Although as New Zealanders we pride ourselves on our ‘clean green’ image, we may not be as squeaky clean as we like to believe.
From 2013-2014 there were approximately 1100 hazardous substance incidents reported to the New Zealand Environmental Protection Agency under the Hazardous Substances and New Organisms Act 1996.
These included spills, leakages, and spray drift. These figures do not include the 100 prosecutions in the last 12 months under the Resource Management Act (RMA), which are handled by local authorities/councils. The average fine was $23,000, and New Zealand’s largest company, Fonterra, was recently fined $192,000.
The consequences of an environmental breach can be costly, with strong public sentiment and bad publicity to contend with as well as any financial penalties.
Traditional insurance policies provide limited protection, with most businesses relying on their Public & Statutory Liability policies to respond to any incidences. However, we are now able to offer Environmental Impairment Coverage to the New Zealand market, which plugs many of the gaps in the traditional insurance arrangements.
Public Liability Coverage will respond to sudden & accidental property damage claims, however it will not respond to gradual events. Likewise, Statutory Liability Coverage will respond for prosecutions or reparations, but not for the costs of cleaning up any contamination. Environmental damage to natural assets such as waterways and harbours is generally not covered by these.
This chart shows the risks covered under a traditional insurance programme vs. what can be included under the Environmental Impairment Liability Cover:
(Source Delta Insurance)
Environmental Impairment Liability Cover is all-encompassing and designed to respond to pollution incidents that you were not aware of. For example, it would include accidental spillages of hazardous substances, asbestos contamination, and sewerage contamination or leakage from underground tanks.
Companies and company directors have an obligation to ensure that the effects of their activities on the environment are limited, and that appropriate environmental management systems are in place. Environmental Impairment Liability Cover can form a key part of this.
High risk industries include manufacturing, construction, agriculture, medical, waste management, petrol stations, mining, and oil and gas.
The Abbott Group pride ourselves on keeping our clients informed of emerging insurance products that may help you better manage your risks. If you have any concerns around your exposure to environmental issues, you can discuss this with your Abbott Group broker.