Environmental Liability and the Potential Costs of Pollution Clear Up

May 30, 2012

Since a change in legislation in 2009, and increased pressure for businesses to operate in an environmentally conscious way, the demand for Environmental Liability insurance has been steadily increasing.

Whilst some organisations may have a greater exposure than others (ie chemical works etc) all businesses have the potential to have an environmental incident and this includes Caravan & Motorhome Dealers and Parks.

The Environmental Damage (Prevention and Remediation) Regulations of 2009 have introduced new obligations to ensure that a polluter pays for damage caused to water, land and biodiversity.

Whilst the fines for an environmental incident can be relatively low, the cleanup costs can be considerably higher. One company was fined as oil was found to be leaking into a stream, the cause was corrosion to an underground pipe that had not been checked in seven years. The fine imposed was £2,000 but the cleanup cost was £100,000.

How Can Environmental Liability Insurance Help?

A normal business insurance policy may provide some cover for sudden and unforeseen pollution to third party property, however gradual pollution will not be covered nor will damage to your own property. An environmental liability policy will provide cover for :

• Gradual, as well as sudden, pollution

• Own site clearup costs imposed by regulatory authorities

• Third party liability including diminution of property value

If the Environmental Agency have to undertake emergency work they will carry this out and then claim their costs back from the company involved so the extent of the costs may not be known until a bill for hundreds of thousands, sometimes millions of pounds lands at your door.

An Environmental Liability policy is not compulsory at present but it is believed that this is just a matter of time, as the government look to control the costs they have historically incurred with this type of cleanup cost.

Wilby Ltd can provide Environmental Liability cover to protect your business, for more information please contact:-