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Environmental Impairment Liability Insurance

The EU Environmental Liability Directive (ELD) affects all businesses that have the potential to cause harm to the environment.

Under the new Directive, more companies face increased costs for clean up and reparation of any environment they pollute. The ELD came into effect across the UK from 1 March 2009 to 24 July 2009 by introducing new regulations* in each country. The regulations are broadly similar.

The Directive is based on the 'polluter-pays' principle, the aim being that the original polluter pays for remediation - not the taxpayer. The Regulations provide that, for certain activities, where there is an imminent risk of 'environmental damage':

  • The operator must take steps to prevent it
  • If damage has occurred, the operator must take steps to prevent further damage
  • Where damage has occurred, the relevant competent authority must assess the damage, identify whether or not it is 'environmental damage' and engage the responsible operator in an appropriate remediation strategy

The operator is liable for investigation, monitoring and reparation costs. Personal costs can also be high. Directors and management teams may be deemed to have committed an offence if they consent, contrive or are neglectful in their duties. The penalties for an offence under the Regulations if it reaches Crown Court can be an unlimited fine and/or up to two years imprisonment.

It is important to consider these additional risks when buying environmental impairment liability cover (EIL Insurance). Insurers have responded to the ELD and specialist environmental cover is now available. Importantly, this cover is not limited to sudden and accidental and offsite damage only - it includes gradual pollution and other forms of damage to the environment, as well as the on site risk.

We can advise you on the most appropriate environmental impairment insurance for your business.

For further information, please contact a member of our Insurance Team to the right of this page.

Mitchell Charlesworth Insurance Solutions Ltd is registered in England and Wales no. 7002662 and is authorised and regulated by the Financial Conduct Authority.