Industrial activity can cause serious damage to the environment and to people's health. A company is liable for pollution to the victims and to the state, and the amounts claimed for environmental damage can be very large. Insurance helps shift part of these costs to the insurer — but it is important to understand which policies are compulsory and which are not.
Is there compulsory environmental insurance in Russia?
No. Article 18 of Federal Law No. 7-FZ "On Environmental Protection" allows for environmental insurance, including compulsory insurance in cases provided for by federal laws. However, Russia has no separate law introducing general compulsory environmental insurance. In practice, environmental risks are covered by a combination of several instruments.
OSOPO: what it covers and what it does not
Owners of hazardous industrial facilities, hydraulic structures and filling stations must insure their liability under Federal Law No. 225-FZ (OSOPO — compulsory liability insurance of hazardous facility owners). The policy compensates harm to the life, health and property of third parties, as well as damage from the disruption of their living conditions caused by an accident at the facility.
Important: OSOPO does not cover damage to the environment itself — soil, water bodies, forests. Without additional protection, the company will have to bear the costs of cleaning up pollution and compensating the state for environmental damage on its own.
Where the law requires financial security
Oil and oil product spills
Organisations operating facilities where oil and oil product spills are possible must have a spill prevention and response plan and confirm that they have financial security for carrying it out, including full compensation for harm (Article 46 of the Law "On Environmental Protection"). This can be confirmed by an insurance contract, a bank guarantee or a reserve fund.
Carriage of oil by sea
The Merchant Shipping Code of the Russian Federation requires owners of certain categories of vessels, including tankers carrying oil in bulk, to have insurance or other financial security for liability for oil pollution damage, along with a certificate confirming it.
Voluntary environmental risk insurance
For other cases, insurers offer voluntary pollution liability insurance programmes. Typical cover includes:
- harm to the life, health and property of third parties caused by sudden and accidental pollution;
- costs of eliminating the consequences of pollution and cleaning up the site;
- compensation for environmental damage claimed by government authorities;
- legal defence and expert examination costs.
Gradual (long-term) pollution, planned emissions within permits, fines and intentional violations are usually excluded. Cover for gradual pollution is rare and requires separate underwriting.
Who needs it
- oil, gas and petrochemical companies, oil depots and filling stations;
- metallurgical, chemical and mining enterprises;
- the energy sector, including facilities with hydraulic structures;
- waste management operators;
- carriers of dangerous goods and owners of chemical product warehouses;
- agricultural enterprises working with agrochemicals and large livestock complexes.
How to prepare for insurance
- List the facilities and activities that could lead to pollution.
- Gather documents: emission and discharge permits, spill response plans, results of industrial environmental monitoring and the history of incidents.
- Determine the liability limit, taking into account the possible scale of damage and counterparties' requirements.
- Check how the policy fits with OSOPO and general liability insurance to avoid gaps and double cover.
Learn more about the compulsory policy for hazardous facilities in the OSOPO section and about voluntary protection in the Liability insurance section. Large environmental risks are often placed with the participation of reinsurers — see the Reinsurance section. Polis Re specialists will help you compare offers — submit a request.