Pollution Legal Liability Insurance & Risk Management

Environmental liabilities present a significant and growing risk to all businesses. As environmental regulation continues to develop around the world, companies are challenged by potential compliance issues, uninsured exposures, and increasing accountability for their impact on the public and the environment.

Pollution incidents can have significant repercussions from both a financial and reputational standpoint. Commercial general liability, directors and officers, and property insurance policies are not designed to provide coverage for such pollution incidents, to respond to demands from environmental regulators, or to provide the emergency and specialist assistance required to deal with such an incident.

JLT’s experienced team of environmental insurance experts, former engineers, and attorneys help businesses navigate the complex arena of environmental liability, ensuring rapid delivery of a tailored environmental program when businesses need it.

KEY SECTORS

WHAT WE DO

Environmental Liability Insurance & Risk Management

JLT’s team of specialists provides access to a full suite of fit-for-purpose insurance products designed to protect organizations and their leadership against existing and emerging environmental risks and liabilities. Our products can be tailored to the specific exposures associated with any operation in both the public and private sector.

Where environmental liability is concerned, there are a number of potential areas where an organization is potentially exposed to uninsured losses, including major business interruption costs, loss of profits, increased costs of working, and loss of rent due to enforcement from a local agency as a result of lax environmental practices, an unfolding incident or poor management of such an incident (business interruption, property and casualty policies greatly restrict the cover applicable to pollution-related claims).

Environmental Liability Insurance & Risk Management

Other areas of exposure include legal defense and mitigation costs incurred, for environmental or third-party damage the business may not have caused:

  • Cyber-attacks resulting in the failure to safeguard measures
  • Unintentional damage to the environment through usual business operations posing a threat to protected habitats and land (under the European Liability Directive or equivalent local laws)
  • Controlled waters presenting an additional investigative burden upon directors and officers

With access to first-hand experience of the London insurance market, we leverage our relationships to our clients’ benefit.

FAQs

Depending on the risk transfer requirements, whether operational risk, historic pollution liability or risks from developing land, covers available include:

  • Clean-up costs on your site and migrating from your site
  • Environmental and pollution policies
  • Third-party bodily injury and property damage
  • Gradual pollution, as well as sudden and accidental
  • Remediation costs (including investigation costs)
  • Environmental damage without pollution trigger
  • First-party business interruption
  • Restoration of environmentally damaged sites including complimentary and compensatory actions required by law
  • Loss prevention and mitigation
  • Emergency costs
  • Transportation and offsite activities
  • Defense and assessment of claims
  • Nuisance claims including odor
  • Protection for directors & officers
  • Historic pollution

Additional benefits include access to professional, reliable, and specialized response support in the event of a pollution incident, as well as specialist environmental claims expertise.

In the event of a pollution incident, there will be cover under an environmental policy for the immediate actions needed to prevent or mitigate the incident from worsening. There would be no issue as to whether the event was sudden and accidental because under an environmental policy, pollution is pollution.

Environmental impairment liability policies fill the gaps in a standard general liability and property program - in some circumstances, clients are unaware that their coverage does not extend as far as environmental liability. Some potential gaps in coverage include cover for gradual pollution, remediation of your own site, biodiversity damage, and statutory liabilities for remediation of imminent threats.

Property policies provide cover for claims resulting from insured damage, but cannot be relied upon to provide full protection for environmental liabilities.

There are several reasons for this. Firstly, cover is only provided in respect to specific buildings and does not, as a general rule, include land. Secondly, while resultant environmental damage to insured buildings may be covered, if contamination enters the soil, remediation costs are unlikely to be picked up. Thirdly, many property policies incorporate a qualified or absolute pollution exclusion. Finally, where coverage is provided it is often tied to sudden and accidental events only and sub-limited at an inadequate value.

The overarching principle of environmental liability is ‘polluter pays’, but if the polluter cannot be found, the secondary port of call is usually the property owner. There are also instances in sale and purchase agreements where the contaminated land liability is transferred by contract, which means you may have pay to clean-up a contamination on your site.

When a pollution incident occurs, the only reported number tends to be the fine imposed. Fines are intended to deter the operator from reoffending and are not insurable by law in most jurisdictions. However, operators also face background costs such as the clean-up operation, defense, long-term remediation and monitoring. As such, support from the experienced professionals can be invaluable in the aftermath of an incident.

Due to a large increase in the number of carriers providing standalone environmental products in recent years, competition has increased –reducing price and information requirements dramatically. JLT is one of the leading specialty brokers, a position we leverage when negotiating on your organization’s behalf.

Key Facts

200% Increase in the level of environmental placement in 2017-18GBP 5 Million + placed into the London market400 million+ environmental capacity accessible in the London marketsOne of the largest environmental broking teams in London

WHY JLT

Today, companies see environmental exposures as one of their biggest emerging risks. Our global team of specialists has the underwriting, engineering, consulting, claims, and wordings expertise to provide market-leading advice and deliver fit-for-purpose solutions for your most complex areas of risk.

This expertise has resulted in a 200% increase in the level of environmental placement in 2017-2018. This has been matched by a doubling in size of our environmental specialist team, which has access to GBP 400 million of environmental capacity in Lloyds and London markets.

Our specialist knowledge of key industry areas is complimented by strong and diverse relationships across the specialty insurance market, as well as our access to traditional and emerging markets through the JLT International Network.

We work closely with our clients to structure a policy that mirrors their risk profile and transfers the appropriate level of risk to the right insurer.

Additional services include:

  • Program Gap Analysis - Identifying coverage gaps in existing programs, discussing how these could impact a business and the extent to which they can be covered
  • Global Program Advice - Including where legal and regulatory regimes may require local policies or heightened environmental due diligence
  • Risk Solutions - Through our engineering team, we provide fee-based surveys and advice to support clients in reducing program premiums
  • Claims Liaison and Support - Our claims advocacy team has experience across a number of complex environmental claims, ensuring the best interests of our clients are represented.

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