An insurance standard definition explained
Environmental insurance is designed to provide for the reinstatement of the environment. Without it, enviroconomists argue that entities that self-insure may incur environmental liabilities that far exceed their liquidated asset values affecting their ability to offer sustainable solutions.
The importance of identifying potential environmental liabilities is critical in the process of risk mitigation because an entity should assess if they are asset rich enough to financially provide for adverse environmental impact or if they should arrange to offset any potential liability with insurance. Why? Investment is necessary to exact precautionary measures to protect the environment.
Remediation is a term used to describe environmental clean up. In insurance terminology it would be defined as “reinstatement subject to commercial consideration to limit the amount an entity would invest within their legal requirements”. [NB: Remediation also suggests that the influence of pollution will slowly attenuate compromising the extent to which reinstatement may be exercised.]
“Reinstatement” means to return the environment to the way it was prior to the contamination, however cleaning up toxins can be a slow process and sometimes the clean up can take many lifetimes.