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- Environmental Liability - the polluter pays
- Insurance Clinic
- Insurance Clinic
Environmental Liability - the polluter pays
With mounting global pressure for companies to ‘clean up their act’ and take more responsibility for the environment, the Environmental Liability Directive has become a key agenda item for many businesses.
The Directive requires European Union member states to remedy and prevent environmental damage. Its aims are simple - to hold those concerned financially liable to rectify the damage that their activities have caused. In short, the polluter pays.
The Directive does not require member states to make environmental liability insurance mandatory, but this could change if measures are not taken to cover the costs associated with corrective action. Some countries have already made the insurance compulsory and others are considering it.
What does the legislation mean for my business?
The Environmental Liability Directive broadens the liabilities of polluters. Operators are required to take immediate steps to prevent damage and/or further damage and to notify the enforcing authority immediately. The authority must then establish if environmental damage has occurred and identify the responsible operator.
To give effect to the Directive, the governments of England and Wales, Northern Ireland and Scotland have brought into force their own regulations. The Environmental Damage (Prevention and Remediation) Regulations 2009 came into force in England on 1st March 2009. The are designed to prevent and remedy environmental damage to water, land, protected species or natural habitats.
Environmental Impairment Liability (EIL) insurance has been available in the UK for some years already and has often been sought when merger and acquisition activity has demanded an indemnity for the purchaser. Premiums have reduced quite dramatically in recent years owing to a greater understanding of the risk exposure being presented. The process of arriving at a premium has become more streamlined than ever, often requiring less documentation than customers anticipate.
You may think your liability insurance covers pollution but that is unlikely. Most policies only offer narrow ‘sudden, unforeseen and accidental’ coverage with no express protection for clean up of contaminated soil and/or water.
Many companies mistakenly believe that, as they didn’t own the land when the damage occurred and they weren’t responsible for the pollution, they are exempt from legal action. The reality is, any business could be exposed to environmental liability whether they were initially responsible for the contamination or not.
Local authorities have been tasked with finding polluters and making them responsible for any remedial work required, often at considerable cost. The number of polluting sites and the resulting prosecutions continue to increase.
If this is of concern to you, you should talk to us. By understanding your situation, we can make the appropriate recommendation and arrange suitable Environmental Liability insurance that meets your specific needs.
Contact us
For more information speak to your usual contact or talk to a member of the Corporate team on 0121 698 8000. You can also email us at corporate@perkins-slade.com.
