Environmental insurance—extent of coverage
Produced in partnership with Duncan Spencer of EDIA Ltd

The following Environment practice note produced in partnership with Duncan Spencer of EDIA Ltd provides comprehensive and up to date legal information covering:

  • Environmental insurance—extent of coverage
  • Why is environmental insurance relevant?
  • Types of environmental insurance
  • Environmental insurance for property
  • Environmental insurance for businesses
  • Environmental insurance for contractors
  • Extent of insurance for a property transfer policy
  • Extent of insurance for an operational or business risks policy
  • Extent of insurance for a contractors' risk policy
  • Climate change and insurance industry

Environmental insurance—extent of coverage

Why is environmental insurance relevant?

Environmental insurance is designed to provide protection to the insured from pollution or environmental damage.

Standard Public Liability (PL) insurance already provides some cover, but is limited to ‘sudden and accidental’ events only. The difficulty arises because:

  1. pollution occurs all the time, often gradually and on purpose (for example the discharge of pollution down a drain); and

  2. as held in the Bartoline case, PL policies covering ‘damages’ do not encompass liabilities for the cost of remediation imposed under statutory remediation notices

As a result, the most significant pollution liabilities are not insured by standard insurance products, but can be covered using specialist environmental insurance products.

For more on when environmental insurance is needed and the advantages and disadvantages of using it, please see Practice Notes:

  1. Environmental insurance—when is it needed?

  2. Environmental insurance—advantages and disadvantages

Types of environmental insurance

The three main types of environmental policy focus on:

  1. property

  2. businesses, and

  3. contractors

Please see Practice Note: Environmental insurance—types for further information.

Environmental insurance for property

Property based cover focuses on site-specific issues (ie provide cover only to sites listed in the policy). During the policy period, the policy can be changed by the insured to include or delete sites as they are acquired or disposed of. Cover can be used to insure both historical and operational pollution liabilities.

The policy periods for:

  1. historical liabilities covered by

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