Beazley’s newest environmental liability product provides lender coverage to protect against environmental issues at a borrower's real estate on single loans.
PRODUCT: Beazley Site Lender Environmental Asset Protection (SLEAP)
BEST RATING: A (Excellent)
AVAILABILITY: Coverage is available through Beazley-appointed brokers only.
FOCUS: Contamination can be difficult to detect, assuming it doesn’t take years to emerge. And that’s just one of a broad array of environmental exposures that can make lending against property a perilous enterprise.
Beazley Site Lender Environmental Asset Protection (SLEAP) is the company’s newest environmental liability product for lenders, providing lender coverage to protect against environmental issues at a borrower’s real estate on single loans.
The product protects lenders’ bottom line in the event that the borrower’s collateral property is devalued.
“SLEAP can allow the lender to remain whole without the need to foreclose on the collateral property,” explains Christopher Biddle, environmental underwriter, Beazley. “This coverage is important to lenders because it seeks to transfer pollution risk at the properties on which they provide loans to an insurance company.”
This is the latest product to originate with Beazley’s rapidly expanding environmental liability team, which has many years’ experience in developing tailored insurance products to meet the needs of a wide variety of commercial organizations, including property owners and developers, industrial and commercial operations, general and specialty contractors, and the environmental services industry.
COVERAGE DETAILS: Upon discovery of a pollution condition at a borrower’s property and the borrower’s default, the policy pays the lender the lesser of the outstanding loan balance or anticipated cleanup cost to address the pollution condition.
During the life of the loan, SLEAP also covers the lender against third-party claims made against them for cleanup costs, bodily injury or property damage associated with pollution conditions at the collateral property.
Finally, if the lender forecloses on the collateral property, the policy will pay for cleanup costs as a result of the lender first discovering pollution conditions at the collateral property after foreclosure.
UNDERWRITING: Required materials include an application; all environmental reports, such as Phase I or Phase II Environmental Site Assessments or underground storage tank closure reports, which have already been completed for the collateral property; and details about the characteristics of the loan, such as the amount, length, value of collateral property, loan-to-value ratio and debt service coverage ratio.
MINIMUM PREMIUM: N/A.
TARGET: Lenders, including banks, savings and loan companies, credit unions, capital market lenders, life insurance companies, or any financial institution which originates commercial real estate-backed loans.
COVERAGE TERRITORY: All U.S. states and Canadian provinces, plus select countries outside the U.S. and Canada.
CONTACT: Christopher Biddle, environmental underwriter; Beazley, 50 S 16th Street, Suite 2700, Philadelphia, PA 19102; 215-446-8416.
Jacquelyn Connelly is IA senior editor.