How Dumpster and Junk Haulers Can Slash Their Insurance Costs

Rolloff Rundowns: Insurance for Haulers

Matt: What’s up, guys? This episode of Rolloff Rundowns is all about insurance, and we brought in Toby Stabs from Wisdom Insurance to talk about how haulers like you can get the very best insurance rates. Let’s jump right into this episode. Hey, Toby, thank you so much for joining this episode of Rolloff Rundown. This one’s a good one in my mind because lots of haulers have questions about insurance. I think that haulers don’t know what they don’t know about insurance, too. Most of them kind of think, “Hey, insurance is insurance; what else do I need to know?” But what they will discover during this conversation is that not all insurance companies are made the same. Someone that specializes in insurance for the dumpster industry and specifically haulers can make a huge monetary difference. So let’s just start with why is that the case?

Toby: Yeah, definitely when it comes to getting the right business classifications and as well as vehicle classifications, when it comes to the insurance side of things, the devil’s really in the details. What we see a lot of is our clients before they come to us, they’ll go to their local BNI group, or they’ll meet somebody at their church, or they know a broker, an insurance agent that they dealt with for years. They’ll go to them and say, “Hey, I’m starting up this junk removal or dumpster rental business or whatever.” And the local broker, because they don’t have a big book of business and they don’t work with a set of clientele that do this type of work, they really struggle to be able to go and find options that are available in their local area. It has a lot to do with just not understanding what to call it and where to go, what insurance companies to approach. Once they do get to a carrier that will quote it, being able to navigate all the different pitfalls where things go sideways with these quotes, a lot of times we’ll see hundreds, if not thousands, if not tens of thousands of dollars’ worth of mistakes being made based off of these misclassifications, radius of operations, just all the different nuances.

The risk factor and the fact that it’s high hazard—insurance companies don’t like companies that go to the dump, they don’t like the idea of unlimited liability when you’re at the dump or even a transfer station, and so high hazard startups, those are just red flags with any insurance company. So being able to figure out and navigate getting started is really challenging.

Matt: Nice. So, working with someone like yourself that specializes in knowing exactly how to insure haulers can save tens of thousands of dollars. I think you’ll share some stories here during our conversation, but I’ve heard them and it’s pretty eye-opening. The numbers are pretty massive, but let’s start kind of at the highest level. What are typically the insurance coverage needs of those in the dumpster industry?

Toby: Sure. To get started, you definitely have to have general liability, and you have to have commercial auto. Those are the two absolutes at a minimum. You have to have general liability to cover third-party bodily injury and property damage. You also need that just to work with any contractor, realtor, property manager. If you’re doing cleanup, if you’re doing anything where you’re dropping cans on a commercial property, they’re going to want to make sure that you have general liability in order to step onto their premises. And then the biggest exposure, without a doubt, is the commercial auto. General liability is relatively cheap. You know, it might be $500 a year on up to $1,500 or several thousand once you get to a certain size in revenues and payrolls.

But the commercial auto is the largest expense. It’s the biggest challenge, and it’s where you’re going to have the largest claims. In this industry specifically, it’s not the little claims; it’s not like there’s a frequency issue. It’s more of a severity issue. When you have a loaded-up truck that’s 20,000 GVW or 30,000, 40,000, and then you fill it to the brim and you drive that down the road, when accidents do happen, they’re very expensive. So the severity is what really drives the rates primarily. So those are the two basics.

Beyond that, you’ve got workers’ compensation, you have inland marine, you have commercial umbrella depending on what type of work you’re doing. If you’re working with, you know, net vendors or other companies that require those additional coverages, you can always buy workers’ comp and really exclude yourself as an owner/officer on the policy and still pick up a work comp policy cheaply as a result of doing that, but it’s all rated based on payroll. And then inland marine’s going to cover specifically your cans, your dumpsters. It’s going to cover against physical damage, theft, fire, wind, hail, all those types of risks.

Do you need those coverages to get started? No, not necessarily. When we get a company started, we’ll recommend that they don’t. Unless you have a bank note on the cans or the dumpsters, you don’t necessarily need to insure those. You can throw air tags in them and run them down if they get stolen. They also require a hook lift to steal. But they do get stolen from time to time; it just kind of depends on what your risk tolerance level is and also if you’re going to file a claim for a four or $5,000 dumpster.

Inland marine will cover that specific exposure. And then commercial umbrella just extends your general liability, your commercial auto, and your workers’ comp, and it adds a million-dollar layer over the top of those underlying coverages. The purpose of an umbrella is to increase your overall limits at a relatively less expensive cost and to also comply with any contractual obligations that you might have with contractors or property managers or something along those lines. Apartment complexes, if you’re dropping cans outside of apartment complexes, that property manager is going to want to see that you’re fully insurance compliant before they let you come on the premises.

So those are kind of the basics. There are a lot of additional coverages that you can— we can sell you the Lamborghini. Do you need the Lamborghini of insurance products? No, not necessarily. But there’s employment practices liability insurance, there’s crime coverage, there’s pollution liability, and so it just kind of depends on your individual risk profile and what you’re comfortable with self-insuring or not getting coverage for.

Matt: That makes sense. What’s the typical cost for the type of coverage that these folks would need, and how are those costs determined?

Toby: Yeah, so they vary greatly. Shockingly dramatically. A lot of it has to do with the state specifically that you might be in. The cost in Texas or Florida—Florida is one of the most expensive states. You can get quote ranges from 10 to 15 grand, 20 to 25 grand, 30 grand. In Florida, it’s a no-fault state, you have a lot of population, a lot of uninsured and underinsured drivers, you have a hurricane pounding in there and causing a billion dollars’ worth of damage every other year. You really have a lot of different risk factors that cause and drive those rates to be so high. A lot of the southern states, we see the rates to be kind of higher in the 8 to 15 thousand dollar range.

Texas is one of the tougher states. Georgia can be. Louisiana’s the worst. I’ve never seen a quote under 30 grand out of Louisiana, so that’s wild. Then you have the Midwest, where it’s four, five, six grand a truck, seven grand a truck, eight grand a truck. Very different laws, very different insurance practices in place. Ohio’s monopolistic, so you have to buy workers’ comp from the state; they are the only ones licensed to sell it. And then you have median states like Pennsylvania, Illinois, Wisconsin; those are all going to be five, six, seven grand, eight grand a unit. Arizona, Colorado similar. California is a really tough state right now. Washington can be.

It really depends on where you’re at. And then the different rating factors—I mean, everything comes into play, including the credit profile of the business owner, because fiscally responsible people tend to be better risks than non-fiscally responsible people. Right? So the insurance companies can tie that into their pricing models, and they do. And then everything from driver history to types of vehicles—are you running 25,000 GVW f600, or do you have Freightliners and Kenworths that are 50, 60, 70,000-pound GVW trucks? The values of the trucks can really drive and determine price.

The majority of the commercial auto premium in this industry really lies in the liability, so I would say that makes up like 80% of that premium. The value of the truck doesn’t actually impact it that much. If you buy an $80,000 pickup truck and trailer versus a $250,000 hook lift for 30 and 40-yarders, those prices can be dramatically different because of the GVW, but the value of the truck—one might be two grand to insure, one might be three grand to insure, in terms of the actual value from a comp and collision standpoint. It really kind of depends on all the different rating factors, what state you’re in, and what kind of rigs you’re running that dictates and drives those differences.

Matt: I heard a lot of variation depends on where you live, and you know, I feel sorry for the people that are running a business in Florida.

Toby: Yeah, definitely. They feel sorry for themselves too, trust me. But you know, there’s a cost of living in paradise, right? I mean, that’s Florida. Well, I mean, I’m in Chicago; it’s like zero degrees right now, so I guess it—and there’s differences too. They’re working year-round, you know, there’s just a lot. You’ve got companies that are up in New York and Maine and the northern states, and it makes it a lot more difficult. They’re just not operating on the road anywhere near as much, so it really depends on all those different factors. But yeah, Florida is tough. Florida is a tough one.

Matt: Let’s say I’m a hauler, and I either am looking for insurance for the first time, or after hearing some of our conversation, I need to go make sure, sharpen the pencil, and see if I can get a better rate. What do haulers need to prepare to come talk to someone like you?

Toby: Yeah, you need a vehicle list, a driver’s list, you need your basic info like your EIN, sales, and payroll, understanding all of that. We actually have a questionnaire that we send out to every client. I can kind of share it with you here. Let me see if I can just pull it up. The questionnaire is good because it identifies all the basic characteristics that we’re going to need in order to run a quote for a client. We have it combined in just one single junk removal and dumpster rental questionnaire.

I’ll share that with you here. It just asks for your prior insurance information, your basic business profile. Are you an LLC or an S-corp or a C-corp or sole prop? Your EIN number, what percentage of the time are you doing junk removal or demolition or dumpster rental? That really matters from a general liability standpoint. You’ve got to have a good grasp and understanding and go to carriers that are comfortable with those multiple exposures. If you are doing more than just the dumpster rental, if you’re just doing dumpster rental 100%, we have a super awesome easy, relatively inexpensive option for you. The business profile—do you go to the transfer station or the dump? We’re asking all these detailed questions just because we know that when we go to the carrier site and we’re shopping this out with four or five different companies, these are all the detailed questions they’re asking. So we’re trying to get all this information upfront.

But that’s just kind of how we operate. Then you have your driver list, vehicle list, do you utilize telematics at all? Because if and when we can get a discount for you, we’re trying to negotiate that upfront. Then the workers’ comp info, and that’s pretty much it. So those are the kind of the details that we’re running through with a new prospect or a new client.

Matt: That’s a good list, and I think we will link in this video; we’ll make a checklist for haulers that are watching this so they can come prepared. How about, if there’s one thing that a hauler needs to know when they’re looking for insurance coverage, what’s the most important thing they should know?

Toby: I would say really making sure that you’re doing your due diligence to ensure that the vehicle and the business classifications are the correct classification. We’ve had some nightmare stories, like a client who was misclassified as a trucking risk. They were doing junk removal out in Hawaii, and they fell down some stairs with a fridge and dropped the fridge on top of a car, smashing it. The claim got denied on the commercial auto side because they were in the act of loading and unloading, which is supposed to be covered under your commercial auto, but they were misclassified as a business entity. So the commercial auto carrier denied the claim, and then the general liability carrier denied the claim because that was supposed to be covered under the commercial auto. Just making sure you’re not creating gaps in coverage and potential surprises for yourself down the line is absolutely critical.

I would also say the next thing is really protecting the integrity of a clean loss history. You can’t file claims at the beginning. If there’s a fender bender or a minor situation, like we had a client who backed into a gate, the video recording showed them backing into the gate, and to repair the gate was $500. The insurance company called the client and said, “Hey, we got this video of you backing into the gate. Would you like a copy of it? We can send it over. This client’s attempting to file a claim to get their gate fixed. Do you want us to go ahead and fix it?” The guy said, “Yeah, sure, no problem.” Didn’t call us, didn’t discuss it, pushed the claim, and his premium in Florida, ironically, which was $32,000, had a renewal premium of $64,000. So he went up 100%, and a lot of that had to do with a bad driver that was linked to that, and they got permanently attached to that driver’s profile. But that renewal was through the roof, and a huge part of that was preventable.

To file a claim for a $500 liability event, in my eyes, is just crazy. I think if and when there’s a scenario where you can work it out with a homeowner or property owner or whatever, or if it’s minor, maintaining and keeping a clean record over time is going to better position you to save money on this commercial insurance, which can be catastrophic with those types of increases to your overall operation. And that doesn’t follow you just for one year. That claim history really follows you for three to five years. A lot of insurance companies will look back five years now, and at a minimum, three, depending on how they’re pricing and what modeling they’re using. Two of the five carriers that we work with just run, just do it based off motor vehicle records. So, no accidents, no tickets, fighting those tickets when you get a speeding ticket or something like that, getting a lawyer to get those reduced or removed is 100% worth your time and effort. Those are impacting the premium significantly, especially with carriers that score or rate based off that motor vehicle record.

Matt: Got it. To piggyback off of that, what if you’re a hauler that does have several claims in that three to five-year period? How do you work with those folks that maybe have been denied insurance with others but come to you?

Toby: I would say the immediate action needs to be an implementation of best industry practices. You need to immediately implement a driver safety program, have some real call to action to create a plan that will help mitigate or prevent future losses, and then create a narrative that can be shared with an insurance underwriter for them to understand what got us into this position to begin with, what was the problem, where were things going wrong, and then what are we doing to get out of this scenario. Then being able for us as the broker to take that and pitch an underwriter: okay, yeah, they’ve had this problem, but they’ve taken these actions to correct them, and as a move forward, they’re going to be a better risk as a result of it. We’ve fired the bad driver, we’ve replaced the problem, we’ve eliminated the risk exposure creating the problem for the client or at least mitigated it in some way. That would be our approach to that scenario, and then just dealing with it on a one-by-one case basis.

Matt: I like that a lot; telling the story with your actions can, you know, that’s great advice. What about if I’m a hauler and I’m hearing this conversation today and I just went with the local insurance agent, and then I’m coming to you, what do you typically see wrong with the policy of haulers that did go the local agent route?

Toby: It’s wild. The biggest one is a misclassification of the actual business. Your local guy—I’ll give you a great example—is like Progressive’s site. Everybody has Progressive. The local guy is going to end up going to it, and you are more than likely going to end up with a Progressive quote. But here, let me show you just how these kinds of quotes start and these quoting platforms start. You can see I’m coming in here; I’m saying, “Hey, the policy’s going to start next week, whatever,” and then, “Do you have a DOT number?” This question right here, just right off the bat. If you have or are applying for a new DOT number within 60 days, that’s a 25 to 30% increase in the quote you’re going to get as a result of applying for a brand-new DOT number. The DOT filings can really make a big impact later down the road with how insurance companies view and classify and categorize your business. If and when you can avoid, obviously, DOT or you’re under DOT requirements, whether it’s state or federal, that is the best route to go. But there are a lot of times where you just can’t, where you’re crossing state lines or have a vehicle that requires DOT filings for whatever reason, and you do have to apply for that.

This is where everybody goes sideways, because if you’re typing in just the word “dumpster rental” and trying to find a business classification under this, as soon as you type in the word “trash” or “dumpster,” class codes come up that you should not be classed in. This is the biggest problem. When you type in “dumpster rental,” nothing comes up. The only thing that comes up is dump truck driver for a fee. Well, that’s not the correct classification. If you type in “dumpster,” nothing comes up. So they end up—the local broker, instead of picking up the phone, calling underwriting, and finding the correct classification, are typing in all these keywords that they think are going to be the right classification, but debris removal is a great example. Debris removal is for the junk removal guys. This is the classification they should be using, and these rates run 30, 40, 50% higher than the dump rental rates. So when you’re typing in debris removal and classifying under trash or debris removal, trash removal is the local valet trash guy that goes door to door. Say you typed in container hauling. This is like a shipper, shipping container hauler, not the correct classification.

So there are so many different points where this business classification—it’s different for each company, so knowing how to navigate this is very, very difficult. The other mistake that we see a lot of times is just the classification of the actual vehicles themselves. Is it a flatbed? Is it a step van? We’ll see roll-off dump trucks being classified as pickup trucks or step vans. It’s the lack of knowledge and understanding of which rates have the better rates and their inability to get this accurate. When it comes to the actual premium— the coverage, rather— the accuracy 100% matters. That’s the biggest thing we probably take over and fix—50 Progressive policies a year where we’re just having a client fill out an agent of record letter and appointing us as their agent. Then we go behind the scenes and fix all the issues that are going on. We see incorrect radiuses of operation. Most of these guys aren’t going over 30, 40, 50 miles away from their primary address. So that absolutely impacts the rate significantly.

If you have a 200 or 300-mile radius of operations, we’ve seen those policies where it’s mind-boggling as to why the agent or broker might have selected a larger radius of operations as opposed to the accurate one that the client is actually driving. For a lot of carriers, like Progressive, their stance is if 90% of your business is within this radius, then you qualify for that particular radius. But it’s different for each carrier, and really knowing how to go in and navigate this is a mess; it’s a nightmare, and it’s very challenging for a local agent who doesn’t know and understand this business. That’s where we see a lot of mistakes being made. So that’s a pretty good example.

Matt: That’s a really good example, and I think that just having the expertise of knowing what to pick, just picking the wrong thing could, like you said, cost you tens of thousands of dollars. That’s a big deal. Along the lines of that, if I’m a hauler coming to you today and we’re sitting down to have a conversation, how do I get the best rate?

Toby: It’s really going to boil down to your risk classification characteristics. One way that you can improve on those rates is through the use of telematics, a good driver screening program, making sure that your drivers are taking routine safety pre- and post-vehicle inspection reports, driver-facing and forward-facing cameras, those types of little things that add up at the end of the day to significant discounts. With Progressive specifically, they offer a program called Snapshot ProView. You get a guaranteed 5% discount for participating, up to 20%. They can’t take adverse action against you, they can’t raise your rates, they can’t cancel your insurance. It’s just knowing and understanding all the little details that go into each and every carrier and their quotes and then taking advantage of everything that you possibly can. If you can afford to pay in full, maybe instead of a 12-month policy, you go for a six-month policy and pay in full, and you save an extra 10 to 15% that way.

There are a lot of different nuances along the way that, if you just don’t know, you don’t know, so you’re not taking advantage of these potential discounts that are out there and available. That’s the thing we really try to take the time teaching and coaching and educating each client on—those little tiny nuances from each carrier. We’re going to run the quotes, we’re going to go to our—you know, we’ve got four or five options now almost in every state. In Florida, there’s only three. But we’ve got Acuity, we’ve got others, we’ve got a lot of carriers we partner with, and each one is different. Each one has different nuances, you know. Acuity requires three years in business; they want to see a relatively clean loss history. They’re going to classify things differently than Progressive will or some of the other carriers out there. It’s just figuring out and navigating once we run all those three or four or five quotes and come back to you and say, “Hey, here’s what we recommend, here’s our best option,” then we work with the individual to try to keep that quote down as much as possible.

Matt: That’s great. Do you have to be a certain size business to take advantage of working with a specialized broker like yourself?

Toby: No, I mean, I started this from zero. I made nothing for three years while my mother-in-law paid my groceries, and we fought for a lot. I mean, whether you’ve got a pickup truck and a trailer and you’re just getting started, we have a lot of clients that find us and come to us that are startups and they’re really needing help trying to navigate this space. We also have a lot of clients that are big franchises, and they’ve got a team of drivers and a fleet coordinator and 10, 15, 20 trucks. We work with those clients as well. But yeah, we’re in all 50 states; there’s nobody we can’t help out there. California is really tough; they passed a recent law that makes it difficult for the insurance companies at the landfills. So I only know of one or two options in California. Outside of California, the majority of the states we’re going to have a minimum of three carrier options and as many as five, six, depending on where the client’s at and how long they’ve been in business, if they have claim activity or not, all those kinds of details.

Matt: Are there preferred carriers for the dumpster industry?

Toby: Yeah, there definitely are. Those carriers are going to require three years in business, they’re going to want to see a clean loss history, and they’re going to offer the general liability, the commercial auto, the commercial umbrella, and sometimes even the workers’ comp all under one roof. They offer 12 equal installments, so there’s not this big coming-up of this huge down payment or fluctuation from a cash flow standpoint, which is really nice. And then two, they’ll tend to offer a lot more ancillary types of throw-in coverages that you’re not going to have available to you as easily with piecing it all together.

There definitely are. Obviously, you’ve got to be established; you’ve got to have a clean history and record, and be what I would consider a preferred risk to qualify for those preferred options. But when it’s a good fit, they’re going to be 10, 20, 30% lower from a rate standpoint, and the value is really there.

Matt: That’s great. Final question: if we had a crystal ball and we were to look into the future, what does insurance look like for the dumpster rental industry?

Toby: My opinion might be jaded because I think I’m optimistic in general, but from what I’ve seen, I started in 2013, in 2015 I wrote my first junk removal account, then for the last decade, we’ve worked on junk removal and dumpster rental. In the last five years, it’s all I work on. We’re running hundreds of clients all over the country over that time frame. We saw when we originally started, we had like seven, eight different companies we could quote with, Progressive was one of the last options we would go to, then we saw that list just slowly peel off and peel down. State Auto went away, Nationwide went away, Liberty Mutual shut it down, and that long laundry list crept down to like one or two companies.

For almost like a year, Progressive was the only one that would do it. Since then, in the last couple of years, I would say two or three, we’re starting to see more companies come out of the woodwork. We’re starting to see local regional carriers pop up in different parts around the country where they’re dipping their toe into the industry as a risk and starting to write some of it. So I’m optimistic that we’re going to continue to see more companies come into the industry and provide that competitive environment so that people don’t have to be handcuffed to these one or two insurance options that they have. I think we’re going to see more and more carriers and more competitive carriers over the course of the next couple of years, and that will allow people to not have to just renew up. Insurance companies are still going to take their 10% 20% increase, they’re still going to adjust rates based off the claim activity and what’s going on from a loss standpoint. None of that’s going to change, but it’s the ability for the marketplace to provide a competitive market where we can stay ahead of those increases as a result of moving you around to the most competitive option in your scenario. That’s what we do as a broker, that’s how we’re trying to stay ahead of that and manage it.

Matt: That’s great. Well, Toby, I just want to say thank you for being on this episode. It’s definitely chock-full of really good information, and I know this is the stuff that is a bit in the weeds that just, you know, if you’re a hauler, you don’t know this stuff. So thank you for helping our audience. I’m going to link Toby’s information from Wisdom Insurance if you’d like to get in touch with him, it’ll be attached to this video. But other than that, thank you so much, Toby.

Toby: Hey, thanks, Matt, so much for having me on. I really appreciate it, and I get it; everybody hates insurance. My goal isn’t to make them love it, I just want them to understand it so that they’re making the best decisions possible for their business, and they’re taking all the different insurance factors into consideration in order to help keep the premiums down over time. That’s my goal. I appreciate you, and thanks for having me on.

FAQ

What are the essential insurance coverages for haulers?

Haulers need general liability and commercial auto insurance. General liability covers third-party bodily injury and property damage, while commercial auto is crucial due to the high severity of claims involving loaded trucks.

How do insurance costs vary for dumpster haulers?

Insurance costs vary greatly by state and risk factors. In states like Florida, rates can be as high as $30,000+, while Midwest states might see rates of $4,000-$8,000 per truck.

How can haulers prepare to get a better insurance rate?

Haulers should prepare a vehicle list, driver’s list, and basic business info. They should also ensure correct business and vehicle classifications to avoid costly misclassification errors.

What are common mistakes made by local insurance agents?

Common mistakes include misclassifying the business type, such as incorrectly labeling dumpster rental services, which can significantly increase insurance costs.

How can haulers with a history of claims improve their situation?

Haulers should implement driver safety programs and create a narrative to explain past issues and corrective actions to insurance underwriters, helping to secure better future rates.