Environmental liability insurance is a type of insurance policy that protects businesses from the consequences of a major ecological incident. Any business that could potentially cause mass pollution or biodiversity damage should consider environmental liability insurance to avoid severe economic consequences in the event that they are found liable for a major incident. 

In general, there are two types of environmental liability insurance coverage: ecological coverage and injury coverage. Ecological coverage handles incidents such as pollutant releases, biodiversity damage, and other wide-ranging liability areas. By contrast, injury coverage handles claims of individual or mass injury as a result of an ecological incident. 

Environmental liability insurance specifically exists to cover incidents that impact the wider ecology of an area. Common coverage areas for environmental insurance are more widely impacting events than standard liability insurance such as biodiversity damage or pollutant releases. These areas are often excluded from standard liability coverage, leading to the need for environmental liability insurance policies.

There are no standardized policies when it comes to environmental liability insurance. In general, the more comprehensive a plan is, the more expensive it will be. Other factors that may increase the price of an environmental liability plan include the number of sites a company has to cover, the amount of pollutants a company handles or produces, and the presence of past environmental incidents that the company has been found liable for.

If a business does not have environmental liability insurance and an environmental incident occurs, they may be on the hook for the full amount of the damages if they are found liable. As with any insurance policy, environmental liability insurance seeks to blunt the impact of a finding of liability for a major incident.