Environment impairment liability insurance

TODAY I have the privilege of co-authoring this article with George Marekera, who essentially originated and wrote majority of the article. George is a seasoned writer and currently working as chief operating officer at Marsh Zambia, a leading broking firm in Zambia. George’s articles also feature in the insurance journal, a periodic publication issued by the Insurers Association of Zambia (IAZ).
Organisations have both a moral and legal duty to keep the environment they operate in safe and sustainable for plant, animal and human life.
The Zambia Environmental Management Agency (ZEMA) is mandated under the Environmental Management Act (EMA) of 2011 to protect the atmosphere, prevent pollution of water bodies, and prohibit discharges into the environment that may cause harm.
This is a huge responsibility to safe-guard our God given environment not only for this generation but several others to come.
Consistent with the obligations of organisations to keep the environment safe, insurers have a product that protects organisations against environmental impairment liability, which is also called pollution legal liability or simply site pollution liability.
It goes without saying that ZEMA is empowered through EMA of 2011 to fine organisations that pollute the environment.
On the other hand, society in general is at liberty to sue organizations for pollution activities that may distort their general order of life.
The above possibilities leave mining, manufacturing, transporters, waste disposal companies and agricultural firms for example, drastically exposed to potential legal suits for environmental degradation, clean-up costs, and death of plant, water, animal and human life.
It is for this reason that such organisations need pollution legal liability insurance cover as an ordinary public liability policy excludes liability arising from pollution activities.
The policy will pay legal defense costs, liability for damages and environmental remediation costs.
Environmental impairment liability may cover unknown pre-existing and future environmental liabilities; third party bodily injury and death; property damage as well as environmental cleanup costs all arising from pollution activities including legal defense costs as well as any damages awarded are covered.
However, it is important to mention that fines by the regulator are not covered.
This policy is necessary to various types of institutions such as those mentioned above. Additionally, other organisations that may need this insurance include hotels, restaurants, shopping centers, hospitals, housing complexes, landfills, recycling centers and cetera.
In order to secure environmental impairment liability insurance coverage there is need to complete a proposal form.
The proposal form often completed by the safety health & environment (SHE) manager seeks to establish the organisation’s health and safety policies as well as enquire on past actual and potential claims.
The limit of liability varies from one organisation to the other depending on various factors that include; size of the firm, nature of business, past loss history, litigiousness of the society were company operates and cetera.
The policy is heavily reinsured with leading global reinsurers often taking the lead. The underwriting requirements before an organization secures cover are therefore stringent.
The completion of the proposal form and at times pre-cover risk surveys become mandatory.
The jurisdiction clause is ordinarily Zambia, meaning it will be Zambian laws to be used in adjudicating the disputes.
Further, the policy does not attract excess regarding third party death and injury claims. However an excess is often applied for third party property and environmental damage claims.
It is worth noting that in the recent past Zambia has experienced droughts which have caused hunger to human and animal life in some parts of the country. Additionally water levels in Kariba dam, the principal hydroelectricity power source was at its lowest level since 1995 forcing a minimum 4hours of load-shedding daily.  These are the effects of global warming which results from poor environmental management in particular the excessive discharge of greenhouse gasses into the atmosphere.
Evidence suggests an increased impetus by environmental regulators to monitor, control and penalise companies that pollute the environment.
Society on the other hand has also heightened their environmental management awareness programs.
In short the risk of organisations being sued for poor environmental management has increased like never before necessitating the need for environmental impairment liability coverage.
It is important for organisations to seriously consider environmental impairment liability insurance to protect themselves against liabilities associated with potential damage to the environment.
More so, transporters who carry fuel, with specificity to acid, to other countries should consider taking such insurance a priority.
This is because in some jurisdictions, penalties and cleans up costs can be very exhobitant.
To get more information or specific terms on this insurance, reach out to a broker, agent or insurer.
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