22 November 2018

OPINION: Protecting your company assets

OPINION: Insurance broker Miles Smith’s chief executive, Paul Chainey, reasons why ‘Environmental Impairment Liability’ is vital for today’s waste management and recycling sector.

With the multiple fires that have broken out this year, it’s imperative that waste operators have the correct insurance policy in place, which will protect all assets of their business.

Paul Chainey, chief executive of Miles Smith

Environment Impairment Liability (EIL) was introduced earlier this year, and covers the cost of restoring damage caused by environmental accidents, such as pollution of land, water, air, and biodiversity damage. It is important to note that an EIL policy would provide cover for gradual pollution whereas a Liability policy would normally exclude gradual pollution.

Laws such as the 2009 Environmental Damage (Prevention & Remediation) Regulations enforce what is known as the ‘polluter pays’ rule, whereby the owner of the property responsible for pollution covers the cost of the clean-up, as well as any third-party and legal costs, and is aimed at ensuring businesses handle chemicals, waste products, and emissions responsibly.

Research

Before taking out Environment Imparment Liability, business owners should find out who is behind the cover; assess the main risks of your company; purchase an adequate limit of indemnity to cover the costs should your policy be called upon; and use a broker that has a thorough understanding of your industry.

There are some alternative policies out there offering restricted cover which might cause issues for the business involved. For example, some insurers in the past haven’t retained enough expertise in loss adjusters and engineers to help businesses get back on their feet, while keeping the local authority and regulator on board.

As a sector, waste operators must look carefully at their liabilities and the opportunities they have to transfer them to some entities, which are in a far better position to cope with that than they are which will appeal to the regulator.

Bonds

If we don’t act as an industry, local authorities may resort to bonds, and the bonds will be expensive, involve a lot of financial analysis and many waste companies would fail to meet the criteria.

Finances at many local authorities have never been more vulnerable and they will not be in the mood for an insured loss resulting in the public purse having to bear the clean-up costs.

From an insurer’s perspective, we need more campaigns and initatives to raise awareness and stretch our gospel of Environmental Impairment Liability as well as a breakdown for waste operators to not only educate them on this policy, but also highlight why it is crucial  to have it in place for the foreseeable future.

With the volatile period we are living in, it is essential we are brought up to speed as a sector by ensuring all of our business assets are protected and ready for any new legislations that may arise post-Brexit.

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