Environmental Liability Directive

The Environmental Liability Directive became law in 2004 and was implemented by all EU Member States by 2007.  It affects all businesses that have the potential to cause damage to the environment. A key difference between the Directive and previous UK environmental legislation was the potential extent of the corrective measures that need to be taken by the polluter.

As with much environmental legislation, the Directive is based on 'the polluter pays' principle. Businesses that undertake the following activities are strictly liable for the environmental damage they cause:

• Pollution Prevention and Control (PPC) installations
• Many waste management activities
• Licensed discharges to surface water and groundwater
• Operations involving the use of various dangerous substances

The Directive provides an outline of the nature, but not the precise scope, of corrective measures that businesses are expected to take. If the business responsible does not implement adequate measures, the regulatory authority may step in to carry out the work and recover the costs from the business.

In terms of insurance requirements, the Directive does not dictate the mandatory use of insurance to manage liabilities.  However, it does require Member States to take measures to encourage the development of financial security instruments and markets with the aim of enabling businesses to use financial guarantees to cover their responsibilities under the Directive.  It may be wise to consider your protection as a business under the Directive and whether you are sufficiently covered for insurance against environmental damage.

It is clear that many businesses face increased environmental liabilities under the Directive and as a result, some insurers have developed environmental insurance products to address these liabilities. 

Your chosen Cherrypicked Insurance broker can help you to find the appropriate environmental liability insurance for your business.

Last reviewed 7/11/2011

Source: Contains public sector information licensed under the Open Government Licence v1.0.  © Crown Copyright Department for Environment Food and Rural Affairs

To talk to an expert in your area and get a quote, contact your local insurance broker.