By Richard Brannigan, managing director at The Bletchley Group.

Picture this, you’re facing claims that your company has caused environmental damage. Consider also that this is unexpected because the effects of pollution were unforeseen and have gradually built up over time. Now you’ve got a sizable bill for the clean-up – something you hadn’t forecast – plus additional remedial work – a process that could take years.

Whether it happened 10 weeks or 10 years ago, you could be held liable for adverse environmental effects associated with your organisation’s activities, premises, or land. This stands regardless of whether, as the current property owner, you caused this damage or not, and could include dust arising from construction work, poorly operating drains causing oil run-off, or a malfunction of any holding tanks on your property. There are hefty financial implications too, with fines often exceeding £1 million.

Risk management

An environmental liability event can significantly impact your business through upfront clean-up and third party clean-up costs, loss of income/profit, legal fees, tort liabilities, and damage to brand reputation. For financial protection, appropriate risk management strategies should be implemented, including environmental liability insurance. Standard liability insurance does not cover environmental risks. 

By choosing the right insurance coverage you’ll be able to prevent unexpected costs at any point. For comprehensive environmental liability protection, you’ll want to evaluate the following: 

  • Coverage limits

In order to define adequate coverage limits, you’ll need to identify and assess business-specific environmental exposures and risk factors. Industries such as construction could be deemed high-risk, or to have significant environmental liabilities, for which higher coverage limits may be necessary. It is crucial to understand the extent of potential exposure to environmental risks.

  • Exclusions

Insurance policy exclusions should be carefully reviewed. Doing so fosters stronger understanding of what is not covered, so that this can be factored into the risk management strategy. Common exclusions include gradual pollution, intentional acts, and certain types of waste disposal.

  • Policy terms

Examining the conditions of policies is critical for ensuring flexibility and continuity of coverage long-term. You’ll want to consider the length of the policy and renewal options.

Factors beyond cost and coverage are also important. Broader consideration should be given to the insurer’s financial stability, for example, as well as customer service; in terms of claims processing efficiency and responsiveness to unique business needs.

Construction is an ever-changing landscape, with more focus than ever on what is being built and how. As a result, the risks are higher than they’ve ever been, not to mention the costs. Selecting the right environmental liability insurance is therefore essential, for both business protection and continuity. By considering key factors such as coverage limits, exclusions, and policy terms, businesses can make informed decisions and take proactive steps to protect themselves and the environment.

To discuss your insurance needs, please call 0121 803 3760 or email info@thebletchleygroup.com