Insuring against the risk of land contamination
Making sure you have the right insurance cover when you own or trade land affected by contamination.
If you own or occupy land which may be contaminated, you should ensure that you have the right level of insurance cover.
Public liability insurance
At the very least, you should have cover for the cost of third-party claims that could result from spills, accidents and other unforeseen circumstances. This is usually included in the public liability insurance that some businesses are obliged to have. However, if your business is at risk of causing contamination, pollution or environmental damage, you may need to take out additional cover.
Insurance for pollution is expensive and is usually only possible after you provide detailed information to the insurer. Insurance for historical contamination is not usually available.
For more information on which types of insurance are required by law and which are optional, see liability insurance.
Insure against business losses
It is also possible to insure against your own business losses as a result of contamination, spills and similar accidents. While this may be expensive, it can be worthwhile if your business is particularly at risk.
Bear in mind that insurance companies will not usually pay out on claims that result from negligence on your part. You should always be aware of the risks involved with your business and take appropriate precautions to prevent pollution incidents - see preventing land contamination.
Insurance when buying or selling land
If you are thinking about buying or selling a brownfield site for development, consider taking out insurance to limit your liability in case contamination or further contamination is found.
Before you buy or sell contaminated land, you may be able to agree an indemnity with the other party to transfer the liability to clean up the contamination. You should speak to a specialist lawyer or property consultant about indemnities.
Bonds - sometimes referred to as surety bonds - can be purchased by the seller to protect the purchaser if contamination (usually limited to above a certain value) is discovered. Bonds are much simpler to administer and are often cheaper than insurance.