Environmental liability insurance covers companies for financial loss arising from the known or unknown pollution events and contaminated land.

The policy provides long-term protection against identified environmental risks as well as unknown sudden, accidental, gradual and historical pollution liabilities that have not been identified by the parties during an M&A transaction.

Cover under the policy typically includes the following:

  • obligation to clean-up and remediate, including the associated costs and expenses
  • third-party claims for bodily injury and property damage
  • business interruption, including loss of profits and  rental income
  • legal defence costs

Why use it?

The insured can transfer actual or potential environmental risks to an environmental insurer and thereby ring-fencing any future financial exposure.

Environmental liability insurance can also release potential opportunities for sale or acquisition that might be precluded by a particular identified environmental risk.

The policy can be taken on by or on behalf of either a buyer or a seller in an M&A transaction.


Phase 1

· Provide high-level information on the risk for an initial view from RCA on the insurability and likely pricing range.
· Depending on the complexity and commercial sensitivity RCA may have no-names discussions with select environmental insurers to obtain initial feedback.
· Minimum information required is property location, a high-level description of the potential liability, a survey/Phase 1 report if available and any development or change of use plans.

Phase 2

· Environmental Insurers may provide an NBI based on high-level information on the basis that more detailed information and supporting documents being provided.
· Environmental Insurers provide an NBI based on the information provided or RCA liaises with the insured to provide further information to enable the environmental insurers to issue an NBI.

Phase 3

· RCA liaises with environmental insurers on proposed cover and reports to Insured and advisors with a recommendation.
· An insurer is selected.
· Further information required will be a site report and desktop review as a minimum. More complex, larger or development sites are likely to require a Phase 2 report.
· RCA advises on potential risk-sharing structures and alternative approaches to obtaining the required cover.
· All relevant documents and analysis are provided to the environmental insurer and RCA coordinates the Q&A between the environmental insurer and insured’s risk manager or environmental advisor.

Phase 4

· RCA works with the environmental insurer, insured and insured’s adviser to draft and agree the environmental policy, bespoke to the insured’s risks.
· Final documents any final reports are presented to the environmental insurer and the environmental policy finalised.