Environmental Impairment Liability

The nature of many business operations means that pollution/environmental harm could occur at any time; this could subsequently lead to a third-party claim for nuisance, bodily injury or damage to property, or a regulatory authority demand for clean up of land or the restoration of biodiversity. An EIL Policy is designed to protect you from these exposures, including legal expenses. It may also be extended to include business interruption losses arising out of the same.

A Commercial General Liability insurance may cover some of these exposures however it will very much depend on that policy wording; many wordings give insufficient cover in this respect in particular as regards gradual pollution and clean up costs. Contractors may look to buy their own “Contractors Pollution Liability Insurance” policy.

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Claims scenarios

A chemical mixing plant had above ground storage vats that were connected by a line directly to a mixing tank. The plant was secured by a fence and, during off hours, some vandals jumped the fence and severed the line. Thousands of litres of pollutants were spilled onto both the first party property and a third party neighbouring property. The mixing plant was responsible for significant clean up costs of both sites.

Due to computer failure and human error, a large amount of whisky escaped into a local water way when a tanker lorry sent whisky into an already full tank. The retaining “safety net” failed when a drain valve to the local river had not been closed after draining rainwater

A commercial property noticed a significant amount of heating oil spilling onto their property. It was determined that an oil tank line at a neighbouring property was cut and had been leaking for days. The owner of that site did not have any insurance coverage. The owner of the commercial property had no other option, but to pay for the emergency remediation out of his own pocket. He proceeded with subrogation against the other party but did not recover all his costs.

An employee at a hotel had been using pesticide around the grounds of the hotel. When he was done, he disposed of the canisters in the dumpster, which was in a self contained area of the hotel. The canisters contained aluminium phosphide, which is a dangerous and toxic compound that will corrode certain metals and ignite spontaneously when exposed to certain conditions. Fire ensued, and the contents of the dumpster had to be safely disposed of by experts hired by the Department of Environment. Costs for clean up were significant.

Fire in an adhesives manufacturing facility resulted in pollution of a nearby watercourse. Clean up was required by the Environment Agency

Staff at fuel storage depot failed to notice that tank capacity had been reached and the tank overflowed. Fuel and air vapour spilled resulting in 20 storage tanks being engulfed in flame with explosions occurring.