ABSTRACT
This chapter considers some of the potential pitfalls associated with environmental insurance and how they might be overcome. Insurance is used where there is a risk of an adverse event, not where it has already happened, or indeed where there is no possibility of the adverse event arising. Insurance type risks might be attractive to capital markets because insurance claim events such as earthquakes are independent of stock market events. Insurance capping of contaminated land remediation costs aims to remove concerns for developers of Brownfield sites about unforeseen rises in the cost of remediation works. However, other insurance and risk finance products might be usefully applied, in the remediation process. The identification and categorisation of risks also enables appropriate risk management measures to be taken to avoid or reduce risks, or identifies mitigating steps that can complement insurance cover or indeed might be required as a prerequisite for cover.
