Is your business covered for environmental liability?

A business can face enormous unexpected expenses should it be held liable for an environmental disaster. Particularly as this type of event is usually not covered by a general liability policy. 

It is especially important for the transport and logistics sector – already plagued by high incidences of hijackings and accidents – these businesses also have a reasonable risk of environmental liability.

Environmental liability cover – also called environmental impairment cover – provides cover for the cost of cleaning up pollution and restoring the affected area to its pre-disaster state, after an accident caused by the insured. Rehabilitation is required when hazardous goods or substances are spilled or when contamination results in land, water or air pollution, or any other biodiversity damage. It also provides cover for business interruption, like loss of rent.

Any businesses that use - or transport - dangerous substances and materials in their daily operations need to be covered by environmental liability insurance.

Preventing environmental incidents

To apply for environmental liability insurance, the applicant must undergo a process that involves an assessment of their locations, size and operations. It’s important that the underwriter is fully aware of all pre-existing pollution conditions at all business locations, including any raw or potentially dangerous stock and materials stored at these locations. Businesses must be aware that even natural substances, like shampoo paper sludge and some dairy products, can cause environmental pollution. Pesticides, for example, are directly toxic whereas other substances affect survival – such as oil spilled in the ocean that blocks oxygen from entering the water, suffocating sea life.

The insurer needs to know about any products being produced that are potentially hazardous, like oil or petrol, or when materials are being used that may cause environmental contamination such as any chemicals, and the business will be required to cover against the potential risk of environmental damage. The risk posed by these materials must be assessed and managed to prevent an incident that may harm the environment.

It is essential to put preventative measures in place and to ensure that all safety procedures are stringently adhered to; every possible step must be taken to avoid an environmental disaster.

Environmental insurance products

Garrun Group works with a niche underwriter agency that specialises in environmental impairment cover. Their products include:

  • Transport environmental impairment cover: This covers vehicles transporting dangerous goods in the event of an accidental spillage or release into the environment, e.g. trucks transporting fuel.
  • On-site impairment cover: A complete solution for any environmental pollution risk on your premises including aboveground tank storage, warehousing, and loading and off-loading.
  • Underground tank cover: Comprehensive underground tank cover for any pollution incidents resulting from spillage or leakage. Fuel stations should have this cover. 
  • A 24-hour toll-free incident management call centre. 
  • Side tank cover: Side tank insurance covers spillage from the vehicle’s own side tank.

Other add-ons and benefits include:

  • Excess solutions: This option reduces the excess payable, to nil within RSA and R50 000 cross-border, for transport clients. 
  • Contingency cover: Tailored cover for the consignor in the event that a sub-contractor’s underlying cover has lapsed due to non-payment of premiums. 
  • Compliance assist: Assistance with driver compliance and licensing renewal.
  • Driver solutions: R10 000 death benefit for on-duty drivers. A value-added benefit available to policy-holders. 
  • Harbour solutions: Cover for spillages as a direct result of loading or off-loading activities from a vessel to an insured vehicle while in the harbour or port. 

Contact your Garrun broker for more information on the Environmental Liability cover.