Limiting Your Environmental Exposure. Environmental Impairment Liability Insurance (EIL)

1. Limiting Your Environmental Exposure.Environmental Impairment Liability Insurance (EIL) POLLUTION INSURANCE Ray Butchart, CCIB, CIP Ward Watkins Insurance Brokers (Surrey) Ltd. 5746 176A Street, Surrey, BC V3S 4H2 (604) 576-6761

2. What is the definition of “Environmental Impairment” (a) Bodily injury; (including sickness and disease) (b) Property damage; (c) Interference with or reduction of any environmental right or amenity protected by law; (d) Liability to “Clean Up” outside the premises of the insured; arising out of any and all emissions, discharges, dispersals, disposals, seepages, releases or escapes of any liquids, solids, gaseous, or thermal irritants or the generation of smells, noises, vibrations, light, electricity, radiation, changes in temperature or any other sensory phenomena.

3. Some Examples of claim or potential claims • Damage to the site or drill hole from a spill of a foreign substance such as Gas, Diesel Fuel or Hydraulic Oil etc. • Uncontrolled surface water discharge releasing sediments and contaminants onto adjacent properties/waterways. • Contamination to ground water at the drill site or adjacent site also to include ground water drawdown. • General nuisance, noise or change in third party environment.. • Smells and sensory phenomena as well as interference with or reduction of any right or amenity protected by law. • Release of oils/fuels/chemicals from on-site storage tanks or other usage (weather related, vandalism, rupture). THE MAJORITY OF CLAIM PAYMENTS ARE DEFENSE-ORIENTED IN NATURE.

4. More Examples… • In July 2007, a BC municipality hired a road contractor to perform routine maintenance. During the course of performing the road repair, the contractor ruptured a pipeline, resulting in a crude oil geyser discharging product into the nearby Burrard Inlet and surrounding residential community for 30 to 60 minutes before being capped;

6. Exxon Valdes (Alaska) & BP Drill Rig Fire in Gulf of Mexico

7. British Petroleum (BP) has reached a $7.8 billion settlement with the plaintiffs’ steering committee (PSC) for the economic loss and medical claims stemming from 2010 Deepwater Horizon accident and oil spill. The settlement is subject to final written agreement.

8. Why do I need it? • Canada’s federal and provincial regulatory systems have adopted statutes designed to promote environmental responsibility and stewardship. • POLLUTER PAYS. • PROPERTY OWNER IS RESPONSIBLE FOR CLEANING UP THE SITE (even if they did not cause the pollution in the first place).

9. Most businesses carry Comprehensive General Liability Insurance (CGL) and/or Automobile Insurance (ICBC) • Pre 1966 CGL did not exclude pollution • 1970’s CGL underwriters quickly excluded or restricted coverage for pollution under their policies. • EIL coverage is available but is underwritten and a specific premium charged.

10. More and More Property Owners, Contractors, Municipalities, Consultants etc. are requesting this form of coverage to get their business. TIP Use your EIL coverage as a marketing tool to get jobs and protect your assets.

11. RISK REDUCTION OPTIONS: • Self Insurance; • Avoidance; • Risk Control/Engineering; • Contractual transfer: • Most commonly used environmental risk management tool • Risk Transfer (EIL Insurance)

12. Premium is based on: • Limit of Liability ($5,000,000) • Description of Drilling Operations & Experience • Revenue and years of Experience • Retention/Deductible

13. EIL Points • Coverage is available at a reasonable cost. • Claim must occur during the policy period. • Application is easy to complete. • Coverage is for Compensatory damages. No coverage for fines or penalties.

14. Questions & Answers