Thursday 20 June 2024

Environmental Insurance

What is Environmental Insurance?

Insurance can be dated back to the early human societies. It was developed to eliminate certain types of risk for day-to-day business dealings. So, we’ve now got cargo, property, death, and medical insurances. But “Environmental Insurance” is a new line in the sector. Environmental insurance, sometimes known as pollution insurance or coverage, is a type that protects a business from the claims against environmental pollutions.

The environment was neglected for a long time, but today state agencies and NGOs like Greenpeace International are keeping a strong eye for damages and disturbance in ecology. The environmental insurance helps respond to such claims or for cleaning up pollution condition.

What Would Be the Cost of Claim?

The environment is not a real person, so legally it cannot claim for the losses. It cannot sue a company for damage to the biodiversity. It needs to be represented by legislations, which simply ask, “you pollute, you clean”. So, you will have to pay for the cleanup and restorations costs. If you’ve harmed protected species, flora-fauna you’ll pay indemnity for the loss of ecological function.

Due to its relation to the environment, the claim cost could be anything. For example – In 2010, the Ajka alumina sludge spill in Hungry cost 460 million Euros in indemnity. As a result, the MAL Hungarian Aluminum went bankrupt and the government nationalized the company. Another example, Union Carbide Gas Leakage, infamously known as Bhopal Tragedy in 1984, did the severest bio-disaster with about 4000 fatalities and half a million nonfatal injuries. No agency in the world can estimate this loss.

Do You Need It?

Of course, you do. It doesn’t matter if you’re not a chemical plant operator, a transporter or a factory owner. With the strong legal liabilities in the present scenario, this is a type of risk that can hit anyone anytime. It is you, who needs to foresee the condition. A constant leakage of toxic substance within your own property could be soaked in another 5-10 meters down by the land. It could get mixed with the underground water currents, which can pollute the complete vicinity. Can you even guess, what would be the claim amount?

That is why construction sites and businesses are finally understanding the risk and availing this insurance. Every leading insurance company is providing environmental insurance and if you’re a bit confused, there are lots of specialist environmental insurance broker websites available.

Can This Insurance Eliminate the Risk 100%?

The straight answer would be, no. Insurance claims never work in such manner; neither do environmental insurance or your car insurance. Generally, a proper case study and paperwork needs to be done before awarding claims. Due to Environmental risks being bigger on the restoration scale, agencies are involved with the investigation. If a disaster is found at the fault of a human error or errors, people can be prosecuted. Environmental insurance agencies will help you to minimize the risk, and that happens due to their specialized inspection and checks. But still, if a catastrophe struck, the company will handle the claim.