States and municipalities that want to reuse industrial sites that have been cleaned up are buying insurance as a way of protecting themselves from future litigation, said one insurer.

In an interview Monday, Robert Hallenbeck, director of government affairs for Environmental Compliance Services of Exton, Pa., said his company and others such as American International Group and Zurich-American Insurance Cos. have found a ready market in cities eager for increasing their tax base."What cities look for is to get these properties on the tax rolls, so they can get the revenues," said Mr. Hallenbeck, who also spoke Tuesday in Washington during a conference on "Reinventing Urban Environmentalism."

Having an insurance policy that sets limits on future liability encourages investment in former industrial sites in a number of ways.

"If you are doing the cleanup, we can limit your liability. If you are a

financial institution, we can protect your investment, so if there is an incident, the market value doesn't go down the drain," he said. "If you are a buyer, we will limit your liability in the future.

Many older cities in the Northeast and Midwest have a great interest in cleaning up industrial properties, especially those near rivers that can be turned into shopping centers and condominiums, said Mr. Hallenbeck.

"The river brings an additional factor to the whole thing," he said. Baltimore, with its Inner Harbor complex of shops, "is an example of city that has done wonderful things with its waterfront."

Reusing these sites not only makes the city look better, it creates jobs for people in the communities, he said.

"Where we see the market right now is people want to do this, but there is some reluctance to write the checks. We think that uncertainty has been created, because there is no catalyst in the insurance market to say we will help along the way," he said. "Also, a lot of developers are waiting for Superfund to be resolved so they know where boundaries are on their liability."

ECS is one of several insurers that offer policies covering possible cleanup cost overruns and guarantees for future environmental concerns involving the site.

"The main factor holding everybody back is uncertainty," Mr. Hallenbeck said. "The main purpose of insurance is to eliminate uncertainty."