Degrees of Coverage

Nick Desoutter

Solid waste concerns require several types of coverages in varying degrees, such as:

Pollution liability coverage. Also called "environmental insurance" or "environmental impairment coverage," it covers damages caused by pollution for which you are found liable, the costs of cleaning up contaminated sites, and/or other pollution-related costs.

Automobile liability coverage. Covers liability for property damage or bodily injury to others caused by your vehicles.

Automobile physical damage. Covers the costs of physical damage to your vehicles resulting from accidents.

Property insurance. Covers damage to your buildings and their contents, and may cover other special property.

Boiler and equipment coverage. Covering boilers and other mechanical equipment, this coverage is usually written separately from the insurance on your other property.

Professional liability coverage. Protects professionals (engineers, architects, surveyors, attorneys, accountants, etc.) if they are found liable for damages.

General liability coverage. Covers liability for bodily injury, property damage, or personal injury arising from your premises and operations.

Workers' compensation. Pays statutory medical expenses and lost wages when employees are injured on the job.

Umbrella liability. Provides additional coverage over one or more of your other liability policies-generally at a lower rate than it would cost to increase each underlying coverage, but may not provide additional pollution coverage.

Another coverage that you should strongly consider is Directors and Officers liability coverage (for private businesses) and Public Officials liability coverage (for publicly-owned entities).

These coverages protect company directors and executives and public officials if they are found liable for damages. Both policies can add coverage for employment practices liability. The relative importance of each coverage in your overall insurance portfolio depends on the nature of your business.

Among other things, the makeup of your insurance portfolio will depend on whether your business hauls waste or processes waste, is more machine-driven or people-driven, or handles hazardous waste or non-hazardous waste (see chart on page 47).

Some waste-hauling organizations buy only the MCS-90 automobile extension, which is the minimum necessary to comply with regulations.

According to Cox, it's only a small financial leap from this minimum level of coverage to full coverage.

Professional and pollution liability coverage are essential for consultants. When it comes to liability, the buck usually stops with the consultants whenever any are involved.

In fact, any solid waste business should ensure that consultants have adequate professional and pollution liability insurance before hiring them.

The consultants' policies need to protect the business for liability arising from the consultants' professional services.

Similarly, you should require specific insurance of any contractors you hire, according to Jerry Johnson, Principal of Johnson and Associates-Risk/Insurance Consulting Services, San Diego.

When Johnson was Claims and Insurance Manager for the city of San Diego, he discovered that the city pays the tab if a contractor isn't properly insured or if the contractor's insurer becomes insolvent.

Likewise, he recommends checking the longevity of the contractor to make sure the company will still be around if a problem arises later.