An organization’s exposure to environmental risk depends on many diverse but inter-related factors, including past and present company operations, geographical setting, contractual arrangements, and the prevailing legal framework in relevant territories.
Insurance products have been developed to cover the financial uncertainties that emanate from an organization's various exposures to environmental liability. Each organization’s environmental risk profile is unique. By working together, we can tailor an optimal risk management and insurance solution through a combination of the products outlined below.
Pollution liability insurance typically protects the insured against unanticipated losses associated with unknown pollution conditions, including cleanup costs and third-party property damage or bodily injury claims
Policies can be designed to cover operational pollution risks arising from unanticipated discharges, leakages or spillages and historical risks for liabilities associated with preexisting contamination. The cover can fill gaps arising from exclusions in general liability policies.
It is possible to combine both operational and historical pollution cover in a single policy. The policies can be extended to cover off-site waste disposal locations, transportation exposures or even contingent risks such as business interruption or economic loss associated with contamination.
Contractors Pollution Liability
This is a form of Pollution Liability insurance designed to protect an organization facing environmental risks through their business operations – for example, environmental or construction contractors. Such operations may present an ongoing risk of causing pollution or exacerbating contamination conditions as a result of disturbing/remobilizing existing contaminants or following unanticipated discharges, leakages, spillages, etc.
Many project insurance specifications require specific pollution liability coverage. Contractors can arrange this on a portfolio basis or on a project-by-project basis. Coverage can be arranged on either a claims-made or occurrence basis.
Companies engaged in both environmental contracting and consulting operations often purchase Contractors Pollution Liability and Professional Liability/Indemnity programs to efficiently package the pollution coverage for their professional exposure and to reduce the potential for gaps or overlaps in coverage.
Professional Pollution Liability/Professional Indemnity
This insurance offers a range of cover to organizations that provide professional advice. It can protect against risks associated with the consequences of a negligent act, error or omission.
Specialist insurers offer Professional Pollution Liability/Professional Indemnity policies that indemnify professional advisers, such as environmental service firms, architects, engineers, etc., for claims and liabilities resulting from alleged errors and omissions in their services. Cover is for losses for which the insured is legally liable arising from a breach of professional duties by the insured and by hired design professionals and joint ventures.
Remediation Cost Cap
Cost-cap or stop-loss policies are designed to pay for unanticipated remediation project costs that exceed original project estimates. Cost overruns have many causes, including the discovery of additional contamination, underestimation of base costs or changes in regulatory requirements.
The insurance attachment point above which the policy will pay out (subject to the policy limit and conditions) is the subject of a negotiated agreement with the insurer.
Blended Insurance Programs
It is possible to transfer both known cost items (identified remediation obligations) and the associated unknown risks (potential overruns) using a combination of pre-funding and conventional cost-cap insurance. These blended insurance programs are typically combined with a Pollution Liability policy to cover third-party liability claims.
Regulators typically require some form of financial assurance to guarantee performance of certain regulatory obligations, notably closure obligations, for mining or certain waste management operations. There are a number of potential options including surety bonds and specialist insurance policies. Each approach confers advantages and disadvantages that require careful consideration.
Representation & Warranty and Excess of Indemnity Insurance
Specialist policies can be arranged to transfer the contractual environmental liabilities established by representations, warranties or indemnities within a sale purchase agreement.
Some insurers offer specialized policies, which are typically based on the main pollution product categories but refined for specific purposes such as covering landfills, underground fuel storage tanks portfolios, asbestos removal and lead paint removal.