Understand Your Liability for Waste Disposal

SEPTEMBER 5, 2023

Most companies produce and dispose of some kind of waste, whether it’s as harmless as paper and kitchen trash, or as hazardous to humans and the environment as toxic chemicals. Waste disposal exposures include:

• Releases and spills during loading, unloading, transport and storage
• Improper characterization of the waste being disposed of
• Improper disposal and “midnight dumping”

Many business owners mistakenly believe they’re covered for pollution releases under their general liability and property policies — but the vast majority of these policies have an exclusion for pollution. This exclusion is designed to remove liability coverage for most pollution events that could occur during the course of the policyholder’s business, including the disposal of waste created by their operations, leaving the policyholder exposed to potentially costly risks.

Business owners must recognize that waste carries cradle-to-grave liability, which means they can be held responsible for the costs of any damage the waste creates. The cost of such claims can run into the millions of dollars, including defense and cleanup costs, as well as fines imposed by government authorities. In some cases, activities can be considered criminal and lead to the imprisonment of those responsible.

Responsible parties can be held liable even when the waste is out of their care, custody, or control — including while the waste is being transported by a licensed hauler and disposed of at a facility approved to accept such waste. 

Coverage for waste disposal liabilities can be secured via different types of pollution policies, including premises pollution liability and contractors’ pollution liability.

A few examples of industries that can benefit from pollution liability coverage are:

The key coverages are:

•  Non-owned disposal site liability coverage, which provides bodily injury, property damage, cleanup costs, and associated legal defense for which you are legally liable as a result of a pollution condition at or migrated from a non-owned disposal site
• Transportation liability coverage, which provides bodily injury, property damage, cleanup costs and associated legal defense that you’re legally liable to pay as a result of a pollution condition caused during the transport of waste

Because environmental or pollution insurance does not have a standard policy, it’s critical to work with an experienced broker that can negotiate appropriate definitions of “pollutant” and limit exclusions based on your business’s activities and its unique pollution risks.

Claims/Coverage Scenario 1:

An unknown party illegally placed a container of hazardous liquid waste into a dumpster at a small manufacturing facility. The container leaked and contaminated the contents of the load, which in turn contaminated the waste on the tipping floor of the transfer station. The manufacturing facility was held liable for the cleanup costs and legal fees, which exceeded $82,000.

Claims/Coverage Scenario 2:

A small paint manufacturing company performed routine drum washing operations over a concrete containment pad. Over time, solvent-laced wash water migrated through cracks in the concrete and into the subsurface soils and groundwater. The plume of solvents traveled offsite and contaminated a nearby municipal water supply well. The municipality filed suit for cleanup and property damage claims, and required costly remedial technologies to provide safe drinking water for its customers.