What is Environmental Impairment Liability?

Environmental Impairment Liability is a specific protection strategy that covers obligation and occasional cleanup costs related to contamination. See additionally: casualty protection,  liability protection, pollution exclusion.

How would you fund the legal costs and awards made against you?

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What does Environmental Liability Insurance cover?

Policies will vary widely based on the insurer, so businesses need to make sure they know exactly what their policy contains. Typical policies can include:

Own site clean-up costs & third-party clean-up costs

Investigation and defence costs

Gradual pollution for third party legal liability during policy period

Cover for both new and pre-existing pollution incidents—each may have their own limits of liability, terms and excesses

Bio-diversity damage to protected sites or sites of scientific interest

Business interruption in the event production needs to stop or there is intervention by a regulator

Specialist Segments:

For businesses that have a high rate of pollution potential, there may be bespoke cover available. This can include policies for:

Environmental contractors

Industrial (Brownfield) site redevelopment

Professional indemnity for environmental consultants

Landfill sites

Radioactive contamination

Key steps towards self-insurance…

It is important to protect your business from environmental risks, and at Ascend Broking  we have earned a reputation for responsiveness, innovation, broking excellence and timely delivery of environmental risk management programmes. (Change wording)

We help clients identify and assess their environmental exposures and then deliver tailored environmental impairment liability (EIL) insurance that complements your commercial objectives and risk management strategy.

Features of our Environmental Impairment Liability insurance:

Our EIL insurance can provide protection against the effects of:

  • Soil pollution
  • Air pollution
  • Water pollution
  • Offensive odour
  • Oil storage pollution
  • Noise pollution
  • Damage to natural resources
  • Other pollution and environmental damage

If environmental awareness is your clients’ concern, risk awareness is yours.

That might sound a bit dramatic but it’s a fact that professionals advising clients are bound by their expertise. Businesses needing guidance on how to meet their environmental obligations want you to tell them what’s what, while avoiding the consequences of not doing so.

A shortcoming here means consequences for you too. Questions are asked, fingers are pointed, allegations are made and solicitors are appointed. Like it or not, mistakes happen every day and you need to know how to deal with one.

Environmental consultants’ insurance is the first step. If things go wrong, your policy pays to fight your corner (whether you’re at fault or not) and picks up the tab if you have to compensate your client.

Having it means you’re not distracted from running your business. Or spending valuable time and money defending yourself. Or worrying about your reputation going down the drain.

This depends solely on what your business does.

There’s no right or wrong answer because every business is different. Our best advice is: be pessimistic and buy as much as you can afford.

In fact, assuming the worst will happen is a good place to start. If you do make a mistake, how expensive will it be to fix? Also think about whether you work on commercial or government contracts, and consider exactly what it is you do for them. Offering advice on how to tackle legislation, for example, is less risky than doing land contamination surveys.

Always bear in mind that you can’t have too much cover. Your legal defence can cost many tens of thousands of pounds – and that’s before the compensation bill from your client arrives.

Employers’ liability insurance covers your business if an employee sues it for damages. Claims are usually because they’ve suffered injuries and illnesses as a consequence of working for you. It’s a legal requirement for UK businesses with employees.

Office and property insurance covers the things in your office (furniture, plants, fixed IT equipment etc) and portable insurance covers gadgets and technical equipment away from the office (laptops, tablets, projectors etc). If you’re not sure it’s worth insuring, add it all up – it’s probably worth more than you think.

Business interruption insurance means you can still work when your office is out of action. Be it flood, fire or flea infestation, you’re covered for the costs of setting up elsewhere and for any lost revenue in that time.

Directors’ and officers’ insurance covers your company bosses. Anyone from regulators to shareholders to competitors can accuse you of not running a business with due care. Worse, directors are personally liable for their actions. The good thing is this insurance covers your defence costs and any compensation you have to pay. So you can put away your chequebook.

Our EIL insurance can provide protection against the effects of:

  • Soil pollution
  • Air pollution
  • Water pollution
  • Offensive odour
  • Oil storage pollution
  • Noise pollution
  • Damage to natural resources
  • Other pollution and environmental damage

Constant product innovation keeps us one step ahead of legislative changes. And where business premises are concerned, that’s invaluable, which is why our cover extends to historical exposures, damage to biodiversity, business disruption and more.

Whether it’s a traditional risk transfer for operational exposure or a complex project, our unique Contractors Pollution Liability cover protects your clients and their contractors on-site. Together, we’ll identify the risks and minimise any impact.

While innovative companies pioneer the way forward in renewable energies, we’re pioneering the way they’re covered, with our industry-first product for the UK and Ireland. Welcome to the era of Renewable Energy Environmental Protection.

Tailor the right solution with us for your clients’ needs, covering a broad range of liabilities and protection. From regulatory remediation costs, to third party injury and damage to biodiversity, our Environmental Protect product is far reaching.

We provide an exclusive legal service under our Management Liability Policy with access to a specialist litigation and commercial law firm that specialises not only in the management of legal crises, but also in the education and prevention of them in the first place.

Support against all regulators including:
Information Commissioners Office (ICO)  |  Health and Safety Executive (HSE)  |  Charity Commission  |  HMRC  |  Food Standard Agency (FSA)  |  Trading Standards  |  Local Authorities  |  DEFRA

Typical Claims

In 2016 a farm in Essex was fined £73,000 for a major pollution incident which led to the death of thousands of fish and affected drinking water supplies. This incident occurred because an employee was driving a tractor over a badly constructed bridge which should have been better maintained (or another route chosen).

Our client was moving slurry out of a main underground tank into a filler tank. Unfortunately, one of the valves was not closed correctly and around 50,000 litres escaped into a nearby beck, causing the death of 2,000 fish. We covered the costs of the remediation and monitoring operation from the Environment Agency of around £20,000.

Frequently Asked Questions

Yes. Pollution or environmental damage that has happened in the past (whether it was 100 years or 6 months ago) has the potential to create liabilities today, and even if as the current property owner you did not cause this damage, you could still be held liable. Fines often exceed £1 million and lead to lengthy delays until a return to production.

With over 300,000 brownfield sites in England alone, historic liabilities should be considered for every property and corporate transaction and be covered by the appropriate insurance.

No. There are two liability criteria in environmental regulations not usually covered in the UK by a standard liability insurance policy:

  • Strict liability for specified environmentally hazardous activities
  • Fault-based liability for all other business activities.

The EDR also introduced three new sanctions that took environmental liability to a new level:

  1. Preventative remediation: action to avoid environmental loss
  2. Complimentaryremediation: other action beyond clean-up to restore damage
  3. Compensatoryremediation: additional works beyond complimentary remediation in more serious cases that can extend to include restoration of another site.

The Environmental Liability Directive (ELD) came into force throughout the EU in 2007 and the UKs latest update, The Environmental Damage (Prevention and Remediation) (England) Regulations 2015 (EDR), mean new liabilities beyond clean-up could spell the end of many businesses in the event of an uninsured loss.

How would your business cope if you suddenly had to respond to claims that your company’s activities, or even just its premises and land under its control, had somehow caused pollution or other environmental damage?

There is a broad range of environmental exposures that can impact air (such as ongoing odour issues), water, land and biodiversity and go on to impact your bottom line.

Consider also the possibility of unforeseen and unexpected pollution, gradually building up on land or seeping into the water table over time. This could impact your business when you least expect it, leaving you with a sizeable bill for the clean-up and potentially additional works to ‘make good’ on the damage done – a process that could take years.

The most common consequences of an environmental impairment liability event are:

  • Business interruption – loss of profit and rental income
  • Statutory liabilities – first party clean-up costs
  • Third party clean-up costs – biodiversity damage
  • Tort liabilities – bodily injury; property damage; trespass, nuisance or obstruction
  • Legal costs
  • Damage to your commercial reputation and standing in your local community.

By taking out EIL insurance, you can gain financial support to tackle these issues.

Pollution liability insurance policies cover claims from third parties against bodily injury and property damage caused by hazardous waste materials released during a company’s business operations. This insurance covers you while you are completing a job, and it also covers your completed operations.

Pollution Liability Insurance, also commonly referred to as environmental insurance, helps protect businesses from unexpected pollution exposures that may not be covered by standard casualty and property policies.

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Matthew Collins - Managing Director

Matthew Collins

Matthew has 31 years broking and underwriting experience, both as part of the management team at an award-winning independent broker, as National Broking Director and UK Board member at Oval Insurance Broking and as Market Management Director at Arthur J Gallagher.

Matthew’s contact details can be found below or, if you would prefer, please complete the contact form at the bottom of this page and Matthew will contact you at your convenience.

Managing Director 
M: 01245 449061   E: Matthew.collins@ascendbroking.co.uk