Iowa City insurance doesn't include landfill

Experts doubt city can claim damages

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The ongoing fire at the Iowa City Landfill, expected to cause $4 million to $6 million damage, does not appear to be covered under the city’s insurance policy, according to two insurance experts.

Shredded tires packed into the liner of a 14-acre landfill cell have been burning since May 26, creating a persistent plume that can be seen from Cedar Rapids. Since water can’t extinguish a rubber fire, the city is trying to limit damage and smother flames to reduce the smoke.

But the city’s problems may continue even after the fire fizzles

“My first instinct is that is not an insured property,” said Ty Leverty, an assistant University of Iowa business professor whose doctorate is in risk management and insurance.

Leverty and an insurance attorney reviewed Iowa City’s property insurance policy and concluded that because the landfill itself is not listed as an asset, the insurance company isn’t likely to cover damage caused by the fire.

This could put Iowa City taxpayers on the hook for millions of dollars’ worth of repairs.

“Landfills are expensive,” said Jeremy O’Brien, director of applied research for the Solid Waste Association of North America. “More expensive than they used to be because of the environmental protection we’ve required to be put in place.”

O’Brien estimates the cost of building a new landfill at $200,000 to $400,000 per acre.

The fire, which officials think may have ignited after someone dropped off a load of hot coals, is contained on 7.5 acres of a landfill cell opened last fall. The cell cost the city $7.5 million that included the land, excavation and liner system, said Iowa City City Manager Tom Markus. Landfill liners must be impermeable so water that passes through garbage doesn’t contaminate groundwater.

Cleanup costs won’t be known until the fire is out, but officials have estimated $4 million to $6 million for environmental cleanup, liner replacement and possibly excavation of an underlying clay layer that may be polluted.

The actual landfill — as opposed to several buildings at the landfill site — is not mentioned anywhere in Iowa City’s property insurance policy through the Travelers Insurance Companies of Hartford, Conn. The Gazette obtained a copy of the policy from the city and asked several insurance experts to review 90 pages of documents.

The policy includes a list of about 250 city assets — everything from the Iowa City Public Library and water treatment plant to park shelters, emergency sirens and the carousel at City Park — and a monetary value for each.

The landfill cells are not listed.

“It’s not a named property,” Leverty said. “If they (Travelers) weren’t aware of it, they didn’t price it and won’t provide coverage for it.”

Richard Garberson, an insurance law specialist with the Cedar Rapids law firm of Shuttleworth & Ingersoll, agrees.

“It looks to me there isn’t much coverage here,” Garberson said.

The city’s best hope for recouping some of the damage costs is an insurance clause that provides $250,000 for pollution cleanup, Garberson said.

Landfill fires aren’t rare, but a fire fueled by shredded tires used as part of the liner system is unusual, said Tony Sperling, of Landfill Fire Control Inc., in North Vancouver, Canada. He doesn’t know whether most communities have insurance to cover these types of fires, but said a recent blaze at a landfill near Calgary, Canada was covered by insurance.

The Metro Waste Authority, which operates a Des Moines-area landfill that is the largest in Iowa, purchases insurance on landfill liners when a cell is new and not covered with trash, spokeswoman Reo Menning said.

“Once the liner is covered with garbage, we don’t feel like there is a risk and we drop the policy,” Menning said.

The Iowa City Landfill fire might send cities running to review their insurance policies, Garberson said. “Everybody has 20/20 hindsight,” he said. “How would you ever figure out damages to a dump?”

Iowa City is working with insurance broker AW Welt Ambriscoe, which has notified Travelers of a pending claim, Markus said. Once the fire is out, Travelers will send an investigator to price the damage. The city is also reviewing its general liability coverage, which may come into play if there are environmental impacts of the fire.

The city manager since 2010 did not want to talk about what the city will do if insurance doesn’t pay for the damage.

“I’ll reserve comment on that until we know where we stand with the insurance company,” he said.

Iowa City Insurance Policy

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