What is environmental liability insurance for?

One of the most impressive images of some cities with a high level of pollution is that of pedestrians who appear on the street wearing masks. In addition to damaging the environment and deteriorating the planet, pollution can cause physical damage to people. In fact, the World Health Organization (WHO) has warned that air pollution causes 1 in 9 deaths a year globally, in addition to being a determinant of cardiovascular diseases such as strokes. Therefore, administrations are reacting to stop the pollution of the environment. One of the measures taken by the Government to prevent pollution in Spain in 2007 was the Environmental Liability Law, to comply with the directive of the European Parliament and of the Council of April 21, 2004. This measure is intended to ensure that companies take responsibility for their environmental responsibility and undertake to repair the environmental damage they may cause as a result of the development of their activities.

The rule is known in the sector by “the polluter pays” and is that, in addition to preventing possible environmental damage, it is intended that disasters are financially assumed by the responsible corporations. In this way, sanctions are imposed on those who pollute or threaten the environment by not taking precautions.

How does the policy work?

Environmental Liability insurance that covers damages for the introduction or dispersion of materials or substances on land, water or air that cause a deterioration in the environment or are dangerous and harmful and have their origin in the facilities of the insured company. In addition to liability coverage, some insurance also includes guarantees such as the cost of decontamination of the soil or water in which the company is located and damage to third parties, property or economic damage.

Is environmental CR insurance mandatory?

The law indicates that the constitution of financial guarantees is an “essential” requirement for the exercise of professional activities that are in Annex III of the Environmental Liability Law. These include some, such as waste management, including collection, transport, recovery and disposal or the transport of dangerous or polluting goods by road, rail, inland waterways, sea or air.

By means of the guarantees, the law specifies that it is intended to ensure that the operator can have sufficient financial resources to meet the costs arising from the adoption of measures to prevent or repair environmental damage. Underwriting an environmental RC policy is one of the options for obtaining the financial guarantees required by law. However, it can also be contracted or combined with other options such as obtaining a guarantee, granted by a financial institution.

Insurance coverages

The main insurance coverage is civil liability, which is responsible for protecting administrators and managers of the company. In this way, the policy takes care of the compensation for damages caused by accidental environmental pollution. The insurer assumes the costs of repairing the damage to the natural elements, compensation for personal injuries and even the replacement of affected species of flora and fauna. Many times insurance also includes the costs of prevention in the face of an imminent threat of environmental damage. In addition, when the accident has already occurred, it is responsible for the costs of avoidance, that is, the measures necessary to prevent further damage.

On the other hand, it also includes other guarantees such as, for example, defense expenses and civil bonds, the defense of the insured against the claim or may even include the constitution of judicial bonds required to guarantee. When taking out the insurance, you also have the option of contracting the Employer Civil Liability, which can be demanded from the insured for the damages caused to employees of the company.

Compare environmental CR insurance

Before taking out environmental liability insurance it is advisable that you compare between several insurers, since each one has its own coverages and not all of them have to adapt to your situation.

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