Financial Assurances
Overview
Financial assurances are used to verify that sufficient funds are available to cover costs that may be incurred as part of an environmental project, permit, or other activity. They act as collateral to ensure funding is available if environmental remediation, mitigation, closure, or clean-up of a site is needed. Environmental agencies often require financial assurances as part of the permitting process.
Available funding is broken down into cost estimates, each representing the minimum amount needed for a specific activity or obligation.
Financial assurance records can be added to permits or compliance actions, and to sites if enabled through system configuration settings.
Financial Instruments
A financial assurance record may have one or more financial instruments associated with it. A financial instrument is a form of collateral, such as a surety bond, certificate of deposit, corporate guarantee, letter of credit, deposit account, insurance policy, or other form of funding that can be drawn upon if needed.
Each financial instrument can allocate a portion of its available funds to one or more cost estimates. These allocated amounts are referred to as coverage amounts and represent the financial responsibility assigned to that instrument for a specific obligation.
Financial assurances are automatically classified as Liability or Non-Liability based on the program, cost estimate type, and instrument type.
For more information about financial instruments, see the Working with Financial Instruments page.