In Focus: Environmental insurance facts, figures and selling points

In Focus: Environmental insurance facts, figures and selling points

Source:, March 11, 2014
By: Brian Anderson

As the nature of environmental liability has become more clean and quantifiable, environmental risk insurance has evolved to provide valuable protection at a reasonable cost. As only a small percentage of environmental risks are properly insured today, many businesses need to consider making use of specialized environmental insurance to complement their traditional insurance programs.

Environmental insurance for property owners and operators across nearly all industries provides coverage for pollution conditions associated with owned and operated properties, non-owned disposal sites, transportation and contracting exposures.

It is typically written on an excess and surplus lines basis, allowing the policies to be highly customized to fit the needs of the buyer. More than 100 different types of environmental insurance policies are available from more than 35 insurers, each with dozens of endorsements available that allow the policy to be customized for the client.

Brokers and wholesalers with specialized expertise in environmental risk management can guide agents and their clients through the maze of options, identifying exposures, finding markets based on past experience and current knowledge, and negotiating terms of the policy.

What does environmental insurance cover?

  • On- and off-site statutory clean-up requirements
  • Third-party claims for bodily injury and property damage
  • Legal expenses resulting from pollution or contamination events
  • Business interruption losses
  • Diminution of value

Even China requiring coverage in some industries

China – never known for its environmental protection record – now requires heavy industries including mining, smelting, leather goods and chemical production to have environmental insurance. While environmental insurance penetration remains low, this is looked at as a step in the right direction. According to the Beijing-based Center for Legal Assistance to Pollution Victims, more than 2,000 lawsuits against environmental polluters are filed each year in China. People who live in place with high levels of air pollutants have a 20% higher risk of death from lung cancer than people who live in less-polluted areas.

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