TRANSPORTATION: Hazardous Waste Companies Learn To Verify Coverage

Debbie Hagen

For years now, hazardous waste companies across the nation have been operating under the belief that an MCS-90 endorsement provides pollution coverage for a transporter.

Unfortunately, that belief has come to be a misconception.

MCS-90 does not provide an all-encompassing type of coverage for hazardous materials transporters. As a result, operators of hazardous waste remediation companies can face a lot of trouble if they only have MCS-90 coverage.

"MCS-90 is a minimum coverage and means that the transporter's insurance carrier will initially cover the cleanup costs of an accident," said Bob Andersen of the Andersen Group, Hinsdale, Ill. "However, it may not provide the coverage to protect a company's interests."

Insurance companies specializing in the hazardous waste industry recommend that transporters carry additional pollution coverage.

Other insurance representatives will clearly state that MCS-90 is not insurance.

It is required by the DOT before a transportation company can obtain the necessary permits to haul hazardous waste, said Don Wasson of Willis Corroon Corp., a Wichita, Kan., insurance brokerage firm. "In order to have true pollution coverage, the auto insurance company needs to exclude the pollution exclusion in the auto policy. If the pollution exclusion is not deleted, the insured may have to reimburse company for cleanup expenses."

Keith Shay, president of Fort Transfer, a Morton, Ill., hazardous waste transportation firm, has been carrying sudden and accidental pollution coverage for his clients for several years.

"With only the MCS-90 endorsement, the insurance carrier will at-tempt to recoup its money for any cleanup of an environmental transportation accident from the transporter," he said. "If the transporter can't pay, the insurance carrier will look to the next link in the chain, usually the general contractor, and then, finally, to the generator. The lawsuit names all parties involved and generally settles with the party most able to pay."

Insurance carriers are often called upon to inform companies of changes in pollution coverage.

"ETS requires every subcontractor to provide proof of pollution coverage" said Diana Hughes, li-cense administrator for Environ-mental Transportation Services. If they don't, they won't be with the approved transportation companies and we won't use them."

Only a relative number of claims related to hazardous waste spills exist, according to Brenda Smith of the Environmental Specialties Division of Zurich-American Insurance Group. "For the most part," said Smith, "hazardous waste drivers are more cautious, better trained in handling that type of product and don't usually face the time constraints that other transportation companies do."

When problems do arise, they are often large and expensive. To prevent future problems, Shay advises hazardous waste companies to audit transporters before their next cleanup project. This should ensure that the company has sudden and accidental pollution coverage, which provides for all cleanup costs, transferring the liability of the cleanup from the transporter, general contractor and generator to the insurance company, Shay said.

To make certain that transporters have true pollution coverage, amend the wording to afford sudden and accidental pollution coverage in the ISO Pollution Exclusion, which is a part of every Business Auto Policy (BAP) and Truckers Policy. By taking this approach, Anderson said, the MCS-90 will, in effect, be redundant.

Once you are fully insured, the transporter, generator and general contractor are under no obligation to repay the insurance company.