BACKGROUND
Insurance for gradual pollution liability or to cover the costs of cleaning up contamination has traditionally been expensive and difficult to obtain - this is no longer the case. Cover is now readily available and premiums now start as low as £650 for a £1m Limit of Indemnity.
Pollution liability is not just a consideration for the more ‘traditional’ environmental industries such as chemicals, petroleum or manufacturing; there is now pressure on any organisation to behave in a social, ethical and environmentally responsible manner.
Companies’ corporate governance and compliance controls are becoming increasingly important considerations for existing shareholders, potential investors and lenders. Legislative changes and the increasing burden of governance and disclosure means that any organisation should consider environmental issues at the most senior level. Organisations need to be aware that in many instances, their casualty policies will not cover them for pollution liabilities.
Environmental Pollution risk has historically been associated with Contaminated Land, Heavy Industries such as chemicals, metals and waste and following large-scale disasters. In light of the recent ELD European Legislation (EU Environmental Liability Directive 2007) far more organisations may well wish to avail themselves of cover:
- All forms of Property Owners
- Property Developers (particularly those who have redeveloped or wish to develop 'brownfield' land)
- Those firms that use or produce potentially contaminative materials
- Firms which create solid, liquid or gaseous waste.
QUESTIONS
Q. Doesn’t my liability insurance already cover pollution?
A. Actually, most liability policies offer only very narrow sudden and accidental coverage with no express protection for clean-up of contaminated soil and water. The vast majority of pollution conditions are caused gradually and not due to a specific accidental release.
Q. I don’t handle hazardous chemicals in my business, so where is my exposure?
A. Any business can find itself exposed to environmental liability, either due to ongoing operations or resulting from activities on your property in years past. There is virtually no way you can be certain of what took place on your site years ago, therefore any business which owns or rents land is at risk. Property Owners, most forms of Industry and Contrcators working on site are all exposed.
Q. Isn’t this coverage only economical for large companies?
A. The majority of environmental liabilities attach to small and mid-size companies, the very firms which are least able to absorb this unplanned and often catastrophic financial impact.
Q. Even if there is pollution on my site, who can make me do something about it?
A. Local authorities have been tasked with finding and assigning responsibility for pollution. The number of sites identified and the resulting prosecutions continues to increase. If you are planning to buy or sell a property, it’s likely someone will want to go looking for a problem. Recent regulatory directives guarantee the enforcement environment will become more stringent.
COVER
There are a range of options available:
- Coverage for gradual as well as sudden and accidental pollution
- Coverage for either historic or future exposures, or both
- Premises or Contractors' Site clean-up of pollution
POLICY PERIODS
Whilst annual policies are available, policies tend to be issued for periods up to 5 and even 10 years.
CLAIMS
Click here for examples of Environmental Pollution Liability claims. |
