Insurance—Learning From Losses

I get many questions about what kinds of losses we’re seeing in the RecycleGuard insurance program, so I thought I’d share some details on recent claims.

General Liability. Many claims continue to involve customers who are hit by equipment. These claims result in the largest dollar amounts paid and reserved under the general liability coverage.

In one incident, a customer was waiting to unload a scrap auto. He got out of his truck to look at another scrap auto and was struck by an employee-operated crane. The crane operator didn’t see the customer because the man was bending over. The customer suffered significant damage to his knee, ankle, and other parts of his body.

This claim, which has a $750,000 reserve, reinforces the need to either require customers to stay in their vehicles until you’re ready to accept their material or require them to get out of their vehicles and remain in plain sight.

Another claim with a $140,000 reserve is interesting because it’s atypical for the scrap industry. In this instance, the claimant died when a train collided with her car in a railroad crossing located on land leased to a scrap facility. The allegation is that the scrap company was responsible for keeping the crossing free of obstruction from brush, trees, and other vegetation.

This claim is a powerful cautionary tale: If there’s a railroad crossing on your property, check your responsibilities under your contract with the railroad.

Automobile Liability. Vehicle-related accidents continue to be a problem for the scrap recycling industry. In one case with an $850,000 reserve, a vehicle insured under RecycleGuard crossed the center line and hit another vehicle head-on. Two passengers were severely injured, one with two fractured hips.

In another case, the insured was making a right turn and swung into an empty left lane to complete the turn. The other vehicle came over the hill and hit our insured. Passengers in the other vehicle sustained multiple fractures. There’s some question about how fast the other vehicle was going, but the insured vehicle was in the wrong lane and it’s likely that fault will lie with the insured. The reserve for this claim is $500,000.

You can take steps to minimize your automobile liability risks by thoroughly interviewing prospective drivers, enforcing your company policies, and being vigilant in maintaining your vehicles, among other things.

When reviewing a driver’s motor-vehicle record, don’t overlook an infraction that occurred on the individual’s personal time. That infraction could reflect the person’s general driving habits.

Most claims dollars are tied to accidents in which a recycling company’s vehicle collides with another vehicle, and most of these accidents could have been prevented. For the 2005 calendar year, 92 percent of the RecycleGuard collision losses were “at-fault” claims. In the first quarter of 2006, 100 percent of collision claims were at-fault.
Keep in mind: Just as you can face a penalty on your personal insurance for at-fault accidents, your commercial insurance premium also can increase due to such accidents. You earn what’s called a “debit” on your experience rating. You can just as easily turn that into a credit by remaining accident-free.

Workers’ Compensation. Many safety experts maintain that all workers’ compensation accidents are preventable. That may sound unbelievable, but if you review the facts behind most accidents, proper training, good housekeeping, and enforcement of company safety rules truly can prevent employee injuries. Consider these scrap industry examples, which have reserves of $305,000, $222,000, and $767,000, respectively:

An employee was feeding scrap cable into a stripper when his right hand got caught, pulling his entire arm into the machine. His arm had to be amputated. Could this have been prevented?

Another employee was moving tools in a shear and slipped on some oil. 

He injured his back and will have to undergo surgery. Could good housekeeping have prevented this accident?

Yet another claim involved a leased employee. The worker was in a baler trying to loosen a jam when the baler accidentally started. His legs were pinched, and one had to be amputated. The insured company originally thought the leased employee was covered under the leasing company’s workers’ compensation coverage, but the certificate of insurance turned out to be bogus. Thus, the scrap firm had to tap RecycleGuard’s workers’ compensation coverage, which will affect its experience rating.

I hope you can use some of these examples during your safety meetings to emphasize that you can prevent most accidents and work “Safely or Not at All,” as ReMA promotes. 

—Monica McNally, senior vice president, RecycleGuard/Willis of New Hampshire Inc. (Portsmouth, N.H.)

Willis RecycleGuard has prepared this article for informational purposes only. It is not intended to provide legal advice. Readers should not rely on this document or act upon any of the information it contains without first consulting competent legal counsel.