Liability for Pollution
Liability for pollution varies whether you are the original polluter or you own land that is already contaminated.
Many operations (manufacturing, processing, transportation etc) use chemicals and fuels in their processes. No matter how well these are managed, they are slowly released in to the environment. Even when permitted, this release can result in a liability for the operator and - potentially - a risk to their investors.
Normal insurance, such as Public Liability, Property and even Directors and Officers, does not provide adequate protection.
For a business to make adequate financial provision against these liabilities, environmental insurance should form part of the operator’s standard insurance programme.
With growing pressure on resources and development sites, 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.
Even though the current owner of a property may not have caused this damage, they could be held liable for it – where the polluter can no longer be found or when they have contractually transferred on the responsibility.
These liabilities can often exceed several million pounds, and uncertainty around it delays investment and development of previously developed sites.
With over 300,000 Brownfield Sites in England alone, every property transaction should consider these liabilities.
Insurance policies can be designed to cost effectively manage residual liability associated with these historical activities.
The way we support our Clients can vary.
Please read the text that best describes your requirements.
A developer of Brownfield Land can be responsible for existing pollution, even if they are not the original polluter, as they may take on liability by accepting a transfer from or providing an indemnity to the seller, make existing pollution worse, introduce a new receptor (the end user) to the land; or provide an indemnity to the end user. These liabilities are complicated as the identification and so management of pollution is challenging – limited by the scope of investigation and potential for new pollutants to be discovered. Insurance can be used to manage these liabilities by providing financial provision against the resulting loss. This provision can support the developer by allowing them to replace or back an indemnity to the Seller, giving them confidence, even if the developer uses a Special Purpose Vehicle, de-risking the project for funders and development partners; and increasing the saleability of the developed site. EDIA’s approach is to understand the Clients objectives in association with the risk profile of the site and its development. We are therefore able to select the most appropriate insurer at the most cost effective premium and provide a clear recommendation for the way forward. Our reports, that set out the risk profile along with clearly identifying the scope of cover available – and its limitations - are unique in the market.
Acquisition or Divestment
Environmental risk in a transaction (whether acquiring or divesting) has the potential to cause severe delays to the deal and result in re-valuation of the asset at the 11th hour. Insurance can be used to manage these liabilities by removing unknown historical pollution liabilities from the transaction and ensuring the target has adequate provision against future liabilities. This provides confidence to both the acquiring and divesting entity and maximises value. It is important to note that standard Warranty and Indemnity insurance programmes do not provide adequate protection to these liabilities and often a separate assessment is required. EDIA only place insurance for environmental risks and so we can work both in isolation or in support of brokers working on the wider transactional risks. Our reports, that set out the risk profile along with clearly identifying the scope of cover available – and its limitations - are unique in the market.
Environmental risks are often the result of the day to day operation of a business, where pollution is released on a continuous (gradual) basis. Standard insurance products – like Public Liability – at best only provide a very narrow scope of protection. For these products to work, the pollution needs to have occurred suddenly and accidently (ie not as part of the ongoing business) and impacted a person or legal entity (ie not the environment). Environmental insurance products manage these (and more) liabilities and so are essential as part of an appropriate risk management strategy. EDIA are unique in the market in that we understand how pre-existing, ongoing and future pollution may cause liabilities and how insurance can be used to transfer the risk from the business. At all times, we strive to ensure that you understand the risk profile of your operations and the protection provided by insurance – with any limitations clearly identified and their relevance analysed.
Consultant or Lawyer working for a Client
Environmental risk management is an increasingly important necessity of business. Understanding the role of insurance in risk management has historically been left to insurance brokers, but very few brokers understand environmental risk. As a result, some programmes do not offer your clients the level of protection which they need, or which they expect to be getting. Your clients can insure against many environmental risks, to manage and minimise their liability. When advising your clients regarding their operational activities, contractual negotiations or ahead of any acquisition you need to understand how insurance programmes can assist in the transfer risk. You are central to your clients understanding driving a need to operate across both the insurance (risk transfer) and environmental skill sets. Such an offering can improve your relationship with the client and provide access to solutions that your competitors do not have. EDIA is a specialist environmental insurance broker. We are independent, and have access to a wide range of insurance products on the market. Our advice is expert, impartial and informed. We can assist you by providing insurance expertise, quickly and succinctly, in support of environmental assessments; and environmental insurance training for you. Normally, we do not charge for the support we provide. We are available to discuss environmental insurance options on a completely confidential basis. We only earn income when insurance cover is put in place.
Environmental liability is significant and a client’s resilience to it requires some form of financial provision that can be demonstrated to shareholders and regulators alike. This provision could be made in the form of insurance. However, reliance on existing Public Liability policy forms is not adequate and may expose your client by inadequately making financial provision to the liability; and You to an Error and Omission claim. In addition, expansion and leadership in this sector of liability will attract new clients to you. EDIA can provide advice that is expert, impartial and informed. We can help you service your clients – providing a role that is wider than wholesaling by developing a marketing strategy, conducting pre renewal account reviews, identifying gaps in cover and associated premiums, environmental risk training; providing direct sales support, completing the placement of the insurance and expert support to Clients, even if insurance is not the solution.