Environment Liability Insurance

The Environment Liability insurance has emerged as a result of the Act of 1st August 2008, which introduced the “polluter pay” principle.

For both individuals and companies, the “polluter pay” principle is already very concrete. It applies more generally through the bonus – penalty scheme for cars, through the government policy for ecological transition, by supporting the purchase and rental of a low-emission vehicle. Also, penalty applies to highly polluting vehicles through a massive annual tax.

For companies the “polluter pay” principle has created a new “Environment Liability”, according to FFA (French Federation of Insurance)

The “polluter pay” principle applies when an owner is held liable as a result of their business activity, in the event of serious damage, or imminent threat of serious harm to environment.

The imminent threat of harm is the sensitive time where harm to environment has not yet occurred but requires to respond to prevent this harm to occur or the mitigate its impact.

As an owner, you are required, in the event of damage, to inform the prefect and take, at your own expenses, precautionary measures or any appropriate repairs.

You must repair the damage to environment, exclusively in nature, under the supervision of the prefect, the competent authority designated by the law.

Environment Damage referred to, are as follows:

• Damage seriously affecting the constitution or to maintain the state of preservation of protected species and natural habitats.
• Damage that affects the soil and cause serious risk of adverse impact on human health,
• Damage seriously and adversely affecting the environmental, chemical and quantitative condition, and the ecological potential of water.

Yes, all companies may be affected, regardless of their size or business field. For certain business fields (classified facilities for the protection of environment, farms, building companies…), the owner will be liable even there’s no fault or negligence on its part.

An owner may be held responsible for Liability Insurance for damage to Environment (RCAE)  in the event of bodily injury, direct and consequential damage suffered by third parties, and resulting from harm to environment after an accident caused by his activity (parts breakdown, explosion, incorrect operation…).

Unlike Liability Insurance for damage to Environment occurs when, an owner may be held responsible for Environment outside any damage to a third party and the operator will be held liable for environmental damage he may have caused as a result of his activity.

In addition, Environmental Liability necessarily implies a repair in nature.

Under the Act of 1st August 2008, 3 forms of repair are provided for:

1. “primary repair” that aims to restore the original natural resources of the damaged site;
2. “complementary repair” that helps provide a level of natural resource or service similar to that of the initial state;
3. “Compensatory repair” that should cover the interim losses of natural resources and services pending the return to the initial state.

Complementary and compensatory repairs shall only apply to waters, species and protected habitats.

Environmental liability Insurance covers the costs of prevention and repair of environmental damage to be borne by the owner.

Based on the insurance policies and subject to the implementation of precautionary and repair measures/actions, these costs may cover:

• the cost of the damage assessment;
• repair and precautionary measures;
• engineering costs to determine repair actions;
• administrative costs, legal fees and performance costs;
• the costs of data collection;
• overhead and costs of monitoring and follow-up…

Cover of liability type does not cover this new environmental liability; if they wish to do so, the owner shall purchase a new policy or an extension of cover to the policy

A guarantee liability may be purchased with a credit institution or an insurance company. The mechanism shall not apply when the bonded owner is defaulting and is unable therefore, to perform their obligations to their creditors.

Unlike the guarantees sureties, environmental liability coverage shall apply regardless of any failure of the owner: as long as damage to environment caused by the owner’s activity, occurs accidentally.

You must report the loss to AGIS as soon as you are aware of it.

The insurer shall appoint, as appropriate, an adjuster to ascertain, describe, assess and determine the cause of damage. During this phase you will be assisted by AGIS Insurance broker, who will assist you with the claim management and with your discussions with the Prefet, based on the provisions of the Policy.

No, some damage are not covered under the Policy. There may be exclusions of cover imposed by law.

Main exclusions include:

• Gross negligence
• Failure to comply with the legal texts,
• The poor condition of the facilities,
• The increasing risk, i.e. the faulty product that could not be avoided or found upon its release as the status of scientific and technical knowledge objectively accessible would not allow it.
• asbestos,
• electric and electromagnetic fields.

AGIS, your insurance broker helps the insured company getting advice in terms of prevention. Indeed, AGIS and the Insurer may make recommendations to help the entrepreneur to better prevent and identify the risks of environmental damage related to its activity, and set out a wise and pragmatic policy of prevention in terms of environmental liability.

Since the recent Act of 1st August 2008, any company recognised as a polluting company must financially indemnify the damage caused.

AGIS offers insurance policies to businesses to appropriately prevent this risk.

With regard to environmental risk, AGIS solutions are designed for companies and R&D firms.

Indeed, service providers may be held liable for damage to environment as a result of other wrongdoing in the engineering or in the performance of work.

Elements relating to one of the solutions available to entrepreneurs are summarised as follows:

    Scope of the environmental liability insurance policy

Environmental liability insurance for entrepreneurs can provide cover against environmental liability not covered under the general standard commercial liability insurance with restrictive provisions for exclusion of risks pollution related risks. Specifically tailored to the needs and risks faced by entrepreneurs, environmental liability insurance for entrepreneurs provide customers with a solution essential to the business to mitigate the losses when sudden or gradual pollution conditions arise on a construction site because of the covered activities.. The target groups include any entrepreneur in the construction and service industry.

    Features and Benefits

• Protection against pollution conditions both sudden and gradual, resulting from covered activities covered, even after the completion of the work
• A potential 50% discount on the excess if a loss was the subject of a successful mediation (up to $25,000 in € equivalent )
• Cover extended to liability caused by the products for products installed as part of the covered activities.
• Automatic protection against road pollution for motor vehicles and marine vessels used as part of the covered activities
• Exclusion limited to warehouses not owned by the Insured, now only applies to the transfer, storage or disposal facilities
• Flexibility to choose if a policy is purchased as a whole or in respect of a specific project
• Access to tools and value-added programs, including PIER (see attached leaflet), and prevention consulting.

    Cover

• Coverage based on the claims reported or on loss events.
• Coverage applicable to personal injury to third-party, property damage and environmental damage.
• Limitations offered up to $50 million (equivalent in €).
• Sublimit of $250,000 (equivalent €) for emergency response costs covered and resulting from pollution conditions that require immediate action; higher limitations may apply.
• Crisis management Programme- Optional
• Warehouse Site Coverage – Optional
• Specific cover of sites insured for the own premises of the owner – Optional
• Cover for additional legal costs – Optional

A broader definition of the conditions of pollution may be agreed upon to include microbial materials, Legionella bacteria, deposits and sedimentation.