24 November 2021
Discover our top 6 key misconceptions about environmental insurance and how brokers can navigate them with their clients.
1. Public liability insurance and environmental cover
A key message to your clients is that pollution cover provided in public liability insurance does not provide adequate protection for all pollution incidents.
Covers not provided under a standard public liability policy include:
Not all pollution events are ‘sudden and accidental’ or catastrophic. Pollution events are equally liable to result from gradual pollution.
Works undertaken by your client at the bequest of an environmental regulator or debts incurred for work undertaken by the regulators on your client’s behalf.
Own Site Clean Up
Own site clean-up from a pollution event is not covered. It is estimated that 70% of claims paid under environmental policies are for own site clean-up.
Much of the flora and fauna are not ‘owned’ by a private entity. Government authorities are charged with protecting the ‘non-owned’ environment. Environmental damage to ‘non-owned’ flora and fauna would not trigger a public liability policy.
Under UK law the occupier or owner of land can be held liable for pollution that they did not cause. Liability attaching to historic pollution is not covered in a public liability policy.
Would you rely on protecting your business against pollution liability with an 'exception' to an 'exclusion'?
2. We are not a polluter
Most businesses do not see themselves as potential polluters. It is a common view that environmental liability attaches solely to heavy engineering, chemical and manufacturing activities.
Environmental damage can be cause from the most unlikely 'pollutants':
- Water damage can become a pollutant when it is discharged into a river at high temperatures
- Milk and alcohol spills can degrade the quality of surface water resulting in fish kill
In fact 57% of serious incidents recorded by the Environment Agency in 2015 were from so called ‘low risk’ trades which would include light engineering, warehouses, retail outlets and commercial offices.
3. The polluter pays
Many businesses rely on the protection afforded to them in UK law that the polluter pays for historic pollution. This is not a sensible approach as problems can arise when:
- The ‘polluter’ cannot be found or has gone bankrupt at which point the owner or occupier of the property can become liable for clean-up; or
- they own land previously occupied by a recently privatised industry e.g. gas companies, water industry or a local authority where recent case law suggests that the successors to these companies or legal entities will not be held liable for any pollution they caused
4. Risk appetite
Insurers do not only provide environmental insurance to low risk businesses.
RSA provide environmental insurance to businesses undertaking a wide range of activities including commercial property, product assembly, storage and distribution, manufacturing and chemical storage.
Operations within RSA risk appetite:
- Real estate
- Logistics and distribution
- Light assembly and manufacturing
- Food and drink
- Specialty chemicals
- Renewable energy and power
- Fuel and chemical tank storage
5. You need a survey first
Streamlining of the underwriting process means that surveys are not always required; often policies are placed on existing information held by the business and on completing the application form.
6. Environmental insurance is too expensive
RSA environmental cover is competitively priced: as well as covering clean-up costs and third party damaged our clients’ value highly the emergency response and the legal and technical support offered to manage their short and long term exposure.
The right insurance policy for the exposure
Getting the right insurance for the risk is the essence of all of our roles in the insurance industry. This is true for pollution exposures and environmental insurance. RSA have the expertise, experience and product range to support you in getting opportunities over line.
- Capacity and territory
- Available cover with RSA
Capacity and territory
- Operational cover
- Historic cover
- Contractors cover
- Limits of indemnity: £250,000-£250,000,000
- Deductible: £1,000 upward
- Term: 1-5years
- UK & Europe
Available cover with RSA
- Clean up expenses
- Environmental damage = Flora/Fauna
- Emergency response expenses
- First-party business interruption
- Legal and technical defence costs
- Gradual, sudden and accidental pollution
Environmental impairment insurance
Pollution events are complex emergencies. We give you an expert team when you need it most, with cover that includes fast response and crisis management. Discover more about our Environmental Impairment Liability cover.