Environmental insurance—when is it needed?
Produced in partnership with Argyll Environmental Ltd

The following Environment practice note produced in partnership with Argyll Environmental Ltd provides comprehensive and up to date legal information covering:

  • Environmental insurance—when is it needed?
  • What is environmental insurance?
  • Role of insurance
  • Key Legislation
  • Benefits of environmental insurance
  • Scope of environmental insurance
  • When to use environmental insurance
  • Historically contaminated land
  • Property transactions
  • Development/Redevelopment
  • More...

Environmental insurance—when is it needed?

What is environmental insurance?

Environmental insurance is a risk transfer solution to indemnify the insured against losses arising as a result of potential environmental liabilities. The insured for property based coverage can be the buyer or seller of a property, or often both.

A separate environmental insurance policy is often required because public liability insurance typically excludes environmental liabilities with the exception of sudden, unintended and unexpected pollution incidents.

In addition, public liability insurance will only provide cover for third party damages, and not for the remediation of the property of the insured.

Insurance policies are available to provide cover for a variety of potential losses arising from environmental liabilities including:

  1. on-site remediation

  2. off-site remediation

  3. civil disputes, and

  4. legal expenses

Role of insurance

Obtaining insurance may enable transactions or developments to proceed where there are environmental risks and liabilities as it provides financial security and removes uncertainty. It places the risk of liability with a suitable third party carrier.

Insurance can also be used to assist operators of high hazard facilities make financial provision against environmental loss.

Key Legislation

There are a number of key pieces of legislation under which environmental liabilities may arise. The most likely to trigger an insurance claim include:

  1. Environmental Protection Act 1990, Pt IIA together with the supporting statutory guidance

  2. Water Resources Act 1991

  3. Environmental Damage (Prevention and Remediation) (England)

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