Farm pollution insurance: protecting your land and business

Environment Agency statistics show that severe farm pollution incidents are becoming regular occurrences within the UK. Farm pollution insurance is just one element to be considered, together with a number of preventative measures which will reduce the risk.

Official figures saw 536 severe incidents recorded by the Environment Agency and its counterparts in Scotland and Wales between 2010 and 2016, from a total of 5,300 recorded cases of agricultural pollution.

Much of the blame for this rapid increase is put down by the Environment Agency to pressure on farm incomes which have left some farmers struggling to cover the cost of adequate pollution prevention measures. Accidents do happen, but a strong maintenance policy can go a long way towards reducing the risk.

Farm pollution insurance cover for on-farm incidents has changed over the past 10 years. Insurers were once unwilling to provide even the most basic cover. However, most insurers now incorporate Environmental Impairment Liability within their policy wordings. Costs arising from pollution can escalate alarmingly, particularly when you include the fees charged at an hourly rate by the national agencies of England, Scotland and Wales, as the following examples demonstrate.

Farm fertiliser spillage is one of the more common causes of farm pollution. One recent farm pollution incident saw clean-up costs of around £25,000 incurred for the removal of fertiliser which proved highly toxic and had to be removed by tanker for safe disposal.

Low level farm pollution incidents that might appear innocuous can still become expensive problems. A recent diesel spill was one of the worst incidents the clean-up team had ever encountered as it polluted both a stream and a lake in a sensitive area. Remedial works to these water courses were ongoing for months. Total remedial costs were in excess of £120,000, of which around £40,000 was spent in the first month as the clean-up company attended site each day removing the diesel from the stream and lake, in conjunction with the Environment Agency.

Pollution incidents are not all farm related, however. Domestic heating oil spills are also commonplace. A standard external spill from a domestic tank which does not impact on the structure of the building might typically raise a claim of over £10,000. However, larger claims do occur, and in a recent case with a listed property, the clean-up operation took almost a year and cost approximately £100,000 with an additional £40,000 incurred for reinstatement costs for repairs to the building.

When using a contractor for fertiliser, spraying or slurry spreading work you should check their insurance policy before they begin work to ensure they have adequate liability cover for the work to be undertaken, including accidental pollution cover. Your own policy is unlikely to cover contractors, even if operating on your land.

Often it is the small things which cause a problem. Some of the more common include overfilling of tanks, faulty valves or bunds, age and weathering of tanks and pipelines, and theft. One of the most effective ways to obtain relative peace of mind is to carry out a preventative inspection. At Lycetts we work with a number of specialist companies offering full farm inspections of this type from as little as £200. This results in a detailed assessment of any work required and how best to bring things up to standard, including likely costs.

All farm policies sold by Lycetts automatically include an extension to insure for Environmental Impairment Liability, including farm pollution incidents. These extensions provide cover not only for the cost of the clean up process itself, but also any emergency measures required and legal costs incurred. It is vital that the insurers in any farm pollution case are notified immediately, therefore all relevant telephone numbers can be found in our renewal letters.

The agencies responsible for farm pollution prevention are gaining in power as the government seeks to tackle this problem head-on. Those deemed to be polluters risk not only huge financial penalties, but also a criminal record, and the net is widening. Should a tenant farmer be convicted and found not to have the necessary cover, there could be a situation whereby the relevant authority will pursue damages against the landlord. When looked at in this context, the cost of a risk assessment or specialist farm pollution insurance may well seem a price worth paying.