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TALKING POINT:
“How about leaving the oil in the ground...?
...it's going to run out in the next 25 years anyway!”

Environment Agency Clean-up Costs
[Bartoline v Royal & Sun Alliance]

It’s not often that the whole insurance industry is caught on the wrong foot.  However the result of the above case holds unexpected and serious cost implications for those with a pollution potential at their premises or contract sites. 

For Bartoline that cost implication was over £600,000.

Circumstances
Bartoline, a manufacturer of adhesives and wood preservatives, suffered a massive and fortuitous explosion and fire at their premises, which led to chemicals and 4,000 litres of extinguishing foam polluting two nearby watercourses.  The Environment Agency, under its statutory duty, carried out the clean-up operation and invoiced Bartoline £622,000 for the work.  Bartoline then submitted the account to its insurer, the RSA, whose subsequent declinature of liability led to the Court case.

The Issue
The issue to be considered by the judge was whether, on a true interpretation of the Public Liability (PL) policy the liability of Bartoline to the Environment Agency for the clean up costs, were capable of constituting a legal liability for damages.

The judge held that Bartoline’s liability to the Environment Agency was statutory and was not a legal liability for damages. [There are many articles on the web that give the judge’s summing up.]

The decision might have been different if the PL wording had covered “compensation” or “legal liability” rather than damages, but most PL and Products Liability covers only indemnify the insured against damages.

Plugging the Gap
1) Public and Products Liability 
We are part of a group of 30 brokers whose clients have a premium spend approaching £500m and even with that influence, major insurers we have approached on behalf of the group, including ACE, AXA, RSA, Aviva (Norwich Union), Allianz and many others, will only offer damages-based cover as standard. We have only identified three who will alter their wording to accommodate Statutory Debt arising from a sudden pollution incident and only one of which offers cover to the full policy indemnity limit.

2) Environmental Impairment Liability (EIL)
An EIL policy can plug the PL/Products gap, include clean-up costs at your own site, and cover clean-up costs where pollution leaks gradually.


If you would like to discuss any of the above, please contact Colin Lees on 01925 755105 or e-mail us via the contacts page



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