Environmental Liability Insurance

environmental liability InsuranceThe first impression the majority of people have whenever Environmental Liability Insurance is mentioned is something akin to the huge disasters like SS Torrey Canyon, the Exxon Valdez or even Chernobyl. All of these were incredibly awful disasters, but putting them in the context of SME businesses operating in Staffordshire, a milk tanker spillage could have similar financial implications. It would be nothing short of disastrous if they did not have Environmental Liability insurance.

A normal Public Liability insurance policy, if it covers pollution at all, will limit the cover provided to sudden and accidental incidents only. Following the Bartoline test case in 2006, offsite clean-up costs sought by the Environmental Agency are not covered by a normal Public Liability insurance policy either.

Why Businesses Need Environmental Liability Insurance

Local businesses operating in the Tamworth and greater Birmingham area need to know that there are numerous examples of where traditional insurance policies do not (and cannot) operate and they need to look at Environmental Liability insurance.

For example:

Imagine a leaking pipe causing small spills over a long period of time. That’s not sudden, so your Public Liability policy won’t operate, so you’ll be liable for the clean-up costs on your own land, and any consequent damage to water courses or third party land.

What about historic pollution? Imagine you discover your land is contaminated, who pays to put it right? Well it could be the previous owners, but if they can’t be located or don’t exist anymore, then the cost will fall on you.  How would you pay for this if you didn’t have Environmental Liability insurance?

What happens if a fuel tank cracks due to old age, spills into a stream and the Local Authority get involved? The law is very simple, since the new regulations came into effect on 1st March 2009, the polluter pays. So you’ll be responsible for all of the clean-up costs, and your normal property insurance or liability policies cannot operate because this type of loss is specifically excluded.

The only type of policy which can and does operate in any of the above scenarios is Environmental Liability Pollution insurance.

What Kind Of Businesses Need Environmental Liability Insurance?

Any business owning land or property needs to consider Environmental Insurance cover. Bricks and mortar are often insured, as are the fuel tanks themselves and their contents, but the soil upon which it is built is extremely vulnerable to damage and the costs involved in cleaning it up can be frightening. 

One of our clients owned a factory built on contaminated soil. When water escaped into the soil, it washed the pollutants into a nearby stream. It cost in excess of £3 Million to undertake the rectification of the stream and surrounding land.  And please don’t consider liquidating your company to escape for paying these costs as the law allows for the costs to be passed onto the individual directors.  So if you’ve got Directors & Officers Liability insurance you’d best make sure it hasn’t got a pollution exclusion either!

The question we always get asked is how much is this going to cost? The premiums vary according to the individual circumstances but start as low as £2,000 per annum.

The other thing that we always get told is that ‘it’ll never happen to me/us’! Well disregarding the fact that if you’re that confident about predicting the future you should simply take up a career in professional gambling, have a look at the Environment Agency website. The following link shows the pollution incidents in your own locality – https://maps.environment-agency.gov.uk/wiyby/wiybyController?topic=pollution&layerGroups=default&lang=_e&ep=map&scale=1&x=357682.99999999994&y=355133.99999999994

Not every risk is insurable. For example, if you own a petrol station it would be extremely prudent to hold this type of insurance, but, if the underground tanks are too old then insurers will be very reluctant to provide the cover. Use this as free risk management advice because if an insurance company doesn’t want to take money off you, it’s probably because they regard the likelihood of a loss as being too high – so you could replace or line your tanks to turn the loss likelihood from a probability into a possibility!

We specialise in providing insurance and insurance advice on Environmental Liability Insurance.  So, if you are a Manager, a Director or Proprietor of a business you can be assured of our expert advice and knowledge of a very wide range of business sectors.  We are Tamworth’s and the Midland’s award winning insurance broker, with an enthusiastic team of insurance specialists who really care about our clients and helping them grow and prosper in business – with the correct insurance of course!

Please just give us a call or drop us an email.

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