D&O Liability For Pollution – Is There A Case For Increased Coverage?

Standard D&O policies may cover the insured for the costs of defending criminal, regulatory and even civil proceedings arising out of a pollution incident. These policies are likely though to fall short of providing coverage for remediation or compensation costs arising from the same incidents. This article explores the reasons for this current position and asks whether recent changes in environmental law make a case for broadening coverage.

The usual coverage offered by D&O policies probably reflects the perceived risk under both the regulatory and civil environmental liability regimes. Directors have been at risk of criminal prosecution for pollution incidents for many years. This risk of liability arises when such incidents result from a director’s consent or connivance or are attributable to any neglect. Until now directors have not, though, recognised a risk of personal responsibility for remediation costs or compensation claims. As criminal fines