As a nation, we’re increasingly aware of our impact on the environment. Documentaries like Blue Planet II highlight the extent to which we’re causing damage – and why we need to take steps to reverse it.
Alongside taking individual accountability, previous governments have introduced legislation to ensure businesses handle chemicals, waste products, and emissions responsibly. Laws such as the 2009 Environmental Damage (Prevention & Remediation) Regulations enforce what is known as the ‘polluter pays’ rule, whereby the owner of the property responsible for pollution covers the cost of the clean-up, as well as any third-party and legal costs.
The owner of the property responsible for pollution covers the cost of the clean-up
The law also stipulates that polluters must pay to reinstate plants and wildlife (flora and fauna) in affected areas, even if this stretches hundreds of miles. This involves working with specialists to ensure the habitat meets the right conditions and that species thrive in the area.
The fines for businesses that fall short of the law can be significant. To illustrate the scale of those penalties, a recent article by gov.uk cites a case where a business was fined £80,000 by the Environment Agency for allowing hydrochloric acid and metals to escape into nearby waterways, changing the chemical balance of the water, killing hundreds of fish and invertebrates.
In February 2018, Environment Agency Chair Emma Howard Boyd issued a press release, saying: “There are still far too many serious pollution incidents which damage the local environment, threaten wildlife and, in the worst cases, put the public at risk.”
The document goes on to say that while there has been a gradual reduction in environmental damage cases since 2001, agriculture is the main source of pollution. The number of cases has remained steady at around 60 per year. This can largely be attributed to waste products and fertilisers contaminating the soil and waterways. As a result, Howard Boyd goes on to call for larger penalties to act as a deterrent.
Introducing Environmental Impairment Liability insurance (EIL)
With these shifts in public awareness and government policy, a new insurance product has entered the market. Known as ‘Environmental Impairment Liability’ insurance (EIL), it provides cover for clean-up costs and legal defence. Although it doesn’t cover fines, it can cover third-party costs for damage to neighbouring land, and potentially compensation for any loss of business suffered as a result.
It used to be unheard of, but EIL is now a commonplace policy in the UK, for risks that other insurance products do not cover. For instance, you may think your public liability insurance covers your business for any breaches or accident, but it may not. Public Liability covers harm to individuals, or their property. However, because UK waterways are not owned by anyone, Public Liability does not apply.
It’s also important to remember that accidental pollution damage is likely to be gradual, so may not be apparent until years down the line. Unfortunately, you can also be held responsible for historical environmental damage. For instance, if there was a slow oil leak onto a property that you have bought, you are responsible for putting it right. Environmental Impairment Liability cover can also protect you in this case too.
EIL cover varies widely, depending on the insurer you use and the industry you’re in. EIL can be arranged for businesses in a wide variety of industries, including agriculture, manufacturing, transportation, warehousing and waste disposal. Some policies will cover just first-party loses (i.e. damage to your property), while others will also cover third-party losses, if there is damage to the environment on neighbouring properties. An experienced, independent insurance broker will be able to help you find the right EIL cover for your business, whatever field you’re in.