Environmental insurance

When is environmental insurance needed?

Environmental insurance is designed to provide protection to the insured from pollution or environmental damage. It is an essential risk management tool for property and corporate transactions, industrial site closure and brownfield development.

There are several reasons why environmental insurance should be considered in transactions and operational site management:

1. •

   contamination and pollution incidents can result in significant environmental liabilities—regulatory enforcement, third party claims, clean up costs and loss in property value

2. •

   site investigations and remediation work will often miss contamination

3. •

   almost every party in a transaction can inherit liabilities for contaminated land—seller, buyer, landlord, tenant, funder

4. •

   clean up costs can be very high, especially in areas of groundwater sensitivity

5. •

   insurance premium costs have been reduced by increased competition in the market

6. •

   clients are reluctant to solely rely on environmental indemnities

7. •

   the Environmental Damage (Prevention and Remediation) (England) Regulations 2015, SI 2015/810 and the Environmental Damage (Prevention and Remediation) (Wales) Regulations 2009, SI 2009/995 require site operators to take immediate action and inform regulators about environmental damage

8. •

   contractors' activities and flooding can mobilise existing contamination

9. •

   standard public liability