Though the resulting aroma was sweet, the rollover accident that caused a tanker truck to spill 40,000 pounds of hot, liquid chocolate on an Arizona freeway was anything but. There were no injuries or other vehicles involved in the accident, but the insurance impact is likely significant.
The accident appeared to have been caused by a structural failure as a latch that connects the truck with the trailer became detached, according to the Arizona Department of Public Safety. The Department and others were able to clean up the spilled chocolate quickly, unlike firefighters who had to use shovels, hot water and torches to remove a ton of hardened chocolate from a German roadway last month following a storage tank malfunction at a Westonnen chocolate factory.
Large truck accidents regularly create messes on U.S. and Canadian highways. The past few weeks have seen an overturned truck dump more than 40,000 pounds of frozen chicken tenders on Route 35 in Alabama; a tanker spill 50,000 liters of jet fuel onto a Toronto-area highway; and a tractor-trailer rollover in New York deposit so many cases of canned goods and other household items on I-88 that one lane was closed for 11 hours to clean up spilled cargo and fuel.
During the last two months of 2018 alone, an overturned tanker spilled 1,500 gallons of used cooking oil onto a highway in Pennsylvania; a trailer loaded with Christmas trees overturned on a Michigan roadway; and a Christmas Eve accident caused a FedEx truck to dump packages onto I-95 in Massachusetts.
The U.S. Federal Motor Carrier Safety Administration (FMCSA) 2017 Pocket Guide for Large Truck and Bus Statistics indicates more than 8.4 million single-unit trucks and nearly 2.8 million combination, or trailer-tractors, were involved in accidents in 2015.
“In the event of a rollover, you could be dealing with multiple lines of business: Auto Liability, Physical Damage, Cargo and Pollution.” – Steve Shepard, Burns & Wilcox
Insurance can help cover the costs of incidents like the Arizona chocolate spill, where factors beyond a driver’s control are the cause, said Steve Shepard, Underwriting Manager, Transportation, Burns & Wilcox, Indianapolis, Indiana. However, who pays for the damage and cleanup is not always clear.
“There could be a few lines (of insurance) or multiple lines involved here,” Shepard said. “Even without bodily injuries the costs could be significant. Our goal is always to make sure clients are properly insured while still being able to make money in their business.”
Many types of policies are impacted
Several types of insurance claims are common following a commercial vehicle accident. A Physical Damage policy covers the cost of a damaged truck or hauler. An Automotive Liability policy pays for damages such as injuries to other motorists or their vehicles, structural damage to a nearby building caused by debris, and more.
The cost of the truck involved in the Arizona chocolate spill could run well over $200,000, Shepard estimated, especially given that truck included a heating unit designed to keep the chocolate in liquid form. Such costs would be covered under a Physical Damage policy.
Companies hauling goods need Cargo Insurance coverage, which generally pays for damages or destruction of any items in tow if an accident were to occur while the vehicle is moving, said Mauricio Zani, Manager, Inland Marine, Burns & Wilcox Canada, Toronto, Ontario. He added that a Truckers General Liability policy is sometimes needed to cover certain costs.
A specialized Trucking Insurance bundle that includes Environmental and Pollution Liability coverage would pay an insured organization back for the cost of cleaning up accidents involving any substance determined to be a pollutant. “Even in the case of the chocolate spill you could have a significant environmental impact,” Zani said. “A pollutant doesn’t have to be a chemical or something hazardous in nature. A pollutant simply means something that is in an area where it doesn’t belong.”
“In the case of the Arizona accident, the chocolate would likely be considered a pollutant because it is out of its natural environment and is in excess.” – Gina Jones, Burns & Wilcox
In the case of the Arizona accident, the chocolate would likely be considered a pollutant because it is out of its natural environment and is in excess, said Gina Jones, Vice President, Director, Environmental Programs, Burns & Wilcox. “Unfortunately some may not think something like chocolate is a pollutant,” Jones said. “You may have some brokers who won’t talk to their clients about the importance in having it, but they need to understand the need.”
Auto losses that involve a pollution loss can be tricky, according to Shepard. Not all Auto Liability policies are created equally and there may or may not be pollution coverages included within an insured’s Auto Liability policy. Oftentimes it is best to have a separate Pollution Liability policy in place to ensure the public is properly protected when a trucking accident occurs.
The typical debris removal sub-limit in a Cargo policy may not cover the entire cost of the cleanup and your Auto Liability policy may or may not provide coverage, Shepard said. Some environmental cleanups, even without the presence of hazardous wastes, can cost in the hundreds of thousands of dollars, he added.
“With a separate Environmental/Pollution policy in place, an insured party can take advantage of the separate limits of insurance and separate defense costs afforded. This can become vitally important as the costs associated with these types of claims can be significant,” Shepard said, adding that generally the trucking company should be providing the Environmental/Pollution coverage since the goods are in their care, custody and control.
Jones said she worked with a company that experienced a truck spill that dumped thousands of gallons of milk in an area that ended up being a $1 million loss. “The milk destroyed local streams and wildlife like fish,” Jones said. “So while (milk) may not be considered hazardous, the milk did significant damage.”
Premium costs rise while carrier options decrease
Premium costs for Cargo, Environmental and even Auto Liability and Collision Insurance for the commercial trucking sector are on the rise, said Zani, who has seen many policy premiums increase by 30 to 50 percent in Canada in recent months.
Insurance may be hard to even come by as carriers can decide not to write particular classes of business due to the volatility of the current market place, Shepard said.
“You have a responsibility to make sure the hauler you hire has the insurance in place to protect you against an incident.” – Mauricio Zani, Burns & Wilcox Canada
“A brand new company in the industry may not have as many options to choose from because they don’t have a documented history,” he said. “Insurance carriers utilize a lot of information when considering a particular risk/exposure. A new entity has limited information available, which makes it more difficult for an insurance carrier to predict how this new entity will perform.”
The owner of the cargo will often require a minimum amount of insurance coverage within a contract that may be over and above what a hauler has in place, Zani said. “You have a responsibility to make sure the hauler you hire has the insurance in place to protect you against an incident,” Zani said.
“In addition, insurance companies will often offer premium credits to those businesses that demonstrate greater safety conscience,” Shepard said. Yet he acknowledges that with rising insurance costs, an insured might be forced to cut back in other areas. Sometimes those cuts can come from their safety program/resources. “You can’t make money unless you are moving freight and you can’t move freight if you don’t have insurance in place,” he said.
Any company hauling or shipping goods throughout North America needs to be aware of the safety requirements throughout the United States and Provinces in Canada they are operating in. This is one of the many reasons why talking to your broker or agent can help protect your interests, Shepard said.
It is in the best interests of an insured party to partner with a broker or agent that specializes in these exposures and has the experience making certain that an insured has all of the appropriate coverages in place. “In the event of a rollover, you could be dealing with multiple lines of business: Auto Liability, Physical Damage, Cargo and Pollution,” Shepard said.
“It’s vital to work with insurance agencies or brokerages who specialize (in Transportation or Commercial Trucking) because they understand your business,” Shepard said. “There is the potential for multiple gaps in coverage that can be costly, sometimes totaling up to and exceeding $1,000,000.”
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This information was provided by Burns & Wilcox, North America’s leading wholesale insurance broker and underwriting manager. Burns & Wilcox works exclusively with retail insurance brokers and agents to assist clients like you with their specialty insurance needs. Ask your insurance broker or agent about a full range of Transportation related policies that might be right for you.