Environmental risk is becoming increasingly pertinent for SMEs and involves a wider range of issues than are often expected. There are now estimated to be 17,000 pieces of environmental legislation in place around the globe. New laws are constantly emerging, while old laws – which may not have been enforced effectively for years – are suddenly being enacted with renewed vigour. At the same time, a more developed appreciation of the interconnectedness of business, society, health and environmental wellbeing is bringing more and more companies into the spotlight. Sectors which may never before have been associated with pollution in the traditional sense, are suddenly finding themselves responsible for new environmental liabilities and risks.
An SME could be exposed to an environmental risk if it is involved in any of the following activities:
• owns, operates or buys and sells property
• operates on third-party premises
• uses, stores, transports or produces a potentially hazardous substance that may cause contamination
• creates solid, liquid or gaseous waste
• redevelops brownfield land
• operates in a bio diverse environment, such as next to a nature reserve or protected habitat.
If any of these apply and a claim is made, the organisation may find itself dangerously exposed unless it has the right cover in place. Executives can now also be held personally accountable, potentially leaving directors and officers exposed to financial and reputational ruin. Directors & Officers cover (D&O) can help in these situations. Meanwhile online commentators and social media pundits are ready to expose any industrial accident to a global audience within minutes, causing massive damage to brand and reputation in the process. With these kinds of challenges emerging, SMEs in all sectors need to look at their risks and discuss them with their broker. At the very least SMEs must be compliant. Without dedicated environmental cover there are very likely to be exposures and the time to discover these is now. Companies often assume that they are covered by their general liability policy, but without specific environmental cover they will almost certainly be left to handle a crisis – and pay for any clean-up, as well as associated works – without the benefit of insurance.
Contact us to find out more about D&O insurance and to discuss when Public Liability cover stops and cover for Environmental risks starts.