Environmental Insurance, environmental liability insurance,

The environment is one of the world’s most essential and growing topics. There seem to be more and more environmental issues that affect the well-being of the planet, animals, and humans. It’s been an issue for generations and is something that most or almost everyone cares about improving.

Climate change is the enormous environmental problem humanity will face over the next decade, especially in cities like Hong Kong. Climate change is an outcome of the pollution and products humanity creates.

Businesses and large corporations cause a large sum of the pollution due to the factories, toxic chemicals, plastic, oil and more. Over the decade, many companies have been blamed for many environmental problems worldwide, resulting in costly lawsuits. However, there is always a light at the end of the tunnel, as it is not too late to save this beautiful plant and everyone.

Environmental insurance is one of the best ways to protect businesses, the environment and people affected by any business pollution caused. A company will never mean to cause harm to the environment, but accidentally, it may create an environmental issue that would cost them millions or even more. This article will discuss how environmental insurance can help businesses fight against sudden environmental lawsuits and also help fix the mistakes caused for a better future.

What is Environmental Insurance?

Green Business in hong kong

Environmental insurance, also known as pollution liability insurance – protects businesses from claims and lawsuits due to the pollution caused while operating.

Environmental insurance is crucial for the following :

  • Any company that uses chemicals or toxic materials (oil, medicine, etc.)
  • Product Industry (manufacturers, packaging and distributors)
  • Logistics industry
  • F&B Industry
  • Warehouse Storage Companies
  • Waste Disposable Companies

This policy will also help a business clean up the pollution or waste created. As accidents can happen at any time, there should always be a strategy to deal with these accidents and help the parties affected.

The losses or damages covered by environmental insurance usually include claims for bodily injury, property damage, cleanup costs, defence costs and business interruption due to the environmental issue. It is an insurance that will help the firm and the environment around them.

Why Does A Business Need Environmental Insurance?

Air Pollution

pollution liability, Air-pollution, environmental pollution insurance

Air pollution is the fastest-growing pollution on our planet. It is so bad that the World Health Organization (WHO) estimates that 90% of humanity breathes polluted air. From developed cities to small villages, air pollution harms humans and animals. The leading cause of air pollution is businesses that run factories, manufacture vehicles and burn toxic fossil fuels. These businesses try their best to create the products they intend to without realising the effect on the environment.

Many environmental organisations monitor the pollution caused by businesses and its effect on the environment. When a business is liable for a certain amount of air pollution, the environmental organisations and the government have the full right to sue the company. For instance, there is an ongoing lawsuit against automaker BMW in Germany for refusing to tighten carbon emissions goals. The non-government organisation (NGO) believes the famous automobile company does not respect and follow German climate change rules and targets. A case like this can ruin a company’s reputation and possible income. The general public will not purchase their products due to the air pollution caused.

Environmental insurance for such cases is an excellent asset for responsible businesses. The insurer will pay for any claim against the business and help provide funds to allow the company to defend itself in court. Additionally, the insurance will provide connections to environmental experts. These experts will advise how to plan business environmental goals to meet the country’s carbon emission target. Finally, a business must respect the public around them and the environment to gain a better brand image for a better tomorrow.

Marine Pollution

Water Pollution, marine pollution insurance, environmental impairment

A fact that may surprise you is that water makes up 75% of the world. The sea, rivers, and marine life are essential. That same water is treated and turned into drinking water worldwide. The same water where we get those delicious fish. Regrettably, water worldwide is being polluted by garbage or chemicals over time.

Various factors cause water/marine pollution, and the main factors are business dumping their wastes into the ocean, accidental cargo oil spills and littering of plastic. Even if a public member throws plastic into the ocean, the public accuses the business of producing plastic.

Environmental firms have sued or fined many businesses due to their part in water pollution. These cases can cost a company a large sum of financial loss and reputation damage if not dealt with quickly. For example, in August 2021, China reported oil spills off the coast after tanker bulk carriers collided. These two companies will be liable for the oil spill, marine fine and cleanup costs. The costs will add up to a significant amount that the business will have to pay to keep operating and avoid reputation loss.

These instances are why environmental insurance is crucial. The insurance will cover all the claims related to the accident and the fines. In addition, the insurance company provides cleanup costs for the business to fix the mistakes it may have caused. The cleanup will benefit the environment and stop harmful contaminations that the company could have caused.

Third-Party Damage

When a business creates some form of pollution in the environment, the third party is always affected first. Third parties include the customers/clients, public living near the production site, and the area’s property. Third-party damage can be bodily injuries or property damage due to pollution caused by business activity. A business will always be liable if a third party is affected by its actions. The company will pay for medical care, repair, compensation, and more in these cases.

pollution legal liability, premises environmental coverage

For example, suppose a small village notices that more and more children are falling sick due to the air pollution caused by a factory nearby. In that case, The town’s citizen has full rights to sue the company and demand compensation for their illness. The company will have to pay the compensation costs and may have to shut down temporarily. Additionally, the business will need to improve its process to fit the environmental needs. The example will cost the business significant financial loss and reputation damage.

Environmental insurance will help pay for third-party bodily injuries or property damage. Additionally, the insurance company will provide business interruption costs to operate again without losing too much income. Environmental insurance can save a business considerable money and brand value when the problems are solved quickly and effectively.

Long-Term Protection (Gradual Pollution)

Plastic Pollution, types of environmental insurance, pollution claims

Sometimes, pollution may not be noticed instantly and may be harmful over gradual time. This pollution is as bad as any other sudden pollution. For example, a chemical spill in water may not affect the safety of the water in the first few years, but after a few years, it could turn toxic and harm the environment interacting with that water. Even if the pollution and harmful effects have taken years, the business is still liable to gradual pollution and harm.

A famous case is Coke, Pepsi, Nestlé, and other companies that environmental groups are suing for creating plastic pollution and misleading consumers about the recyclability of plastic. Plastic pollution is a big part of gradual pollution, as the bottles not decaying over the years make it long-term pollution. The public holds these brands liable for creating plastic pollution that affects the sea, land and animals.

They will have to pay the compensation costs and cleanup costs. More consumers are becoming plastic-aware and would not buy from brands that use plastic in any part of their products.

Environmental insurance cover can protect businesses from gradual pollution by providing costs for claims and, most importantly, cleanup costs. The insurance makes a big difference for a business as it does not suffer a significant financial loss and allows the company to clean/ fix the spread of pollution. In addition, the cleanup will positively affect a business’s brand image.

When Does A Business Need Environmental Insurance?

Businesses should buy environmental insurance as soon as possible, as accidents can happen anytime. It can save a company a large sum of financial loss and reputation damage. It is also crucial to keep updated on environmental insurance and renew it to avoid unwanted risks and prepare for accidents. Environmental insurance is vital for industries such as most products, chemical, manufacturing, transportation, warehousing and waste disposal industries.

Some countries around the world are making environmental insurance compulsory. The government believes businesses should be aware of their environmental responsibilities. Such as Poland, Germany, and the Philippines, and the list is growing.

Businesses need to take responsibility for their negative environmental actions. It is still not too late for companies to be green businesses and purchase environmental insurance.

 

To Learn More about environmental insurance and get the best protection for your business and protect the environment, contact Red Asia Insurance.