Common insurance misconceptions

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Courtesy of Waste Advantage Magazine

There are some common misconceptions regarding insurance for the waste industry. The most prevalent of which revolves around Environmental Insurance and who really needs this coverage. Many waste industry operators believe this type of coverage is only needed by hazardous waste haulers or entities engaged in landfill operations. While both of these operations would need environmental coverage, it is also true companies performing residential, commercial and C&D collection need this coverage, as do transfer stations, material recovery facilities and demolition contractors.

Pollution Coverage
For the purposes of this discussion we will define “pollutants” as: any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.1 As you can see, this is very broad in scope and could identify almost any substance as a contaminant if dispersed in a location where it is not normally found.

A real life story regarding a pollution claim involved a company who manufactured flavored syrups. They had a tanker truck filled with their product, all of which was designed for human consumption, involved in an accident. The tank cracked and the liquid leaked into a nearby reservoir killing much of the fish and plant population. A pollution claim was filed by the municipality stating the company was responsible for cleaning up the water and restoring the fish and plant life back to a suitable level. The company immediately called their insurance agent to report the claim and seek coverage under their auto policy. The agent informed them the auto policy did not offer such coverage, so they turned to the General Liability policy only to learn the same news. When it was all said and done, the syrup company had to pay roughly $3,000,000 out of their own pocket to remediate the contaminated area and satisfy the local authorities.

The point of this example is twofold. First, just about anything can be considered a “pollutant”. Second, the company automatically assumed they had coverage in place to protect them from this type of accident. Now think about the number of roll off bins you have out there, or the number of commercial or residential clients you are servicing. As it is highly unlikely you have an employee sifting through every bin, dumpster or trash can, do you really know what you are picking up and transporting? How many times have you overheard someone say, “I was cleaning out my garage last weekend and found a bunch of old paint and pain thinner. I didn’t know what to do with it, so I found a construction site and tossed it in the dumpster.”

Many waste industry operators believe pollution coverage is built into their General Liability or Auto Policies automatically; however, this is generally not the case. It is the responsibility of the company owner (or person in charge of insurance for the company) and the company’s insurance agent to make sure the company is protected. If this subject is not addressed during the procurement process and the agent does not specialize in, or have a number of waste related clients, they might be unaware of this coverage gap leaving the company exposed to potential claims.

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