Environmental
Insurance
For Asia Pacific businesses
Does your business need environmental insurance? It’s an emerging risk you need to be prepared for.
Currently, we estimate that less than 1% of businesses across Asia Pacific have environmental insurance cover in place, yet this number is rapidly growing as businesses face clean-up costs, reputational fallout, fines and penalties.
What is environmental insurance?
You don’t need to be a waste management company or an organisation dealing in hazardous chemicals to be at risk of costs relating to environmental damage.
Today, businesses of all sizes across many industries and sectors face a wide range of environmental exposures, including:
Gradual contamination
Natural disasters
Inherited environmental incidents
Business interruption
Environmental insurance is also the only insurance product to provide coverage for defence costs, first-party expenses, and third-party claims that emerge from environmental contamination.
Four of the most common claims from environmental incidents are:
Costs of mitigation and emergency response
Quick and decisive action is often needed if an event occurs. This can help contain the incident as well as demonstrate publicly your commitment to swiftly resolving the issue. However, taking immediate action can also bring significant costs.
As well as removing contaminants and pollutants and cleaning up a third-party site, including waterways, clean-up costs can also include compliance with regulatory requirements for site remediation.
Clean-up costs
The reputational risk from an environmental event is potentially devastating. It needs to be managed carefully and strategically to maintain public and stakeholder trust and minimise long-term damage.
Public relations and crisis containment expenses
Environmental regulatory authorities are increasingly conducting investigations and issuing environmental protection orders, clean-up orders and fines and penalties in response to environmental events. Complying can be costly and time-consuming.
Environmental regulatory authority costs
Across the world, penalties for environmental crimes are taking force. For example in the state of NSW in Australia, penalties for environmental crimes doubled in March 2024 in major changes made to the Protection of the Environmental Operations Act 1997.
The strategy is part of the NSW Government’s efforts to deter repeat offenders and make polluters pay.
Companies in NSW can now face maximum penalties of A$10m if they are found to cause wilful harm to the environment from disposal of waste, or causing any substance to leak, spill or otherwise escape.
Tougher penalties for environmental crime
Read more
15
+
Liberty has been writing Environmental Liability Insurance in Asia Pacific for 15+ years
300
+
Liberty protects 300+ businesses across Asia Pacific from pollution exposure
When it comes to environmental liability, we’re now seeing a wide range of industries facing immediate risk.
Why environmental insurance is important for more industries than you may think
Here are a few examples of some of the risks different businesses face:
Textile manufacturers that use chemicals to dye and finish fabrics.
Food manufacturers that produce liquid waste.
Construction companies that may accidentally disturb buried waste.
Property owners who are responsible for indoor air quality.
Commercial building tenants on brownfield sites may find themselves managing site remediation.
When an environmental event occurs, it can create a whole host of issues for a business.
From the immediate impact to investigations, reputational damage and business interruption, the effects of an environmental incident can be wide-ranging, long-lasting and very expensive.
Here are just a handful of examples of how businesses in traditionally lower-risk industries can be affected by environmental claims.
5 examples of unexpected environmental damage
Relevant industries
Manufacturing
Manufacturing
Long-term leakage of harmful substances into soil and water
Chemical spills leading to groundwater contamination
Emissions of pollutants into air water or soil during production processes
Accidental release of hazardous materials
Transport
Accidental spills of hazardous materials during transportation
Air pollution from large vehicles
Oil spills from tanker truck accidents on highways
Transport
Logistics
Improper disposal of packaging materials
Hazardous spills during the loading of unloading of goods at distribution centres
Contamination incidents during storage or handling of hazardous materials in warehouses
Logistics
Commercial real estate
Asbestos or lead contamination in older buildings
Contamination from underground storage tanks
Mold and legionella growth
Historical contamination found during property redevelopment
Commercial real estate
Accomodation
Air quality issues from HVAC systems
Soil contamination from oil tanks
Water pollution from improper disposal of cleaning chemicals
Accomodation
Leisure
Soil pollution from improper disposal of waste
Contamination of water bodies from wastewater leakage
Chemical spills from pool maintenance
Leisure
$1m
Environmental claims in Australia and Asia commonly exceed $200k and several have exceeded $1m
of Liberty’s environmental claims involve wastewater pollution
20%
of Liberty’s environmental claims involve asbestos
1/6
Reputational damage, interruption to the business and injuries as a result of contamination extend far beyond the obvious industrial giants in the petrochemical and utility generation business.
I have helped contractors, property developers, steel manufacturers and port terminals consider the pollution risk to their balance sheet.
Senior Underwriter, Casualty, Singapore
Daphne Cheah
The environmental fallout from natural disasters
Flooding, storms, bushfires and earthquakes are all examples of natural disasters that can create environmental liability issues for a business. Damage may be directly caused by the natural disaster, or there may be a indirect impact that requires remediation.
These can include:
The impact of contaminated surface water run off caused by attempts to extinguish a fire.
Mould infestation from prolonged exposure to flood waters.
Disease caused by untreated sewage and other storm-related sediment.
Discharge of untreated effluent from wastewater treatment plants.
Disturbance of construction sites and pre-existing contamination.
Interference of HVAC systems and impact to indoor air quality.
Prolonged flooding or a seismic disturbance that causes storage tanks to float to the surface, pipeline breakages and substance leaks.
Leaks from above or below-ground storage tanks and their related pipelines.
Release of toxins from landfill and other waste treatment storage or disposal facilities.
These can all be extremely expensive to remediate – and large litigation and indemnity costs may follow.
Protect your business in ways that traditional liability policies
fall
short
Most businesses incorrectly assume their general liability, professional indemnity, property or directors & officers policies will provide sufficient coverage in the event of an environmental claim.
1%
We estimate that less than 1% of Asia Pacific businesses have environmental insurance – meaning a huge number of organisations are leaving themselves exposed to both new and inherited environmental risks.
Head of Casualty Specialties, Asia Pacific
Alan Thorn
Unfortunately, most businesses are still under the impression that general insurance products will protect them against the financial and reputational costs of a contamination incident.
I’ve been writing environmental insurance policies for 12 years and have seen the pollution and emerging risks businesses are exposed to evolve significantly over this time. In my experience the financial implications of an uninsured clean-up order from an environmental regulator can have a devastating effect on businesses.
#myclientdoesnothaveapollutionexposure
Traditional insurance policies provide very limited cover for environmental contamination
A dedicated Environmental Impairment Liability policy offers much broader protection.
Coverage
General Liability
Property & ISR
Professional Indemnity
Directors & Officers Liability
Environmental Liability
Defence costs
Legal expenses
Sudden & accidental pollution
First party expenses - protection for the insured business
Gradual contamination
Civil fines and penalties
Regulatory clean up orders
Asbestos & biological contaminants
Business interruption
Public relations expenses
Emergency response costs
Remediation of your property including illicit abandonment
Diminution in property value
Property damage
Bodily injury
Asbestos & biological contaminants
Natural resources & biodiversity damage
Business interruption
Regulatory clean up orders
Gradual contamination
Sudden & accidental pollution
Third party expenses - protection for damage caused to other people/businesses
*Only applicable if the damage is caused by or arises from the occurrence of any event or the operation of any peril which is not otherwise excluded under the Policy
General liability policies do not provide coverage for losses resulting from:
Clean-up costs, property damage or bodily injury from gradual pollution events
Clean-up costs on an organisation’s own site or a site it is responsible for
Damage or destruction of natural resources
Statutory compliance with a clean-up order and fines and penalties
Crisis containment expenses and reputational damage
Emergency response costs incurred to mitigate a pollution event where immediate action is required
Historical pollution
Pollutants such as asbestos, radioactive material, mould and bacteria
Surviving the media storm of an environmental contamination incident
with Alan Thorn, Head of Casualty Specialties
Who’s responsible when things go
wrong?
The “polluter pays” principle applies under environmental legislation. However, this does not mean that the liability for property owners stops if a tenant causes a pollution event.
If the tenant has disappeared or gone into liquidation, the liability for the clean-up can fall back on the owner, even if the owner did not control the site.
By virtue of their position, owners can be held liable for pollution on or migrating from their sites.
In addition, liabilities can exist for both owners and occupiers under contract, or arise as a result of their operations or development works undertaken on the site.
Contractors pollution liability
Common risks
What it covers
What it is
Download Proposal Form
Clean-up costs at the project site
Property damage or bodily injury from pollution events
Clean-up costs
Contractors pollution liability
Contractors pollution liability protects from losses resulting from:
What it covers
Historical pollution
Pollutants such as asbestos, radioactive material, mould and bacteria
Crisis containment expenses and reputational damage
Emergency response costs incurred to mitigate a pollution event where immediate action is required
Damage or interference to natural resources
Statutory compliance with a clean-up order and civil fines and penalties
Construction and general contractor activities have the potential for significant water, soil or air pollution by a range of contaminants.
The risk of exposures caused by these activities can be influenced by the surrounding environmental receptors, the subsurface contamination conditions, the exposure pathways, the chemicals and pollutants involved; and the mechanism of pollutant transport.
Contractor pollution liability helps protect a contractor from third-party claims arising from pollution caused by activities at a third-party site. This can be written on an annual or project-specific basis.
What it is
Contractors pollution liability
Improper disposal or transportation of construction waste
Run off of contaminated water or chemicals
Air pollution from dust, emissions or release of asbestos
Accidental release of hazardous materials during construction
Common risks
Contractors pollution liability
Download Proposal Form
Common risks
What it covers
What it is
Fixed site pollution liability
Accidental release of chemicals or pollutants during manufacturing or processing
Illegal waste dumping at your premises
Historical contamination
Common risks
Fixed site pollution liability
Historical pollution
Broad range of pollutants such as asbestos, radioactive material, mould and bacteria
Crisis containment expenses and reputational damage
Emergency response costs incurred to mitigate a pollution event where immediate action is required
Damage or destruction of natural resources
Statutory compliance with a clean-up order and civil fines and penalties
Clean-up costs on own your premises
Property damage or bodily injury from pollution events
Clean-up costs on your premises
Fixed-site pollution liability protects from losses resulting from:
What it covers
Fixed site pollution liability
For property owners and occupiers, there are a wide range of pollution exposures that can have a critical impact on your business – including the storage and transportation of hazardous goods, off-site migration of firewater, illegal waste dumping, natural disasters, historic contamination and release of asbestos.
Fixed-site pollution liability helps protect you from claims that result from pollution that comes from or migrates onto your site, filling the gap created by the limited pollution cover provided under a standard liability and property insurance policy.
What it is
Fixed site pollution liability
Release of asbestos
Off-site migration of pollutants
Gradual leakage of hazardous substances from storage tanks
First party costs to clean up your premises
Download Proposal Form
Common risks
What it covers
What it is
Buying or selling a company
Damage to natural resources caused by past activities
Unexpected clean-up costs for pre-existing environmental issues
Inherited liability from ongoing gradual pollution events
Discovery of historical contamination
Common risks
Buying or selling a company
When you’re buying a company or premises, you can eliminate a common source of merger and acquisition deal risk by transferring uncertainty from environmental risks to the insurance market. It is critical that the purchase agreement allocates the responsibility for environmental liabilities clearly and with specificity so there is no confusion or ambiguity that could lead to litigation. Because clean-up costs for future contamination losses have the potential to be significant both sellers and purchasers utilise environmental insurance to bridge the gap mitigating the potential financial exposure for contamination costs while freeing up their own capital otherwise being held in escrow.
What it covers
Buying or selling a company
This coverage protects a business against environmental liabilities it may inherit as a result of an acquisition. When buying or selling a business the sales transaction will create a transfer of potential pollution liabilities. This is because “Polluter Pays Principle” is almost universal within environmental law, however in the absence of the polluter the associated liabilities default to the property owner/purchaser.
What it is
Buying or selling a company
Liberty Specialty Markets offers 3 environmental insurance products
Senior Underwriter, Environmental Impairment Liability, Melbourne
Fiona Priestley
There are several common triggers for companies to obtain environmental insurance, but three main reasons stand out:
Environmental regulator requirements: businesses may face clean-up orders and fines from environmental regulators. Insurance assists in managing these financial impacts and meeting obligations.
Uncovered losses: companies seek environmental insurance after experiencing losses not covered by existing policies, ensuring financial protection for unforeseen incidents.
Contractual and compliance obligations: environmental insurance is often required for signing tenders or contracts, helping meet obligations related to risk management.
Unexpected rainfall creates roadwork problem
Think you’re not at risk? Here are nine recent case studies of unexpected environmental exposures.
Environmental claims in action
A combination of 50% asphalt/50% kerosene was used to seal the base of a road. It was left to dry for 24 hours before the final two coats of asphalt were applied. Unexpected rain washed off the emulsion into the stormwater system. The insured incurred over $300,000 in clean-up costs including testing to ensure that the water contamination had been rectified.
Unexpected rainfall creates roadwork problem
Asbestos discovery creates historic problem for new owner
Warehouse fire creates environmental exposure
Lead poisoning in public housing project
Fill material contains asbestos
Building owner liable for tenant’s chemical escape
Mouldy library books
Soil delivery contaminated
Contaminated soil on building site
A commercial developer acquired land and following excavation it was discovered that asbestos had been released into the atmosphere and the site. The regulator issued a clean-up order and costs were incurred to transport and dispose of the material to an asbestos facility. Under the sale and purchase agreement the purchaser assumed responsibility for all historical and new contamination on the site.
Asbestos discovery creates historic problem for new owner
A fire in a warehouse caused toxic smoke and significant run-off from stored chemicals and firefighting foam into a neighbouring creek. The site was leased and operated by a third party that had gone into liquidation. The property owner faced extensive costs to determine the degree of soil and groundwater remediation required to clean the site and creek to a standard acceptable to the regulatory authority.
Warehouse fire creates environmental exposure
A large property fund leased premises to a steel fabrication business that went into liquidation. Large, poorly maintained process tanks had leaked chlorinated solvents, which had escaped through cracks in the reinforced concrete floor. This caused extensive soil and groundwater contamination to the surrounding property. The property fund became liable for the resulting environmental exposures.
Building owner liable for tenant’s chemical escape
A landscaping contractor inadvertently brought fill material containing asbestos onto site as part of the soil for the landscaped gardens. The Environmental Protection Agency (EPA) issued a cleanup order to remove the fill and complete subsequent soil screening to ensure that the asbestos had been removed. The costs of the mandatory cleanup and monitoring significantly increased the overall costs of the landscaping project.
Fill material contains asbestos
After several people in a public housing project suffered from lead poisoning and were hospitalised, lead in excess of the World Health Organisation drinking water standards was found in their drinking water. Although it is alleged that the pipes were manufactured to detailed specifications, which excluded the use of lead materials, lead was found in the solder materials of the pipes. A costly investigation and remediation process was initiated to rectify the issue.
Lead poisoning in public housing project
During construction of the basement of a multistorey residential building, several construction contractors became ill and were hospitalised. The construction site was shut down until the cause of the release could be investigated by both the EPA and environmental consultants. It was subsequently determined that the soil on the building site contained trapped hydrocarbons that had been transported over time to the site from the leaking fuel tank of a nearby service station. The remediation costs in this example are expected to be in the order of several hundreds of thousands of dollars.
Contaminated soil on building site
A paper mill that was being developed and repurposed claimed a delivery of soil contained asbestos and heavy metals beyond the allowable limits. The environmental policy was triggered to cover the transport to remove and dispose of the soil. The client was appreciative of our efforts and today maintains a working relationship with the claimant.
Soil delivery contaminated
Following a prolonged period of significant rainfall and widespread flooding, an Australian educational facility suffered significant water damage. Once the flood waters receded the property insurance responded to the physical damage, but the mould impact was overlooked and not immediately identified. Following further investigations mould and mildew was discovered to have caused extensive damage to the HVAC system impacting indoor air quality and also requiring extensive remediation costs of valuable library books.
Mouldy library books
Senior Claims Specialist & Tech Lead, Brisbane
James Tucker
I’ve handled environmental insurance claims for almost 7 years. In that time we’ve helped insured’s to remediate and clean-up their own premises to enable a continuation of operations. We’ve also assisted to protect the insured from third party liability claims and continue to see greater presence from the relevant state regulators.
For more than 15 years, Liberty Specialty Markets has been working with businesses of all sizes to manage and mitigate environmental risks across a wide range of industries, including waste management, construction, engineering, funds management, local government and management consultancy.
Our specialised team of local underwriters, risk managers and claims are well versed in dealing with the technical issues of complex risks. They work closely with clients and brokers to identify potential possible risks, and suggest the most appropriate products.
Of course, you only ever know the true value of insurance when it’s time to claim. If and when that time comes, Liberty’s experienced claims team is waiting to guide you through the claims process to achieve a fair, timely and effective resolution.
Why Liberty?
Specialist teams, strong relationships, leading knowledge
Australia and Singapore-based environmental underwriters and claims specialists
Reliable, proven and speedy incident response
Strong relationships with local environmental protection agencies
Liberty’s environmental expertise in numbers
Policy premiums range from $3,000 up to $500,000
We protect 300+ businesses across Asia-Pacific for environmental impairment risks
The average premium is around $30,000
One-third of clients each year are first-time buyers
One-sixth of our claims are asbestos-related
20% of environmental claims involve wastewater pollution
Specialised expertise
Few areas of risk are as complex as environmental liability – so you need an experienced expert team you can trust. Liberty’s expert team are environmental specialists with strong relationships with environmental protection authorities across the region. We understand the evolving regulatory environment and emerging issues. We have relationships with environment experts to understand our clients’ obligations, allowing us to move quickly.
Liberty’s expert team provide a fully integrated environmental insurance service across EIL. From identifying and understanding individual risks and helping mitigate them to ensuring compliance with local legislation and the insured’s environmental, social and governance (ESG) commitments, we actively protect your business.
Integrated service
Environmental liability is a complex area, and one of the most challenging areas for clients is knowing what risks they actually face – and the type of insurance they need. Our specialist environmental team work closely with risk engineering to combine our knowledge of the legislative climate, customer insight and technical expertise, ensuring you have appropriate coverage and risk mitigation strategies in place.
Tailored approach
Insurance is only ever as good as the response it provides when you need it. When an environmental incident occurs, a strong and prompt response is required through dedicated claims specialists, legal and crisis management teams and specialist environment partners. Liberty’s expertise ensures quick, decisive and relevant action is taken immediately and repercussions such as negative media coverage are managed.
Quick incident response
Specialist environmental insurance solutions for:
Hong Kong
Singapore
Australia
Malaysia
New Zealand
Philippines
Vietnam
Thailand
Japan
South Korea
Assistant Underwriter Environmental Impairment Liability, Brisbane
Pippa Salvatierra
The most common question I get asked about environmental insurance is what it covers. This includes enquiries about coverage for pre-existing pollution conditions, clean-up costs, third party claims and regulatory compliance costs, and whether it applies to both sudden and gradual pollution incidents.
Liberty’s claims promise
When it comes to claims, Liberty is committed to pursuing a higher standard with an approach that’s rooted in partnership and offers continuity and assurance in an ever-changing world.
Raising the bar for claims
You will be supported by our claims experts who have access to world-class tools and services on a global scale. Each handler is truly empowered to make decisions, enabling us to act swiftly and decisively when it matters most.
Act decisively
We have an exceptional team on hand to make your claims experience as straightforward as it can be, ensuring your claim is handled promptly and fairly.
Paying claims fairly and dependably
We go the extra mile to provide exceptional service. In addition to our claims expertise, we offer a wide range of services, including risk prevention measures, that bring significant additional value to our client and broker relationships.
Working together as one team
Contractors Pollution Liability
New Business Proposal Form
Australia
Singapore
Singapore
Australia
New Business Proposal Form
Fixed Site Pollution Liability
Download relevant proposal form
Insights and related content
Listen now
Join Liberty’s Alan Thorn and James Tucker for a 15 minute podcast with Insurance Business on Environmental Impairment Liability.
Podcast
Watch now
YIPs Masterclass: Cleaning up your act – why companies are increasingly taking up Environmental Impairment Liability cover
Webinar
Read now
Learn about Australia’s first independent national environmental protection agency
Website
Read now
Liberty’s Alan Thorn explains the environmental insurance landscape in to Insurance Business Australia
Article
Find out more
If you are a businesses considering purchasing environmental impairment insurance please talk to your insurance broker.
Business
Like to learn more?
Brisbane
If you are a insurance broker please contact the Liberty Environmental team – with specialised underwriters located in:
Insurance broker
Singapore
Melbourne
Last updated 14 February 2025
AP0983
About Liberty Specialty Markets
All benefits and covers described in this publication are subject to the terms of the relevant policy
Liberty is not authorised to provide financial product advice. The information in this document does not take into account your objectives, financial situation or needs. Always consider the applicable policy wording and other relevant documents before deciding to acquire a financial product. This information is current as at January 2025. Liberty means Liberty Specialty Markets, a trading name of Liberty Mutual Insurance Company, Australia Branch (ABN 61 086 083 605; AFSL No. 530842 (for claims handling and settling services only)) incorporated in Massachusetts, USA (the liability of members is limited); Liberty Specialty Markets Hong Kong Limited (UBI 66395065); Liberty Specialty Markets Singapore Pte Limited (UEN 201538069C); and Liberty Specialty Markets Singapore Pte Limited, Labuan Branch (Company No. LF12903), a licensed insurer under the Labuan Financial Services and Securities Act 2010 (Licence No. IS2016162).
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What is environmental insurance?
The industries at risk
Who’s responsible when things go wrong?
Where traditional liability policies fall short
Insights and related content
Why Liberty?
Environmental claims in action
Liberty Specialty Markets environmental insurance products
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Remediation of your property including illicit abandonment
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Asbestos & biological contaminants
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Gradual contamination
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Sudden & accidental pollution
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Hong Kong
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Australia
