Guilty until proven Innocent

Your status when it comes to being liable for polluting the environment

Being held guilty is a complete turnaround to the presumption of innocence until proven otherwise, and enough to turn your business world upside down when it comes to gradual or sudden environmental pollution.

At Econorisk’s August #Risk Series, Environmental Impairment Liability (EIL) expert, ITOOs James Brice informed guests that the best way to treat a pollutant is to keep it concentrated and contained. However, when it’s underground and unseen in a pipeline or storage tank; on a truck in transit; or produced in a refinery or plant – the chances are that the containment will leak sooner or later.

And when it leaks, it spreads, and for every year it spreads,
the rough estimate for cost of clean-up increases 10-fold.

Everything leaks sooner or later!

When you consider that an undetected pinprick hole found in a 43 000 litre tank could create a spill with a spread of 300 metres – it becomes a damaging, sudden and costly incident. This particular case resulted in a hefty R1.2 m clean-up, not including 3rd party costs.

ITOO offers a Tanksafe product that covers underground and above-ground storage tanks for common fixed facilities such as filling stations, factories, warehouses and depots. On the other end of the scale, gradual pollution can slowly cause widespread damage, making it much more expensive to clean up.

Econorisk Risk Series

So, you thought you had a squeaky-clean site…

Businesses need to be cautious during property transfers. “If you find yourself with an environmentally compromised site, whether it is bought or leased industrial property, the clean-up bill could cost up to R5 to 10 million – not something you want to be left with if it wasn’t your fault to start with,” cautions Brice. If EIL cover is in place, you are able to indemnify yourself. “We have found that the Propsafe policy has been used as a means to solve deadlocks in negotiations where buyers and sellers can’t agree on the selling price, as in an international deal in the motor sector last year. The Buyer wanted a warranty that they were not buying a compromised site – in a situation where there was no time to do a 5-month risk assessment to reassess the one that had taken place five years earlier. The Seller took out a 3-year EIL policy and ceded it to the Buyer, which we wrote into the Sale and Purchase Agreement in lieu of a warranty. The price was not compromised, and the deal went ahead”.

As brokers for the EIL cover, Econorisk, would like to point out that in an emergency situation – you want to get onto site as quickly as possible. “A valuable advantage of EIL is that *Emergency Response Costs to prevent further migration of an accidental pollutant release are pre-approved up to R250 000 from a panel of providers – meaning swift action and less damage,” says Guy Scott, CEO of Econorisk.

Other benefits are that ITOO runs a Risk Assessment at their own cost, to independently estimate the limits of liability required, and clients are rewarded for doing the right thing with up to 70% premium reduction for best-in-class risk management systems.

ITOO introduced South Africa’s first fully comprehensive environmental product to cater for local conditions because general liability policies only cover sudden and accidental.  On a continent where much of the infrastructure is old, in situations where it is often very difficult to prove occurrence of pollution – there was a gap for an EIL policy operating within Sub-Saharan Africa.

Risk series breakfast

Guest speaker – James Brice, Econorisk CEO – Guy Scott and ITOO MD, Justin Naylor


Clean-up Costs & *Emergency Response Costs
Include Restoration & Remediation such as:
– Disposal of contaminated soil to landfill or off-site treatment, pump and treat systems for surface and groundwater, re-vegetation and restoration to pre-existing land-use
– Claims exclude repairs or upgrades to source of the leak, except for the Tanksave cover


– Emergency Response Costs
– Defence costs incl. defending an interdict
– Damage: loss of crops, livestock, property etc.
– Business Interruption, increased costs of working
– Loss of biodiversity & ecological restoration costs
– Public Health & Bodily Harm (sub-limited)
– Pre-existing or known conditions – if specifically agreed

August Risk series

The EIL policy is ideal for:

– Filling stations, pipelines, mine-related infrastructure
– Waste facilities, oil & gas installations
– Chemical manufacturing & processing facilities
– Hazardous goods storage facilities
– Harbours & airports
– Depots, fuel farms, power stations
– Even nuclear medical equipment


EIL is worth serious consideration if you have a business with a concentration of pollutants that could ‘leak out’. And considering that milk can be a hazardous pollutant – there is some definite food for thought!

“Context is everything in this game”
James Brice

It’s a way for us to share the current risk trends and issues, opinion and industry changes that affect small and medium businesses from a short-term insurance perspective. These sessions were created to support businesses that don’t have risk managers – the risks they face however, remain relevant to all businesses across diverse industry segments.

Our Risk Advisors are always ready to assist.
Call Econorisk (011) 045 8555 or (011) 803 7446

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