Fuel theft is on the rise, driven by the economic climate, the fuel crisis and price increases. The cost for businesses to replace lost fuels as well as repairing tanks, pumps and ancillary equipment, not to mention additional expenses incurred by business downtime can be significant.
But the potential costs of fuel theft are far higher than just the operational loss, it also has potential environmental and reputational consequences.
Fuel theft is not just about the money
Damage to pipes and tanks and subsequent leakage of fuel are common following a theft, leading to environmental contamination that can be difficult to clean up. In some countries environmental legislation states that the responsibility to pay is on the polluter, so on top of having your fuel stolen you have an environmental issue that needs to be dealt with too… and pollution claims can be expensive.
If there is substantial pollution, then in addition to fines and lost contracts there could be the cost of reputational damage.
Being prepared with a proactive approach
Fuel theft can really disrupt a business; it is inconvenient, time consuming and costly and can be a painful process to rectify if a pollution condition occurs. Costs to the business can be 100 to 200 times more expensive than the price of the fuel, with an average insurance claim being in the region of £250,000. You can’t always avoid these events happening, but you can be aware of the risks, take precautions to minimise the threat and protect your business. And, if the worst-case scenario does happen, be prepared to react and to minimise the damage.
Here are our tips for implementing preventive measures:
Despite taking all these precautions theft may still happen and purchasing Environmental Risk Insurance can help provide additional protection. It can help:
The cost of remedying environmental damage can mount up when you factor in third party costs, legal fees and the clean-up itself and cover will help you get back on track.
As outlined, there are both some simple and some more sophisticated preventative measures you can put in place to mitigate the risk to your business from fuel theft. The environmental aspect might not be something that you have previously considered, nor the negative impact it could have on your business. Reviewing your business exposure to risk to make sure you are protected for operational, environmental and reputational damage is time well spent.
For more information about environmental risk read more here or contact us here.
Dorothée Prunier, Senior Vice President, Environmental Risks, Chubb Overseas General – Underwriting