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insured fixed-price cleanup (IFC)

Under the traditional environmental cleanup model, a contractor is hired to perform the cleanup, but the risk of cost overruns is borne largely if not entirely by the site owner or other entity(ies) originally responsible for the cleanup (owner). Under an IFC, the contractor guarantees a fixed price to cover all environmental regulatory costs, regardless of whether those costs increase due to unknown pollutants, regulatory changes, or other causes. The guarantee is typically backed not only by the contractor's own indemnification but also by a site-specific insurance policy. Thus, the contractor and insurer assume the risk of overruns before the owner, and the owner need pay nothing more unless all of the following protections fail: commutation account; insurance policy; contractor indemnity.

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