Environmental Impairment Liability
What Is Damage To the Environment?
Damage to the environment encompasses a wide range of environmental impairments, including pollution of land, water, air and biodiversity damage (i.e. damage to protected species and habitats). Damage can be the result of an obvious sudden incident such as a burst fuel tank or from a gradual cause such as a leaking underground pipe.
Environmental damage can lead to other problems such as illness from drinking contaminated water or breathing contaminated air; property damage to cars showered with corrosive chemicals; or "amenity" issues for those who have to live in the changed environment.
Businesses are responsible for ensuring they undertake practices to minimise the likelihood of causing such damage whilst carrying out their operations and can be held responsible for all clean-up costs if their measures fail.
My Liability Policy Protects Me - Doesn't it?
In short, no. A standard public liability policy covers liability for third party claims however, most environmental liabilities are "statutory" or "regulatory" liabilities which are policed by bodies such as the Environmental Agency and will therefore fall outside the scope of cover.
More often than not public liability policies also include exclusions which
exclude all pollution related liabilities except those that the policyholder can show were caused by "a sudden, identifiable, unintended and unexpected incident which took place in its entirety at a specific time and place during the Period of Insurance" and;
exclude liabilities associated with any remediation work that takes place on the policyholder's own land.
The majority of environmental liabilities that do fall under the scope of the cover are subsequently thrown out by these exclusions.
Some public liability policies appear to offer adequate protection under an environmental "extension". In reality, this extension provides limited protection.
The extension still contains the exclusions 1 and 2, so many environmental liabilities are consequently excluded from cover.
The extension also relies on legal action being taken by a third party before cover comes into force.
Under most public liability policies, liability for clean-up costs would not be covered.
So How Do I Protect Myself And My Business?
Consider protecting your business against these risks with a specialist Environmental Impairment Liability policy. Wide, stand alone, cover can be obtained to supplement your current insurance programme. Contact me for more information.