The Need for Environment Insurance for Business

Before the United States government got legislation passed relating to environmental issues, it had not been considered necessary to have environmental insurance. In fact there wasn't a specific product in place, other than regular liability insurance and in many instances environmental issues, such as pollution were generally excluded.

However, the environmental legislation was fully enforced and within a short time companies found they had claims which were being heavily pursued. It's always at this time that the policy wording gets looked at closely, often to discover that the claim event isn't covered, leaving the company in a particularly unstable financial position.

The insurance market is always keen to find new markets to get involved with and it didn't take long for some of them to realize that there was an opening for specific environmental insurance. Products were developed and are now available from most general insurers.

Initially premiums were high; firstly because there were only a few players, so the there was little competition and secondly, it was a rather an unknown market. No one really knew how many claims would occur and what the monetary value of claims would be. It was therefore important for insurers to build up a reserve fund.

Any company or organization that may get involved with environmental issues of one kind or another, no matter how remote the chances of a claim arising are needs to get the protection of environmental insurance coverage. While premiums are fairly expensive, compared to regular liability insurance premiums, the protection they afford far outweighs the cost of the cover.

The oil industry has an obvious need for environmental insurance. However, many other companies that may not have considered they could present a pollution risk also need to buy the insurance. For example, a company which stores or transports materials that could leak pollutants, needs to buy environmental insurance.

Environmental insurance isn't in place, so a company can relax its safety procedures, knowing it has insurance protection in place. It is there so that in the event of an accident occurring, a company has financial protection. Before any insurer allows cover to be put into place a full survey is undertaken to ensure that the company takes safety and environmental issues seriously.

Policy wordings clearly state that the policy responds in the event of sudden or gradual accidental incidents. It extends to provide cover for property damage, bodily injury and damage directly related to a pollution incident.

An important aspect of an environmental insurance policy is the ability to access funds immediately an incident occurs. Pollution accidents require an immediate response to stop it spreading too far; this requires money. There isn't time for the insurance company to assess the damage and what needs to be done. Work must start at once and a company needs to know it can get the work started without prior approval from their insurer and that they will get reimbursed for the cost that exceeds their excess liability limit set.

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Lawrence Reaves covers environmental issues and recommends Beacon Hill Associates (http://www.b-h-a.com) - check out their comprehensive insurance scenario resources (http://www.b-h-a.com/claim-scenarios.aspx)

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