Look Out Below

Bruce Hooker, R.F. Mattei & Associates of CA Insurance Services, Sacramento, Calif.

Most waste firms are accustomed to being asked by their customers for proof of insurance (usually in the form of a certificate). As astute business people, these customers want to confirm that companies entering their property have adequate insurance coverage should an accident occur. However, many waste companies are not similarly protecting themselves when it comes to dealing with the subcontractors who work for them.

The use of subcontractors or contracted services varies greatly in the waste industry. A large materials recovery facility may have dozens of different contracted service providers who come onto the site to service machinery and mobile equipment; to do welding, plumbing and electrical work; or to drop off or haul away recyclables or waste. A small collection operation may only have a few contractors who work for it, such as a company that power-washes its trucks or does on-site container repair. In either case, if another company is coming onto your property to do work, then you have a potential liability exposure.

A contractor working on your property may accidentally damage your property or injure someone on your site. It is vital to know that the contractor has adequate general liability and auto liability insurance to cover any damage or injuries. It should be standard company policy to request a certificate of insurance from any and all contractors who work on your property.

While damage to your property or injuries to a third party is of great concern, it is also important to be aware of injuries to the subcontractor or the subcontractor's employees. For this reason, it is also important to make sure that all subcontractors provide you with proof of workers compensation insurance.

In some instances, your company may still have a liability exposure even if the subcontractor never physically comes onto your property. For instance, many waste collection companies subcontract work out to other haulers. In these situations, another hauler may be doing the actual collection work on your behalf, but it is your company that is billing the customer. It is crucial that subcontracted haulers provide you with proof of general liability and auto liability coverage.

Protecting your company against subcontractor liability exposures starts with obtaining certificates of insurance from all subcontractors. Be aware of the expiration dates for the policies listed on the certificate, and obtain new certificates when a new policy is issued. Additional protection can be obtained by being listed as an “additional insured” on the subcontractor's policy, by obtaining “hold harmless” and indemnity agreements, and by obtaining a waiver of subrogation. A waste company should speak with its insurance agent, company risk manager or corporate counsel about the best ways to protect against this exposure.

Bruce Hooker
R.F. Mattei & Associates of CA Insurance Services
Sacramento, Calif.