Scrap Metal & Recycler Insurance

Protecting scrap metal dealers, metal recyclers, and processing yards

You buy, sort, process, and sell ferrous and non-ferrous metal — collection, shredding, baling, torch-cutting, and resale to mills. Your defining feature is large accumulations of combustible and mixed material processed with heavy machinery on a yard exposed to fire, pollution, and equipment failure, plus a cash-buying operation that attracts theft and fraud. That fire-plus-environmental-plus-heavy-equipment profile is what defines the class and makes it a hard-market risk. You need coverage built around fire and equipment exposure, pollution and environmental liability, and the heavy machinery, crime, and property of a scrap yard. This is a corner of environmental and property insurance built for how scrap operations actually take loss.

Done right, coverage protects your operation, your equipment, and the surrounding environment.

Scrap metal recyclers buy, sort, process, and sell ferrous and non-ferrous metal — collection, shredding, baling, torch-cutting, and resale to mills. The defining feature is large accumulations of combustible and mixed material processed with heavy machinery on a yard exposed to fire, pollution, and equipment failure, plus a cash-buying operation that attracts theft and fraud. That fire-plus-environmental-plus-heavy-equipment profile is what defines the class and makes it a hard-market risk. A scrap recycler needs coverage built around fire and equipment exposure, pollution and environmental liability, and the heavy machinery, crime, and property of a scrap yard. This is a corner of environmental and property insurance built for how scrap operations actually take loss.

Properly structured coverage protects the operation, its equipment, and the surrounding environment.

The Scrap Recycler's Signature Exposures

Your defining exposure is fire: shredders and torch-cutting create ignition, mixed scrap hides fuel and — increasingly — lithium-ion batteries and pressurized vessels that explode and ignite, making yard and shredder fires frequent and severe. Pollution and environmental liability is close behind: soil and groundwater contamination from fluids, metals, and runoff, and stormwater compliance on an open yard. Radioactive sources hidden in loads, such as industrial gauges or old devices, add a quieter exposure: a contaminated load can be rejected by the mill, and the cleanup and downtime land on you. Your heavy mobile equipment (shredders, balers, cranes, magnets, loaders) is high-value and breakdown-prone, torch and machinery work injures workers, and a cash-buying model brings theft, fraud, and stolen-material exposure. Premises and auto for collection round it out.

Key Risks in Scrap Metal Operations

You face exposure related to:

• A shredder or yard fire, including lithium-battery or pressurized-vessel ignition
• Soil, groundwater, or stormwater contamination
• Equipment breakdown of a shredder, baler, or crane
• A worker injured by machinery, torch-cutting, or material handling
• Theft of metal, cash, or equipment, or purchase of stolen material
• A fire or pollution event affecting neighboring property
• A collection-truck or loader accident

Piles of metal, heavy shredders, and fire waiting to happen is what most defines the class.

Core Coverages for Scrap Metal Recyclers

A properly built scrap program typically includes:

Commercial Property & Fire (Yard, Stock, Buildings) — Covers the facility, stock, and equipment, with fire the central peril.

Pollution / Environmental Liability — Covers soil, groundwater, stormwater, and contamination exposure from the operation.

Equipment Breakdown & Mobile Equipment / Inland Marine — Cover shredders, balers, cranes, magnets, and loaders — failure and physical damage.

Commercial General Liability — Covers third-party injury and property damage, including fire spread to neighbors.

Commercial Crime & Cash Coverage — Cover theft, employee dishonesty, and cash-buying exposure.

Commercial Auto (Collection Fleet) — Covers roll-off and collection trucks.

Workers' Comp, Business Income & Umbrella — Cover a high-hazard workforce, lost income after a fire, and higher limits.

What's Commonly Overlooked

Scrap programs are most often weakened by:

• Fire protection and property valuation that don't reflect shredder and lithium-battery fire risk
• Pollution/environmental coverage omitted or too narrow for an open yard
• Mobile equipment and equipment breakdown underinsured
• Cash and stolen-material exposure not addressed by crime coverage
• Business-income limits short for a shredder or facility rebuild

A battery that rides in with a load and ignites inside the shredder can take the machine, the building, and months of income with it. The gap that hurts most is a property valuation and business-income limit written for an ordinary yard rather than a shredder line, because a shredder fire both burns far more than the policy values and runs for months longer than the income limit allows.

Real-World Claim Examples

• A lithium battery hidden in a load ignites inside the shredder and the plant burns, and the claim is reduced because property values and fire protection never reflected the cost of rebuilding a shredder line
• Stormwater carries heavy metals off an open yard into a neighboring creek, and general liability excludes it, so the recycler needs a pollution policy that covers gradual releases from the yard
• A yard crane drops a bundle of scrap onto a customer's truck, and general liability pays the damage because the crane is mobile equipment, not an auto under the commercial auto policy
• A thief steals a trailer load of copper from the yard, and the property policy pays only a small theft sublimit for metals, leaving most of the load's value uninsured
• A fire shuts the yard for six months and business income pays only to a limit that never considered a long rebuild of the processing line, leaving fixed costs unpaid
• A worker is crushed by a falling load and workers' compensation pays, but the later lawsuit over missing guards on the equipment raises an employer's-liability claim the primary limit may not cover

A single claim like these can be significant, and the fire and environmental claims are the most distinctive.

Regulatory & Licensing Context

Scrap recycling is regulated environmentally (EPA and state hazardous-waste, stormwater/SWPPP, and air rules; RCRA where applicable) and through state scrap-metal dealer laws requiring seller ID, transaction records, and holding periods to deter theft of stolen metal. OSHA governs machinery, torch-cutting, and material-handling safety, DOT rules apply to collection fleets, and local zoning and fire codes govern the yard. Fire-code and NFPA guidance increasingly addresses lithium-battery and combustible-material storage.

Why Proper Placement Matters

Underwriters weigh your operations (shredding, torch-cutting, ferrous vs non-ferrous), fire protection and battery/contaminant controls, environmental history and stormwater compliance, equipment values, cash-buying controls, and loss history. Because fire and environmental severity make it a hard class, scrap recyclers are placed through environmental and specialty-property markets that underwrite the yard-fire and pollution exposure with care. Hardening fire controls, securing real pollution coverage, and insuring your mobile equipment to value come first.

Our Approach

At Cory Washington & Co., we insure scrap metal recyclers around the fire and the ground — placing property and fire coverage that reflects shredder and lithium-battery risk, pollution/environmental liability for the yard, and equipment-breakdown and mobile-equipment coverage for your machinery, plus crime, fleet, and business income. We also insure related businesses, including waste hauling and recycling operations, auto salvage and dismantlers, junk removal companies, and manufacturers.

Piles of metal, heavy shredders, and fire waiting to happen make a scrap recycler a specialized risk, so we build the coverage around it, fire, environmental, and equipment included.

All insurance descriptions on this website are provided by Cory Washington & Co. LLC strictly for general informational purposes. They are not intended to be, and should not be relied upon as, legal, financial, or insurance advice. The information presented is general in nature and does not guarantee the availability, terms, conditions, or scope of any insurance coverage. Actual coverage is determined solely by the specific policy language issued by the insurer and remains subject to underwriting approval. Nothing on this website creates or implies an agent-client relationship, binds coverage, or alters any existing policy. Cory Washington & Co. LLC expressly disclaims any liability for actions taken, or not taken, based on the content provided here. For advice regarding your particular situation, please consult directly with a licensed insurance professional at Cory Washington & Co. LLC or another qualified insurance professional, and always review your policy documents in full.

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