How Marine Pollution Can be Reduced with Environmental Insurance?

We celebrate Earth Day to learn as a community how we can do so much to protect the Earth and the environment. The planet is full of beautiful places and breathtaking nature. The scenic environment helps us in many ways, including taking cool Instagram pictures. Additionally, the clean air and clear waters allow us to forget our worries and embrace nature at that moment.

Unfortunately, over the years, there has been a growing concern about air, marine pollution and environmental contamination. One of the main causes of this deviating problem is business activities. It is a serious concern, and there is still time to change.

When a business causes environmental damage, it is held responsible and must pay for the cleanup. These costs are very high, and one accident can cost millions.

It’s time for businesses to prioritise the environment’s safety and correct their mistakes. This case study will explain how environmental insurance assisted a shipping business in fixing its marine pollution mistake and saved it HKD 12 million. 

Client Background

The client is a shipping business that oversees cargo ships that transport various goods from one country to another. These goods include cars, raw materials, oil, and much more. When running a shipping business, the industry must consider many environmental risks, as cargo ships are one of the main contributors to marine and air pollution.

Marine pollution is a concern in today’s world. The ocean is flooded with two main types of pollution: chemicals and trash. Ships have caused many serious marine pollution incidents, including oil contamination, fallen cargo, and ship material contamination (paraffin). Additionally, a ship doesn’t have to be a cargo ship to cause pollution; it could be a yacht, cruise ship, or even a smaller boat.

Therefore, the client has a higher chance of causing marine pollution due to the multiple cargo ships and journey distances.

Client Problem – Marine Pollution Accident

One of the client’s ships was transporting large cargo containers with various products from Asia to Europe. The business had planned the safest route and ensured the cargo was secure. All procedures were in check, and the ship had left Asia.

During the journey, the ship encountered harsh weather conditions, which caused it to lose control and crash into rocks (in port). This accident caused a considerable hole in the fuel supply, which now poured oil into the sea.

The captain immediately informed the nearby coast guards and neighbouring country authorities. Unfortunately, it was too late, and the damage had begun, as the oil was causing extensive marine pollution in the area.

The authority took the ship to the local repair grounds, and the local government informed the business of the accident. The country involved also sued the company for marine pollution damage claims. The business was liable to pay for the compensation and marine pollution cleaning costs.

Even if it was an accident, the business would have to follow legal protocols and pay for the required costs, which could cost millions. A marine pollution incident is never taken lightly as it harms aquatic life and locals nearby.

How Environmental Insurance Was the Solution to The Marine Pollution Accident?

Thankfully, the business had purchased environmental insurance. Environmental insurance, also known as pollution liability insurance, will cover claims and lawsuits due to the pollution caused while operating the business. The insurance will also help the company with the funds to clean up the pollution or waste created.

It is the best insurance when faced with an accident that causes unwanted pollution or environmental damage. In this case, the insurance will reimburse all the compensation/fine costs and the cost of marine pollution clean-up. Sometimes, a business does all it can to avoid environmental harm, but accidents do happen, and it is important to act on them.

Therefore, environmental insurance covers the following costs:

Marine Pollution Clean-up Costs

• : HKD 2,000,000

Compensation Costs:

• HKD 10,000,000

Legal Costs

• : HKD 150,000

Total Costs: HKD 12,150,000

Marine Pollution Case Conclusion 

A business can cause and pay for various types of environmental damage, including marine pollution, air pollution, waste contamination, and more. Environmental insurance will cover any environmental damage caused by an insured company.

The insurance is crucial to any business or industry involved with chemical-based products, manufacturing, transportation, or warehousing of chemical products. Environmental insurance usually covers claims for bodily injury, property damage, clean-up costs, defence costs and business interruption due to environmental issues.

Businesses should buy environmental insurance before the slightest chance of an accident; it’s better to be prepared with environmental insurance.

It is time to become a green business and do your part for the environment by fighting marine pollution. 

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