The Summit

Beacon Hill Associates A publication of Beacon Hill Associates

Environmental Exposures for Different Types of Recycling Facilities

The recycling industry encompasses several different types of facilities, all with unique exposures

In this article we will discuss types of recyclers and some environmental exposures they face. We believe all recyclers have a pollution exposure that is worth transferring to an insurance policy. We will provide some claims examples that will show what can happen and how costly they become.

We see many different types of recycling operations at Beacon Hill. We tend to receive submissions that include traditional recycling, metal recycling, electronic recycling, medical waste recycling, and roll off/construction debris recycling. Below we will detail these types of recycling operations and some exposures each face.

Materials Recovery Facility

A materials recovery facility (MRF) is a facility that receives, sorts/separates, and prepares recyclable materials to end user manufacturers. These operations generally accept a wide variety of plastics, glass, metal consumer products, paper, and construction type materials and usually have a large sorting component to their operations. The insured may be picking up the recyclables from other facilities to bring back to their sorting locations via commercial roll-off or trailer.  As with any sorting operation, there is always a chance of having hazardous material mixed in with the other recyclables. Petroleum related products, mercury vapors, pesticides, lead, and asbestos containing materials may be mixed in prior to sorting.  Airborne bacteria and fungus levels may be at high concentrations. Hostile Fires with the above chemicals can produce offsite Bodily Injures and off-site property damage. Emergency response costs, environmental clean up, restoration of the facility and business interruption claims can run into the millions. There’s also liability for improper disposal for any necessary waste stream.  A San Francisco MRF had a chemical spill affecting 26 people with injuries.

Metal Recycling

Recycled metal often comes from home appliances, railroad tracks and cars, autos, and metal from demolished buildings. There are two types of metals that are recycled: ferrous (contains iron and is magnetic) and nonferrous metals (aluminum, copper, tin, brass, lead, and zinc). Vehicles provide most ferrous metals for recyclers while nonferrous are more valuable and demand higher prices.

Once the scrap metal is received, it is processed by sorting, shearing, shredding, torching, and baling. This results in metal pieces of a size, density, and purity specified by steel mills and foundries for melting and use in the production of new steel. Many large metal recyclers receive vehicles for recycling. After the autos are properly drained of fluids and hazardous materials are removed, the autos are stripped of valuable core parts. The remaining auto body is crushed and/or shredded into 20–50 millimeter chips which are sold to metal foundry for reuse.

The soil found at these locations can have high concentrations of copper, zinc, cadmium, chromium, nickel, and lead, especially near car battery storage. These metals can leach below the soil and can migrate if groundwater is present. This can spread to other properties around the facility as well. The use of the product prior to being recycled can have a hand in causing elevated levels of volatile chemicals imbedded in the metals prior to recycling.  It is not uncommon for improperly disposed of radioactive metal waste to end up in scrap metal facilities as well. Metal recyclers use radiation detectors to prevent this material from going thru shredders and contaminating these expensive machines. If contamination does occur, pollution claims can cost millions of dollars between clean up claims, first party clean up, any 3rd party damages, defense costs, and loss of business costs. A metal recycler in Beaver Falls, PA accidentally shredded radioactive metal and affected and shut down two other facilities resulting in 3rd party property damage, clean up, and business interruption issues.


Electronic recycling, or e-recycling, is one of the fastest growing areas of the recycling industry. These businesses sort and recycle parts from computers, TVs, cell phones, air conditioners, refrigerating related items, and various other electronics. There is an abundance of lead, mercury, ammonia related refrigerants, and battery acids in e-waste/recyclables, which could cause soil or groundwater contamination and could potentially cause injury to a facility employee. The storage and removal of these hazardous materials is very large component of the environmental hazard facing this segment of the industry. A report from USA Today points out that in March a battery caused a fire at a recycling facility in Queens that burned for two days and caused disruption to nearby train services.

Medical Waste

There are many types of medical waste: infectious, sharps (needles, scalpels, blades), pathological, radioactive (fluorine, IODINE, Technetium-99, Strontium-89, Iridium-192 and Cobalt-60), pharmaceuticals, and chemical. This waste is collected from doctor offices, hospitals, veterinary offices, home care, among other sources. The waste is sorted and treated by way of: incineration, thermal, microwave, chemical, or with enzymes. Pollution exposures from this type of business include: bodily injury and property damage due to non-secure storage of materials, spills or leaks during transport, or at the facility. Incineration of materials may emit air omissions and generate ash. The subsequent disposal of materials at permitted facilities can often lead to clean up claims. An explosion at a Petersburg, VA medical waste facility sent biohazards and contaminants through the property, injuring 3 people.

Roll Off Contractor/Construction Debris Recycling

Construction material recycling operations mainly deal with the recycling of metal, concrete, wood, drywall, asphalt, and other construction debris from job sites. Most of these operations involve leaving roll off dumpsters at construction sites. These are later removed and the debris is then sorted at the insured’s facility. Depending on the age of the material and the prior uses of older debris, environmental issues can arise in the sorting process. The discovery of lead, PCBs, and asbestos in the recyclable material is a prime concern. Silica dust related to concrete and water run-off from the insured’s facility is a concern as well. All of these pollutants have the ability to spread to neighboring locations. Last year a dumpster chemical fire near Erie, NY affected the whole town. Aluminum powder caught fire in the dumpster; robocalls were sent to neighbors to urge them to stay indoors.

Petroleum Recycling

Petroleum recycling is a large segment of the recycling industry and can focus on recycling of oils, gases, anti-freeze, contaminated fuels, and parts related to petroleum fuel use. These accounts tend to have a heavier auto exposure as they may be transporting bulk waste oil or fuel via vacuum truck operations. There is also a high risk of ground contamination at the insured’s recycling facility. These contaminants have the ability to spread to surrounding properties and natural environments if not properly controlled.

For many recycling risks Beacon Hill can write General Liability (GL), Environmental Impairment Liability (EIL), Auto, Workers Compensation and Follow Form Excess policies. Most package GL/Pollution policies are rated on projected receipts and average $15,000 - $50,000 with a minimum premium as low as $7,500. It is important to review coverage form terms and conditions as most policies are written on surplus lines paper and no two insurance company’s policies are the same.

Information for this article was obtained from the following sources:

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