Limiting Your Limiting Your Environmental Environmental Exposure.Exposure.Environmental Environmental Impairment Liability Impairment Liability Insurance (EIL)Insurance (EIL)

Ray Butchart, CCIB, CIP

Ward Watkins Insurance Brokers (Surrey) Ltd.

5746 176A Street, Surrey, BC V3S 4H2

(604) 576-6761

POLLUTION INSURANCE

What is the definition of What is the definition of “Environmental “Environmental Impairment” Impairment” (a) Bodily injury; (including sickness and disease)

(b) Property damage;

(c) Interference with or reduction of any environmental right or amenity protected by law;

(d) Liability to “Clean Up” outside the premises of the insured; arising out of any and all emissions, discharges, dispersals, disposals, seepages, releases or escapes of any liquids, solids, gaseous, or thermal irritants or the generation of smells, noises, vibrations, light, electricity, radiation, changes in temperature or any other sensory phenomena.

Some Examples of claim Some Examples of claim or potential claimsor potential claims

• Damage to the site or drill hole from a spill of a foreign substance such as Damage to the site or drill hole from a spill of a foreign substance such as Gas, Diesel Fuel or Hydraulic Oil etc.Gas, Diesel Fuel or Hydraulic Oil etc.

• Uncontrolled surface water discharge releasing sediments and contaminants Uncontrolled surface water discharge releasing sediments and contaminants onto adjacent properties/waterways.onto adjacent properties/waterways.

• Contamination to ground water at the drill site or adjacent site also to include Contamination to ground water at the drill site or adjacent site also to include ground water drawdown.ground water drawdown.

• General nuisance, noise or change in third party environment..General nuisance, noise or change in third party environment..

• Smells and sensory phenomena as well as interference with or reduction of Smells and sensory phenomena as well as interference with or reduction of any right or amenity protected by law.any right or amenity protected by law.

• Release of oils/fuels/chemicals from on-site storage tanks or other usage Release of oils/fuels/chemicals from on-site storage tanks or other usage (weather related, vandalism, rupture).(weather related, vandalism, rupture).

THE MAJORITY OF CLAIM PAYMENTS ARE DEFENSE-ORIENTED IN THE MAJORITY OF CLAIM PAYMENTS ARE DEFENSE-ORIENTED IN NATURE.NATURE.

More More Examples…Examples…

• In July 2007, a BC municipality hired a In July 2007, a BC municipality hired a road contractor to perform routine road contractor to perform routine maintenance. During the course of maintenance. During the course of performing the road repair, the contractor performing the road repair, the contractor ruptured a pipeline, resulting in a crude ruptured a pipeline, resulting in a crude oil geyser discharging product into the oil geyser discharging product into the nearby Burrard Inlet and surrounding nearby Burrard Inlet and surrounding residential community for 30 to 60 residential community for 30 to 60 minutes before being capped;minutes before being capped;

Exxon Valdes (Alaska) & Exxon Valdes (Alaska) & BP Drill Rig Fire in Gulf of BP Drill Rig Fire in Gulf of MexicoMexico

British Petroleum (BP) has reached a $7.8 billion settlement with the plaintiffs’ steering committee (PSC) for the economic loss and medical claims stemming from 2010 Deepwater Horizon accident and oil spill.

The settlement is subject to final written agreement.

Why do I need it?Why do I need it?• Canada’s federal and provincial regulatory Canada’s federal and provincial regulatory

systems have adopted statutes designed to systems have adopted statutes designed to promote environmental responsibility and promote environmental responsibility and stewardship. stewardship.

• POLLUTER PAYS.POLLUTER PAYS.

• PROPERTY OWNER IS RESPONSIBLE FOR PROPERTY OWNER IS RESPONSIBLE FOR CLEANING UP THE SITE (even if they did CLEANING UP THE SITE (even if they did not cause the pollution in the first place).not cause the pollution in the first place).

Most businesses carry Most businesses carry Comprehensive General Comprehensive General Liability Insurance (CGL) and/or Liability Insurance (CGL) and/or Automobile Insurance (ICBC)Automobile Insurance (ICBC)

• Pre 1966 CGL did not exclude pollutionPre 1966 CGL did not exclude pollution

• 1970’s CGL underwriters quickly 1970’s CGL underwriters quickly excluded or restricted coverage for excluded or restricted coverage for pollution under their policies.pollution under their policies.

• EIL coverage is available but is EIL coverage is available but is underwritten and a specific premium underwritten and a specific premium charged.charged.

More and More Property More and More Property Owners, Contractors, Owners, Contractors, Municipalities, Consultants Municipalities, Consultants etc. are requesting this form etc. are requesting this form of coverage to get their of coverage to get their business.business.

TIP Use your EIL coverage

as a marketing tool to getjobs and protect your

assets.

RISK REDUCTION RISK REDUCTION OPTIONS:OPTIONS:• Self Insurance;Self Insurance;

• Avoidance;Avoidance;

• Risk Control/Engineering;Risk Control/Engineering;

• Contractual transfer:Contractual transfer:– Most commonly used environmental risk Most commonly used environmental risk

management toolmanagement tool

• Risk Transfer (EIL Insurance)Risk Transfer (EIL Insurance)

Premium is based on:Premium is based on:

• Limit of Liability ($5,000,000)Limit of Liability ($5,000,000)

• Description of Drilling Operations & ExperienceDescription of Drilling Operations & Experience

• Revenue and years of ExperienceRevenue and years of Experience

• Retention/DeductibleRetention/Deductible

EIL PointsEIL Points• Coverage is available at a reasonable Coverage is available at a reasonable

cost.cost.

• Claim must occur during the policy Claim must occur during the policy period.period.

• Application is easy to complete.Application is easy to complete.

• Coverage is for Compensatory damages. Coverage is for Compensatory damages. No coverage for fines or penalties.No coverage for fines or penalties.

Questions & AnswersQuestions & Answers