The highs and lows of chemical liability

However you look at chemicals they are risky business. Volatile chemicals present a huge explosion and fire risk while even the more stable chemicalscan incurspillage, pollution and poisoning liability.

Hence, says Hattingh, Senior Manager Client Services, Alexander Forbes Risk Services “the golden rules with insuring chemicals are, firstly, to buy as much as you can afford and, secondly, to accept as little risk as possible - by passing on as much as possible.”

To get this right you need to make sure that the contracts you enter into are guided by professionals who understand the risks that you are accepting and can ensure that you are covered for the full liability that you have assumed.

Extra caution with chemicals is, however, required as liability can be extreme. Hattingh quotes the 1984 Bhopal gas disaster where over 15,000 Indians died and 500,000 were injured.

“Neither Union Carbide and Dow Chemicals (who took over Union Carbide) nor the Indian government had even remotely enough cover to compensate the victims. The scale of the liability saw decades-long legal battles in both India and the U.S. and compromised the investment prospects of American companies in India for over twenty years,” says Hattingh.

The point is there is no formula for calculating chemical risk. Each case needs to be assessed by professionals able to identify the full extent of possible liability.For example, “if arsenic got into domestic pool chlorine and the producers were faced with liability arising from 100 000 poisoned swimming pools - what would this cost?”

Compensation costs aside, a team of expensive assessors, experts, engineers, officials and interested parties would need to work out the matrix of risks and covers involved.

The complexity of chemicals cover is exacerbated by the fact that chemical liability usually results in more than one policy being triggered.For example in a recent case, a client spilt 800 liters of hydrochloric acid on a third parties’ property- polluting several adjacent properties, corroding fences, floors, computer and electrical cabling, cars (fromseveralother business) and office equipment.This accident triggered a series of third party claims causing millions in damage to a host of other parties - even though 800 liters of hydrochloric acid costs relatively little.

And, says Hattingh, “legislation is very clear in taking a ‘polluters beware’ line. In short, full responsibility for the safe handling and transit of chemicals rests with the supplier.”

The Actalso stipulates that, “a supplier should not provide chemicals to a client unless the client has met the requirements for the safe collection, transport and housing of the chemicals” says Hattingh.

The problem is not so much with the large suppliers and the big transport companies that they use. These all have the correct equipment, vehicles and procedures to move chemicals safely between official storage areas in the major centres. Moreover, they all have professionally advised and placed cover.“Problems usually develop, however, when smaller amounts of chemical are purchased by smaller users and moved in, say, a bakkie on a dirt road to be stored in an unsecured shed on someone’s farm” says Hattingh.

A supplier would have no control over how these chemicals were being packaged, transported, stored and housed. Yet if something did go wrong, according to the Act, the supplier wouldbe held liable if the farmer caused injury to his workers or the environment.

This is why when you buy something as simple as chlorine for your pool the packaging comes with strict and detailed instructions on how to store and handle it. If these instructions are disregarded by the purchaser and damage is caused the supplier is able to distance itself from liability.

Finally, when people think chemical damage they usually think hazardous chemicals. But this is not always the case.For example,“in a recent incident a truck dropped its load of flour on Van Reenen’s pass during a rain storm. While this did nothing to the environment as flour is entirely biodegradable, when wet if becomes like glue or cement” explains Hatting.The cost of clearing the pass of this otherwise harmless substance was substantial – and the supplier was entirely liable.

The point is there is no formula for calculating chemical risk. Each case needs to be assessed by professionals able to identify the full extent of possible liability.For example, “if arsenic got into domestic pool chlorine and the producers were faced with liability arising from 100 000 poisoned swimming pools - what would this cost?”

Compensation costs aside, a team of expensive assessors, experts, engineers, officials and interested parties would need to work out the matrix of risks and covers involved.

The complexity of chemicals cover is exacerbated by the fact that chemical liability usually results in more than one policy being triggered.For example in a recent case, a client spilt 800 liters of hydrochloric acid on a third parties’ property- polluting several adjacent properties, corroding fences, floors, computer and electrical cabling, cars (fromseveralother business) and office equipment.This accident triggered a series of third party claims causing millions in damage to a host of other parties - even though 800 liters of hydrochloric acid costs relatively little.

And, says Hattingh, “legislation is very clear in taking a ‘polluters beware’ line. In short, full responsibility for the safe handling and transit of chemicals rests with the supplier.”

The Actalso stipulates that, “a supplier should not provide chemicals to a client unless the client has met the requirements for the safe collection, transport and housing of the chemicals” says Hattingh.

The problem is not so much with the large suppliers and the big transport companies that they use. These all have the correct equipment, vehicles and procedures to move chemicals safely between official storage areas in the major centres. Moreover, they all have professionally advised and placed cover.“Problems usually develop, however, when smaller amounts of chemical are purchased by smaller users and moved in, say, a bakkie on a dirt road to be stored in an unsecured shed on someone’s farm” says Hattingh.

A supplier would have no control over how these chemicals were being packaged, transported, stored and housed. Yet if something did go wrong, according to the Act, the supplier wouldbe held liable if the farmer caused injury to his workers or the environment.

This is why when you buy something as simple as chlorine for your pool the packaging comes with strict and detailed instructions on how to store and handle it. If these instructions are disregarded by the purchaser and damage is caused the supplier is able to distance itself from liability.

Finally, when people think chemical damage they usually think hazardous chemicals. But this is not always the case.For example,“in a recent incident a truck dropped its load of flour on Van Reenen’s pass during a rain storm. While this did nothing to the environment as flour is entirely biodegradable, when wet if becomes like glue or cement” explains Hatting.The cost of clearing the pass of this otherwise harmless substance was substantial – and the supplier was entirely liable.

“Neither Union Carbide and Dow Chemicals (who took over Union Carbide) nor the Indian government had even remotely enough cover to compensate the victims. The scale of the liability saw decades-long legal battles in both India and the U.S. and compromised the investment prospects of American companies in India for over twenty years,” says Hattingh.

The point is there is no formula for calculating chemical risk. Each case needs to be assessed by professionals able to identify the full extent of possible liability.For example, “if arsenic got into domestic pool chlorine and the producers were faced with liability arising from 100 000 poisoned swimming pools - what would this cost?”

Compensation costs aside, a team of expensive assessors, experts, engineers, officials and interested parties would need to work out the matrix of risks and covers involved.

The complexity of chemicals cover is exacerbated by the fact that chemical liability usually results in more than one policy being triggered.For example in a recent case, a client spilt 800 liters of hydrochloric acid on a third parties’ property- polluting several adjacent properties, corroding fences, floors, computer and electrical cabling, cars (fromseveralother business) and office equipment.This accident triggered a series of third party claims causing millions in damage to a host of other parties - even though 800 liters of hydrochloric acid costs relatively little.

And, says Hattingh, “legislation is very clear in taking a ‘polluters beware’ line. In short, full responsibility for the safe handling and transit of chemicals rests with the supplier.”

The Actalso stipulates that, “a supplier should not provide chemicals to a client unless the client has met the requirements for the safe collection, transport and housing of the chemicals” says Hattingh.

The problem is not so much with the large suppliers and the big transport companies that they use. These all have the correct equipment, vehicles and procedures to move chemicals safely between official storage areas in the major centres. Moreover, they all have professionally advised and placed cover.“Problems usually develop, however, when smaller amounts of chemical are purchased by smaller users and moved in, say, a bakkie on a dirt road to be stored in an unsecured shed on someone’s farm” says Hattingh.

A supplier would have no control over how these chemicals were being packaged, transported, stored and housed. Yet if something did go wrong, according to the Act, the supplier wouldbe held liable if the farmer caused injury to his workers or the environment.

This is why when you buy something as simple as chlorine for your pool the packaging comes with strict and detailed instructions on how to store and handle it. If these instructions are disregarded by the purchaser and damage is caused the supplier is able to distance itself from liability.

Finally, when people think chemical damage they usually think hazardous chemicals. But this is not always the case.For example,“in a recent incident a truck dropped its load of flour on Van Reenen’s pass during a rain storm. While this did nothing to the environment as flour is entirely biodegradable, when wet if becomes like glue or cement” explains Hatting.The cost of clearing the pass of this otherwise harmless substance was substantial – and the supplier was entirely liable.

The point is there is no formula for calculating chemical risk. Each case needs to be assessed by professionals able to identify the full extent of possible liability.For example, “if arsenic got into domestic pool chlorine and the producers were faced with liability arising from 100 000 poisoned swimming pools - what would this cost?”

Compensation costs aside, a team of expensive assessors, experts, engineers, officials and interested parties would need to work out the matrix of risks and covers involved.

The complexity of chemicals cover is exacerbated by the fact that chemical liability usually results in more than one policy being triggered.For example in a recent case, a client spilt 800 liters of hydrochloric acid on a third parties’ property- polluting several adjacent properties, corroding fences, floors, computer and electrical cabling, cars (fromseveralother business) and office equipment.This accident triggered a series of third party claims causing millions in damage to a host of other parties - even though 800 liters of hydrochloric acid costs relatively little.

And, says Hattingh, “legislation is very clear in taking a ‘polluters beware’ line. In short, full responsibility for the safe handling and transit of chemicals rests with the supplier.”

The Actalso stipulates that, “a supplier should not provide chemicals to a client unless the client has met the requirements for the safe collection, transport and housing of the chemicals” says Hattingh.

The problem is not so much with the large suppliers and the big transport companies that they use. These all have the correct equipment, vehicles and procedures to move chemicals safely between official storage areas in the major centres. Moreover, they all have professionally advised and placed cover.“Problems usually develop, however, when smaller amounts of chemical are purchased by smaller users and moved in, say, a bakkie on a dirt road to be stored in an unsecured shed on someone’s farm” says Hattingh.

A supplier would have no control over how these chemicals were being packaged, transported, stored and housed. Yet if something did go wrong, according to the Act, the supplier wouldbe held liable if the farmer caused injury to his workers or the environment.

This is why when you buy something as simple as chlorine for your pool the packaging comes with strict and detailed instructions on how to store and handle it. If these instructions are disregarded by the purchaser and damage is caused the supplier is able to distance itself from liability.

Finally, when people think chemical damage they usually think hazardous chemicals. But this is not always the case.For example,“in a recent incident a truck dropped its load of flour on Van Reenen’s pass during a rain storm. While this did nothing to the environment as flour is entirely biodegradable, when wet if becomes like glue or cement” explains Hatting.The cost of clearing the pass of this otherwise harmless substance was substantial – and the supplier was entirely liable.