Does Your Hazardous Waste Disposal Company Have Enough Insurance?

Posted by author Richard Espinoza on Tue, Aug 05, 2014

Does Your Hazardous Waste Disposal Company Have Enough Insurance?

Picture this scenario………Eyewitness News reports a freeway closure due to an accident involving an overturned truck  on a major US highway.  The aerial pictures from the news helicopter shows a truck lying on its side surrounded by liquid that spilled from the back of the truck, and is now pooled up across three lanes of the interstate.hazardous-waste-truck-spill

Hazmat crews are on the scene evaluating the incident, and there is a long line of commuters stuck on the freeway going nowhere.

If you have spent any time on our nation’s highways, this is a commonplace scene replayed on a daily basis. All well and good, but how does this affect the millions of hazardous waste generators out there?

What if this load of hazardous waste originated from your facility?  What liability, if any, does your company face in this scenario?

Cradle to Grave

The answer to this question is not as easy as it may appear at first glance.  While your hazardous waste disposal company would retain liability from the operation of their vehicle, companies must remember as part of the Resource Conservation and Recovery Act (Environmental Protection Agency, 42 U.S.C. s/s 6901 et seq., 1976) hazardous waste generators maintain cradle-to-grave liability.

The concept that waste generators are liable for the hazardous nature of their waste streams from point of generation to disposal is supported by federal, state, and local law. This liability covers all steps including storage, transport, handling, processing, and ultimate disposal.

Original waste generators may be held just as culpable for improper handling, illegal disposal or spillage of their waste streams as their hazardous waste disposal company. This ultimately requires the generator to diligently pursue proof of, and document, the proper processing and disposal of their waste, regardless of method or state requirements.

Why Your Hazardous Waste Vendor’s Insurance Is Important?

If you hazardous waste disposal company maintains minimal insurance coverage, you may be involved in insurancethe cost of cleanup and additional liabilities (e.g. injuries, hazmat teams, evacuations, etc), if your waste stream is involved in a serious accident.

Let’s take a look at the potential liability to a company involved in the accident above which ends up costing 3 million dollars to clean it up.

Company A.

                Company A contracts with a hazardous waste disposal company to transport their waste and dispose of it legally. The transportation company holds 1 million dollars in liability insurance.Since the cleanup bill is $3,000,000 and the transportation company has $1,000,000 in insurance, the waste generator, meaning you, could be responsible for the balance.*

                Clean Up = $3,000,000

                Insurance = $1,000,000

                Potential Liability = $2,000,000*

Company B

                Company B holds 5 million dollars in liability insurance. Same scenario as Company A.

                Clean Up = $3,000,000

                Insurance = $5,000,000

                Potentail Liability = $0*

*The potential liability a company could be held responsible for depends on many factors. This is a very simplistic view and should not be construed as the actual outcome.

It is human nature to focus on price when comparing bids from different hazardous waste disposal vendors.  However, it is prudent to consider other factors including proper licensing, safety record and insurance coverage limits for all parties to your bid.

Many hazardous waste transportation companies offer low-ball bids to generate business quickly, but oftentimes those bids are accompanied with minimal insurance coverage ($1 million or less) which puts your company’s finances directly at risk. Given the scenario above for Company A, a large spill like this could bankrupt a company!

Ask the Right Questions

When selecting your hazardous waste disposal company, we suggest that you go beyond the quote and ask your candidates to provide a documented compliance history, licensing credentials, insurance coverage, and statement of qualifications. Here are a few questions to ask in the research and interview process:

  • Are they financially sound e.g., Dun &Bradstreet report, Bank letter of credit, etc.?
  • Are they properly permitted for the transportation, storage, treatment and disposal of waste identified at your facility?
  • Are they able to demonstrate a good sound history of regulatory compliance?
  • Do they meet minimum insurance requirements and have coverage for accidents?
  • Do they have adequate personnel that are properly trained?
  • Are they able to provide a statement of qualifications (SOQ)?
  • Do they have procedures for dealing with unknown chemicals?
  • Are they able to provide a list of capabilities/services (e.g., transportation, disposal, treatment, identification of unknowns, etc.)?
  • If using subcontractors, are they able to identify which companies are utilized and for what activities?
  • Are they able to identify how materials they handle will be managed?
  • Are they able to provide a list of references on past related projects?

Protect Yourself

Ensuring you make an informed decision is critical to the financial health of your business, especially, when it pertains to transporting hazardous waste. Ask yourself an additional question, “What would happen if this type of waste was spilled by the transporter?” Answering this question should force you into thinking differently about the types of bids you select, and ensure that whoever is going to transport your waste is qualified and adequately insured.

All things being equal, price will play its part. But if you compare apples to oranges then one mistake could ruin your business.

Make sure that your hazardous waste vendor is top-notch and maintains proper coverage to keep your company out of the news and you out of expensive litigation. 

Subscribe to IDR Blog


Comments