It may not be the most exciting area of running a business, but waste management and caring for the environment surrounding your business are important parts of your day-to-day housekeeping.
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keeping it clean

Not only can failure to do so result in a hefty fine, it could also pose a risk of injury to your employees or customers. In this bulletin Gallagher look at waste management, noise pollution, fly-tipping, invasive species, subsidence and Environmental Impairment Liability (EIL) and how the right combination of best practice, risk management and insurance can help you to avoid reputational and financial damage.

Waste management

EU laws over recent years have become increasingly more restrictive about how businesses handle any waste their business produces. It isn’t just hazardous waste or asbestos either, the EU Waste Framework Directive, for example, requires all waste collection authorities and businesses that produce waste to separate recyclables including paper, plastic, metal and glass, from non-recyclable waste such as food. Waste should be disposed of without endangering human health or causing harm to the environment. When doing so, it is also important not to invalidate your insurance policy. For example, the Council could provide plastic bins to use for recycling however these could void your insurance policy if they are placed closer than 10 metres to a building due to fire safety reasons. Further to this, if the Environmental Agency (EA) finds that you have failed to meet your obligations then they can prosecute and issue a penalty of up to £5,000. Plus, if the EA can prove that an individual was responsible for the oversight then they can prosecute and fine them too.

Storing waste correctly

All waste can potentially be a pollutant if you fail to store it correctly. You should ensure that:

  • waste containers are secure and not worn or corroded;
  • that no accidental spilling or leaking occurs;
  • waste cannot blow away when in transit; and
  • waste cannot be scavenged by animals or humans.

You are responsible for any waste emanating from your site, so you should take extra caution when storing material attractive to scavengers (such as scrap metal), clinical waste or waste liquids which can cause pollution.

Noise pollution

Noise pollution can be quite subjective, but is generally defined as "an unlawful interference with a person's use or enjoyment of land or of some right over, or in connection, with it." This can rest on a number of factors including the level of noise, its timing and its duration. If faced with a noise complaint then your business will have to demonstrate that you have used all possible means to minimise the impact and control the source of the noise1.

Often businesses tend to put tackling noise pollution quite low down on the list of environmental plans. This is the wrong strategy to take, especially if your business is located on a busy road or flight path or if you work in the manufacturing or aerospace industries. Excessive noise can drain your employee’s productivity and increase workplace stress, so any steps to reduce these will be welcomed by your employees and are likely to improve employee retention rates by enhancing the quality of the working environment.

Fly-tipping

While the Council is somewhat responsible for removing fly-tipped waste, you may be surprised where their remit ends and yours begins. The Council is only required to remove it from areas with open air on at least one side, which are publically accessible or owned by them. Unfortunately, this means that landowners and occupiers are required to remove all waste fly-tipped on all other types of land, regardless of who put it there. The local Council and the EA also have the ability to serve notice on landowners, requesting that they remove waste within a specific time and then seek reimbursement. One way to help tackle this cost is by using a property damage extension on your existing policy. There are several add-ons available including one specifically designed to cover the costs of clearing and removing illegal objects and one which covers the costs of additional security in the wake of a loss. If your business uses high-risk property such as out of town offices, vacant warehouses or disused sites then you may also want to consider a stand-alone EIL policy which is discussed in detail below.

Handling knotweed and other invasive species

No matter how it originated on your property, discovering Japanese Knotweed on the grounds of your business can be a significant concern. Generally, standard commercial property insurance will exclude claims made for the removal of Japanese Knotweed, and removal can be incredibly expensive. To further complicate the issue, if it has damaged the foundations of your property or that of a neighbouring property, you could be liable for rectifying the damage.

That’s why if your property is at risk of Japanese Knotweed, you can secure Japanese Knotweed Indemnity Cover either as an extension of your property policy or as a stand-alone policy to cover the cost of removing the plant and any claims due to it spreading to a nearby property.

Subsidence

An increase in subsidence claims can be brought out by a number of factors, but generally speaking, subsidence is more likely to occur in the South East of England due to the predominately clay soil – but that doesn’t mean that other areas are immune.

The first sign of subsidence is usually cracks in the building. You will usually be able to spot these cracks on both the inside and the outside of the building. Another tell-tale sign of subsidence is your doors – which may appear distorted or fail to open or close properly – and your windows, which can appear slanted.

If you suspect that your property has subsidence then you should contact your broker or insurer immediately as they can make sure that the correct insurer is notified. They will also appoint specialist loss adjusters who will investigate the suspected cause of the damage and advise what your next steps should be to complete any repairs as quickly as possible.

Environmental Impairment Liability (EIL)

Similarly to the issue of waste management discussed previously, increased environmental legislation has led to more and more companies finding themselves having to pay for clean-up and third-party claims due to pollution on their sites. Current law states that businesses have to pay to reinstate harmed plants and wildlife in effected areas, even if the damage stretches for miles around. That’s where EIL insurance comes into play, as not only does it provide cover for the clean-up costs and litigation, it also covers third-party damages to nearby land. EIL is becoming increasingly more popular as businesses realise that public liability insurance does not cover environmental breaches, even if they are accidental as it only responds to harm to individuals or their property. UK waterways, as just one example of many, are publically owned and therefore exempt.

Environmental claims can be prohibitively expensive and also can result in significant reputational damage for your business, but holding an EIL policy can demonstrate willingness to learn and respond to the risks surrounding pollution. Pollution damage generally occurs slowly over time, so your business may not realise the impact until years in the future. This makes EIL insurance especially important as it responds to historical environmental damage too.

How can Gallagher help your business?

At Gallagher we understand the intricacies of the waste and recycling industry and can utilise risk managers to assess how your business is currently handling risk and how you can make changes to help prevent claims and minimise their impact if they do occur.

To help tackle the issue of fly-tipping, you can extend your existing property damage policy to incorporate the cost of clearing any property illegally left on your premises or consider insuring the costs of extra security. The latter policy would respond following the loss, destruction or damage of property which incurred the need for additional physical security.

Japanese Knotweed can be remedied with a Japanese Knotweed Indemnity Insurance policy or by extending your existing property insurance to include its removal as well as covering the cost of any reparation or third-party claims. We can also survey your site to detect if Knotweed is present as part of our risk management service.

While subsidence cannot always be prevented, if you suspect a case of subsidence you should contact your broker who can appoint loss adjusters to assess the damage, advise on what the next steps are and arrange for any required repairs as quickly as possible.

Finding out more

If you would like to discuss how insurance and risk management can help your business meet its environmental obligations in more detail or have any questions related to your existing policy, simply contact your usual Gallagher representative to find out more.

  1. http://www.environmentlaw.org.uk/rte.asp?id=76