifically designed to help manage this procedure. By electronically documenting and tracking any environmental sampling data, including Phase I and Phase II site assessments, companies can monitor the potential existence of pollutants.

When contaminants are found, these systems help to lead an environmental remediation team toward site compliance and clearance with regulatory entities. The systems track each step of the remediation process, so property owners can more easily resolve conflicts over indemnities and regulatory actions.

These tools also help to ensure proper environmental liability coverage is secured as they monitor changes to policy terms and conditions and manage any claims that may manifest from the property. In addition, such systems are valuable data management tools and may serve as a centralized repository for various environmental documents.

For example, property asset managers have real-time access to the environmental coverage policies, endorsements, enhancements, deductibles, limits, exclusions and claims history for individual properties, as well as information on the aggregate portfolio.

The Web-based systems are highly configurable and can be customized to display all asset details and associated environmental data. In addition, companies are able to manage environmental issues for current properties as well as potential acquisitions.

In terms of the environmental coverage process, the amount of time saved by utilizing these systems is astronomical. In the past, property owners and real estate developers used spreadsheets and paper-based processes to collect and track environmental issues and risks. At renewal time, they either copied environmental documents or scanned them onto a CD and sent them to the underwriter and underwriting engineer.

Representatives from competing markets would sometimes need to travel to review hundreds of environmental documents. The entire process was costly, cumbersome and time-consuming.

With Web-based software, environmental data is now uploaded and provided to underwriters in a matter of minutes, rather than weeks. Online access is granted only to authorized individuals, who are provided with a secure username and password to protect the confidentiality of information. In this way, the broker and competing carriers are able to view–in real time–site details and documents from the convenience of their offices.

Various stakeholders can be authorized to safely access the information, including asset managers, remediation experts and underwriting engineers.

There are increased efficiencies through automatic scheduling of reports and distribution of e-mail alerts that notify asset managers of predefined risk events, such as the existence of noncompliant locations and detection of new contaminants. Ultimately, data is owned by the property owner, with complete portability regardless of broker or insurer relationships.

Tracking the environmental liabilities associated with real estate transactions can be extremely complex. As the industry moves toward a more sustainable approach to developing and re-using property, Web-based software helps to facilitate the environmental due diligence process and secure adequate liability insurance in the event that contaminants are found and remediation is required.

Native Internet technology serves as a collaborative platform to warehouse and share environmental, legal and regulatory documents related to the property. Companies should consider an enterprise solution that provides environmental capabilities as part of a more comprehensive risk management approach, so they can leverage a more inclusive analysis of their risks and exposures.