Definition: Environmental Impairment Liability (EIL) is a type of insurance designed to offer coverage to businesses and organizations for claims resulting from environmental damage or pollution caused by their operations. The coverage typically includes legal defense costs, cleanup mandates, and damages arising from pollution.
What It Covers
EIL insurance generally covers:
- Cleanup costs: Expenses related to the mandatory cleanup of a contaminated site.
- Legal fees: Costs associated with defending against claims or legal actions due to environmental damage.
- Damages awarded in lawsuits: Compensation required to be paid to third parties affected by contamination.
Key Features
- Claims-Made Basis: Most EIL policies operate on a claims-made basis, meaning the insurance policy must be active both at the time the pollution event occurred and when a claim is filed.
- Tailored Coverage: Coverage details may vary greatly depending on the industry, the specific operations of the insured, and the potential environmental hazards present.
Relevance and Laws
EIL is particularly essential for industries with high environmental risks, such as manufacturing, chemical production, and waste disposal. Regulations like the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or Superfund) in the United States, may require entities to have adequate coverage for potential contaminations.
Related Guides and Additional Information
- Agency for Toxic Substances and Disease Registry: Assessment of exposure to environmental pollution ATSDR website
- Environmental Protection Agency (EPA): Laws and regulations about environmental impact EPA Regulatory Information
- Details about Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) are available on the EPA website.
This coverage plays a critical role in mitigating the financial risks associated with environmental incidents and ensuring compliance with government regulations.
