What is environmental insurance? Also known as Environmental Impairment Liability (EIL), this insurance covers claims for personal injury, damage to property, clean-up expenses, legal expenses or fines that have been incurred as a result of pollution.
Why do you need to ensure against the risk of causing damage to the environment? Since 2009, the EU Environmental Liability Directive (ELD) has aimed to encourage businesses to take more ownership of the risks they may pose to the environment. Businesses are now liable financially for the cost of any damage their pollutants have caused. Under the European directive, the business must investigate the cause of the contamination and pay for remedial action. Should contamination be as a result of individuals in that company being negligent in their duties, it can be considered an offence which – if it comes to court – could result in up to two years’ imprisonment, and/or an unlimited fine. It doesn’t matter, either, whether it is pollution caused by contractors. A company can still be liable for contamination events caused by work done by contractors they’ve hired.
Who might need this cover? Potential buyers of environmental insurance include any business that buys or sells land, uses raw materials, produces waste or undertakes groundwork has an environmental exposure. For Real Estate this would include such issues as historical contamination/legacy issues taken on by contract and Tenants actions resulting in landlord being liable for clean-up costs (including waste crime).
To read more on this subject click here for our information sheet on Environmental Liability Insurance
It offers financial protection to individuals who are directors, partners or officers (managers/ supervisors) of a company for the cost of compensation and claims made against them for alleged wrongful acts occurring during the course of running the business. It is sometimes referred to under “Management Liability Insurance” which often includes D&O Insurance as well as the company/entity also being protected, and/or Employment Practices Liability, more details of which are described over under “Associated covers”.
As many of our property and construction clients will be aware from press articles and communications with their professional bodies, the cheap PI rates experienced in the “soft” UK insurance market for over a decade have come to an end and professionals and contractors are now feeling the impact of increased PI premiums and in some cases more restrictive cover.
What has caused this?
Lloyd’s of London conducted a
review of its worst performing lines of business in 2018 with PI insurance
being the second worst performing class (USA property business was the worst).
In 2017 Lloyd’s Syndicates incurred £272m in claims but only collected £170m in
premium for Architects, Engineers and construction risks; a situation which is
Several Lloyd’s Syndicates
and specialist insurers have withdrawn from the PI market during 2018 and 2019
and no new entrants have taken their place, so there is reduced capacity.
The Grenfell Tower fire has led to concerns about the construction industry in general, both in terms of building regulations and fire safety, which has led to greater regulatory scrutiny. PI insurers have reported difficulties in being able to pass claims for construction projects down the line to designers and consultants. This has led to an increasing number of insurers scaling back on capacity or withdrawing from the PI insurance market entirely. Consequently we are now in a “hard” insurance market.
effects are we seeing?
Insurers increasing their rates with the result of significant increases in PI premium levels as the costs are being passed to businesses.
Insurers being more diligent and proactive with their risk assessment before quoting or offering renewal of PI cover.
Punitive terms are being imposed, such as reduced limits of indemnity, higher excesses, restrictions in cover or cover exclusions.
In some cases, insurers are declining to offer renewal terms in the event of significant risk exposure or where there are existing claims or notifications.
Slower response times from insurers as insurers are inundated because more firms are looking for alternative PI cover in the hope they can find more competitive renewal premiums.
Insurers may now be declining to quote risks or professions where they would have been eager to provide terms in previous years. 2019 renewal premiums in some cases may be up by 25% or more. This can be hard to understand, particularly for businesses which have not had any claims and where turnover has remained stable. Many property related professionals (not just Architects and Design & Construct risks) may experience challenges in renewing their PI insurance at terms that they consider are suitable or affordable.
professions is this affecting?
The following professions
have so far experienced the greatest impact:
Design and Construct
Surveyors (particularly those involved in mortgage/lending
Building and Engineering Contractors
Commercial Investment Agents
However, it is anticipated that premium increases will filter through across all professions during the second half of 2019 and there is likely to be a continued impact on availability, cost and capacity over the next few years.
How will this impact and what can be done?
There may be delays in insurers response times and unexpected premium increases and/or restrictions in cover.
Don’t assume that renewal of your PI insurance will be a simple formality and that terms will remain similar to last year. The low premiums of recent years are a thing of the past.
Allow plenty of time before renewal to prepare. As a minimum submit your renewal presentation at least 3-4 weeks prior to your renewal date.
Provide a comprehensive insight and detailed information into the running of your business together with details of new projects, changes to activities and any variations to your directors and partners.
Keep the information clear, concise and consistent. Make your renewal presentation with care and demonstrate that you have a clear vision of the outlook for the future and where the firm is going.
For more information
regarding your PI needs, please contact Verena Cole or Anna Lloyd at our
Bristol office on 0117 387 8880/8881.
The Arlington team took part in the JLL Property Triathlon on Friday 28th June and helped raise over £230,000 for JLL’s charity partner, Crisis.
The Arlington team took part in the JLL triathlon on Friday 28th June and helped raise over £230,000 for JLL’s charity partner Crisis. The Sprint Triathlon format consisted of a 750m open water swim followed by a 21.4k bike ride finishing with a 5k run all set around One of the venues of the 2012 Olympic Games, Dorney Lake!
Congratulations to Ciaran (Swim), Sarah (Cycle) and Rachel (Run) who competed in the Mixed Relay event and to Nick and Louis who participated in the Individual Mens competition. It was a great day in the sunshine and we look forward to entering again next year.
If your buildings sum insured is around £500,000 and contents £100,000 then you might fall into this category depending on the insurer and it’s certainly sensible to consider a High Net Worth contract when your sums insured reach this level.
What Is High Net Worth Insurance And
What Does It Cover?
of this bespoke cover are significant and below is a list of some of the wider
cover provided by a High Net Worth policy:
Contents cover automatically applies worldwide on an all risks basis
No under insurance penalties
Trace and access cover up to full buildings sum insured
Automatic cover for newly bought or acquired items
Specified items insured on agreed value basis
Automatic identity and credit card fraud with high limits
Worldwide annual travel cover with no conditions for pre-existing medical conditions
No “pairs and sets” clause so the undamaged item(s) in a pair or set is also covered.
Cover for students belongings up to the full contents sum insured
Second homes and holiday homes – UK and overseas properties
Yachts, sailing and speed boats
Did you know?
Reports suggest that Wines, Jewellery and pieces of Art are three of the Top Ten under-insured items on Home insurance policy.
Wines – Your carefully selected Wine collection is your pride and joy. It’s stored and cared for in a way that only wine can be. Is it correctly valued and up to date on your Insurance policy?
Jewellery – Your limited edition
Rolex or Platinum Engagement ring is something you would not want to be
without. Is it covered for the correct amount? How old is the valuation?
Art and Antiques – Works of art and
antiques are, by definition, irreplaceable! We know this. With the correct
cover, at least you will know you will compensated sufficiently should your
beloved 18th Century Oak Bureau or 21st Century Banksy become lost or damaged!
High value possessions require
greater level of protection, which are not normally covered by standard
Talk to us today to protect your high
value assets and possessions as at Arlington Insurance we can arrange cover for
High Net Worth individuals who need specialised insurance that reflects their
lifestyle and offers the right level of cover and flexibility.