Insurance Offers Inadequate Cover For Environmental Risks: New Report

A recently published report by Charles Taylor Adjusting has revealed alarming gaps in insurance coverage for environmental risks associated with the transition to greener technology. The report, titled Going Green Carries Its Own Environmental Risks, highlights that standard property policies do not cover losses resulting from on-site environmental damage, posing a significant risk to businesses navigating the shift to more sustainable practices. 

Graham Hawkins, head of environmental technical and unique risks at Charles Taylor Adjusting, stressed the importance of organisations fully understanding the extent of their environmental exposures. The report indicates that without adequate specialist environmental cover, companies may face substantial out-of-pocket expenses for clean-up efforts following ecological damage. 

The findings also point out that many existing insurance policies, including public, general, and motor liability, expressly exclude coverage for losses arising from environmental damage to areas of biodiversity.  

This exclusion extends to costs associated with clean-up operations mandated by regulatory authorities under their statutory powers, leaving policyholders with limited recourse.

Hawkins further explained that even when businesses have an environmental extension to their standard cover, this may not be sufficient. 

This lack of coverage could lead to significant uninsured expenses for site owners, potentially prompting them to question the quality of advice received from their insurance brokers. Hawkins suggested that with the appropriate coverage, such as a premises pollution liability policy combined with property and liability policies, the financial outcome in the event of an incident would be markedly different. 

The report underscores the need for businesses to proactively engage with their brokers to secure specialist environmental insurance, which could prevent significant financial burdens in the event of environmental damage. As the push for greener technology intensifies, ensuring comprehensive coverage for associated risks is becoming increasingly vital for organisations across various sectors.