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Environmental Liability Insurance


Climate change, pipelines, carbon tax, methane from cows.  Let’s talk about the environment. Or since I’m an insurance broker with a one-track mind, let’s talk about insurance for environmental exposures that exist.

Environmental liability insurance is readily available in Canada. Even with the challenging insurance market we are facing, the Suez Canal blockage hasn’t stopped the supply chain for environmental insurance.  Whether you are a crop input retailer, a manufacturer, a farmer, or a contractor, there are multiple markets that are willing to provide environmental liability insurance should you have an accidental spill on your property or inadvertently cause harm to a third-party. Buying insurance protects you from obvious claims made against you should there be a catastrophic event that causes potential harm to the environment around you.

If you drive around most small towns across the prairies, you will likely find a site that used to be home to a service station, gas bar, recycling facility, machinery or truck storage facility, etc. These sites are no longer occupiable due to their condition and the cost of remediating the land. Many of these sites could still be operational today if there had been proper environmental precautions and insurance in force.

Another benefit in buying proper environmental liability insurance is to protect the long-term value of your land.  We have seen an interesting wrinkle in business sales being stalled, cancelled or substantially changed when pollutants are found on the sale site. You may think this would be easy to keep hidden from potential buyers, but it is commonly uncovered when the purchaser’s financing company requests an environmental survey before releasing the funds. In certain situations, having any hint of site pollutants has caused major hiccups in transitioning business assets.

Is all environmental liability insurance the same? There are a wide variety of forms and wordings available for coverage. Farm Liability policies typically include limited pollution insurance, with sub-limits applying to certain claims. With some insurers, there are also coverage additions available for a Commercial General Liability policy. Stand-alone environmental policies typically provide the best coverage available in the marketplace. Some policies provide only sudden & accidental coverage, with a short time-frame for discovery of a pollution event. This wording is typically less expensive, as it will not respond in the event that the pollution spill is found after the discovery limitation. Another option is called gradual pollution, which provides coverage for any new pollution events from the retro-active date specified on the policy. In addition to these options, there are policies that will protect only 3rd party exposures and will not pay for any pollution clean-up on your own site. Needless to say, there are many options.

If you ever wonder why your insurance broker looks like they haven’t slept in months, it’s because they are likely awake at night considering the options, reviewing the details enclosed to provide good advice and education to clients on the complexity, and availability of environmental insurance.

Be sure to seek advice and purchase insurance from those who understand your business!

David Schmidt is an Account Executive and Rempel Insurance Brokers in Morris, MB, specializing in insuring farms and businesses across Manitoba and Saskatchewan. 

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