What Does Environmental Liability Buyout Mean?

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What does Environmental Liability Buyout mean? Read on to discover the definition & meaning of the term Environmental Liability Buyout - to help you better understand the language used in insurance policies.

Environmental Liability Buyout

Environmental Liability Buyout

A third-party contractually assumes the ownership of the known environmental conditions in a given property. In exchange for a cash payment to a third party, the third party will assume all obligations for remediation and liability associated with known conditions. The assuming party will then complete all required remedial activities, negotiate with the Environmental Protection Agency (EPA) or other regulatory bodies, and provide a full indemnity to the "seller." Procedurally, the contractual assumption typically requires that the assuming party purchase an environmental insurance policy to backstop their indemnity. Thus, the ceding company will be protected in the event of the failure of the indemnitor. To protect the funds transferred to the third party, the contract's insurance provisions typically dictate the use of a finite risk insurance policy.

We hope the you have a better understanding of the meaning of Environmental Liability Buyout.

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