All entities should carry out an environmental risk assessment so that they understand how their business processes impact the environment now and whether they are going to be able to afford the unexpected additional costs of environmental “reinstatement” (repair) that are insurable.
A skilled insurance broker would advise that Environmental Insurance must be investigated because it is a common exclusion from every insurance policy. Once an environmental assessment has been conducted, an environmental insurance policy can commonly be arranged.
Knowing which environmental risks are insurable and which are not can guide you about the activities that your business may choose to maintain or cease.
And isn’t that our environmental responsibility anyway? To undertake only those activities that affect our environment in a way that is rectifiable and accounted for?
The key is to plan ahead and not to wait until the irreversible environmental damage occurs. That way we don’t have the outcome of the environmental disaster in the Gulf of Mexico in 2010 all over again, where the largest oil spill in history was not remediable from funds accessible through environmental insurance.
The public should be demanding that those who carry out environmentally sensitive activities be insured if they can and if not, that they do not do what they intended before they sought insurance advice about it.
The public should also be demanding that insurance brokers as a profession be well prepared to discuss environmental risk and the potential sources of cover to insure against environmental damage.
Until then, Environmental Insurance is well equipped to approach these problems for businesses across Australia.

A hypothetical

Imagine you are the owner of a service station. After accounting for the fuel you have sold, you have less fuel in the underground storage tank (UST) than you should have.

Do you …

Increase the price of the fuel to cover the loss?
Contact a real estate agent to sell the site?

Service station operators have a duty to report a possible contamination to the Environmental Protection Authority (EPA) but may avoid reporting it if it means that they could incur a fine or penalty or a notice to clean up.

Fortunately, the cost of UST rectification is not as expensive as the potential claims and fines and the penalties that could arise if the owner/operator of the service station does not follow some simple rules:

1. Record the date of the leak and the amount that has gone missing, the day it first occurs.
2. Report the matter to the EPA and confirm action is being taken or seek guidance.
3. Contact an environmental consultant to find out how bad the leak is and whether it has transgressed to neighbouring properties.

If the service station owner does not have insurance they may be scared to report the leak. Environmental insurance takes away the fear of reporting.

Welcome to the new Environmental Insurance website where you’ll find news and information about the evolving world of environmental insurance. We invite contributions from people in the field and encourage providers to get listed on this site to broaden the base of potential customers.