Environmental Impairment Liability: Why You Need It and Why You Should Keep It

The best way to understand the importance of keeping Environmental Impairment Liability (EIL) or Site Pollution coverage in place is to revisit the reason for originally purchasing the coverage.  Companies and organizations buy EIL coverage, because they hold some kind of environmental risk or exposure due to operations and/or Environmental Laws.  Some examples of this would be, chemical companies handle substances that can poison an entire drinking water supply for hundreds of thousands of people.  Byproducts from a manufacturing facility’s operations can lead to serious natural resource damage.  The chemical used in dry-cleaning solution has been linked to dangerous health effects from long-term exposure.  The liability associated with these risks tends to be more than most companies are able to or willing to self-insure and look to transfer the risk.  A way to do this is to purchase insurance.  In the case of environmental liability, folks purchase EIL coverage. 

               What’s important to understand, is what drives or creates this environmental liability for companies and organizations.  What makes a company or organization responsible for the natural resource damage they cause or the bodily injury that results from their actions?  The answer is a mix of statutory regulation and Common Law.  Negligence, nuisance, and trespass form the Common Law portion of environmental liability and provide the basis for civil suits.  Environmental protection laws create liability for cleanup costs and damages to natural resources. 

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