Why Should Businesses Care About Environmental Liability?

Environmental Impairment Liability Insurance (EIL) should complement a business’s environmental risk management practices and protect them against unforeseen liabilities. However, standard property and liability policies provide limited cover for environmental damage, as they exclude any incident where the proximate cause is gradual.

Land Based Underwriters explains this and some of the other factors that make EIL insurance essential for businesses, to help environmental liability insurance brokers convince clients of the policy’s importance.

Sites of Special Scientific Interest (SSSI)

A business that is located near a Site of Special Scientific Interest (SSSI) is more vulnerable if environmental damages occur. There are over 6000 SSSIs in the UK, with more than 70% being globally recognised as important to wildlife. Most businesses are located near an SSSI, so the majority are left vulnerable if they are not covered for gradual damages under an environmental liability policy.

Regulators and Responsibilities

Regulators have the power to bring claims against a business, without being an injured third party or owners of the affected land, water or species. A business that causes environmental damage is not liable under the regulations to pay damages for losses to others but is required to remediate the damaged environment.

This can become very expensive, very quickly, as complimentary and compensatory remediation are included in addition to the primary cost of damages to contaminated land.

Standard Property Policies

Nowadays, companies face the problem of clean-up costs, compensatory damages, and complementary damages, rather than traditional fines and penalties. Property policies cover buildings, stock, machinery, and contents but not land or gardens. This means these costs are not covered by a standard property policy.


The public or natural resources cannot benefit from a site during the time it takes for an area to recover from damages. Regulators demand compensatory remediation to cover these interim losses. If it’s not possible to fully restore the damage, regulators can demand that additional remediation is carried out, either at the current site or a different location, to make up for the losses incurred.

The cost of carrying out primary, complimentary and compensatory remediation is likely to be high. These costs won’t be covered under standard Public Liability Insurance, meaning specialist Environmental Liability Insurance is necessary.

How Can LBU Help?

Land Based Underwriters provides comprehensive, specialist Environmental Liability insurance policies to keep your clients protected from extortionate costs and hefty remediation payments. Please get in touch to find out more.