General Liability Class Code 16009, is applicable to second hand dealers and distributors in the recycling industry, who handle industrial and consumer material such as paper, paper products, rag and rubber stock, meant to be reused, repurposed or recycled.
Recycling is great for the environment and making a profit from the sale of used products and scrap makes good business sense, especially when consumer demand for green products is on the rise.
Re-sale and second-hand dealers face unique risks, and appropriate insurance coverage is necessary to protect the firm’s business interests, its employees as well as its customers.
Liability exposures increase when:
- Locations, sites or holding lots are open to the general public
- Second hand goods are found to be defective
This policy specifically targets the General Liability risks and exposures that these dealers and distributors face, and offers protection when claims and lawsuits arise from:
- Customer Injury
- Customer Property damage
- Product Liability /Damage caused by defective products
What is Paper, Rag or Rubber Stock Dealers & Distributors- Secondhand (Class Code: 16009)?
Class Code 16009 is a general liability classification for businesses that buy, sell, process, or distribute used paper, rags, rubber stock and similar recyclable materials. Coverage focuses on third-party liability exposures such as bodily injury, property damage, and product liability arising from defective second‑hand items. Underwriting factors include the scope of operations, transportation of materials, and on‑site public access.
Who needs it
Small storefront dealers, scrap yards, mobile collectors, and distributors that resell or repurpose consumer or industrial materials typically seek this coverage. Operators with public-facing yards or those that transport goods regularly face higher exposure due to operational hazards and transportation risks. Businesses that also handle equipment or store inventory may combine this with property coverage and equipment coverage.
What it typically covers
Core protections usually include commercial liability and product liability for harm caused by sold or distributed goods, legal defense costs, and medical payments for customer injuries. Coverage can be tailored to include premises liability for open lots, and limited contingent coverages related to transportation or storage. For similar recycling niches see Recycling Paper Insurance and Recycling Rubber Insurance for operation-specific guidance.
Common exclusions or limitations
- Intentional acts and willful misconduct
- Pollution or environmental cleanup (often excluded or subject to endorsement)
- Damage to goods in the insured’s care, custody, or control unless specifically endorsed
- Auto liabilities unless a commercial auto policy is in place
Factors that influence cost
Insurance cost depends on sales volume, number of locations, whether the site is open to the public, employee count, loss history, and underwriting factors such as safety programs and storage practices. Adding endorsements for product liability or broader property coverage will affect premiums. Operators who also function as junk dealers can compare options like Junk Dealers Insurance if their activities overlap.
Proof of insurance & compliance
Many municipalities and buyers require certificates of insurance showing limits and any required additional insured endorsements. Maintain records of policies, safety training, and equipment maintenance to support underwriting and compliance requests.
How to get a quote
Gather basic business details — operations, sales, location access, vehicle use, and loss history — to help underwriters assess exposure. Discuss coverage options and limits with your broker, and if you need a starting point, talk to your agent for specific recommendations and comparison quotes.
Frequently Asked Questions
Do I need separate coverage for transportation?
If you regularly transport materials, a commercial auto policy is typically required in addition to general liability to cover vehicle-related liabilities.
Will product liability cover defects in used items?
Product liability can respond to claims alleging injury or damage caused by sold items, but coverage details and limits depend on the policy language and any exclusions for used goods.
Is pollution from stored scrap covered?
Pollution and environmental cleanup are often excluded from standard general liability and may require a specialized pollution liability endorsement or separate policy.
Still have questions? Talk to a local insurance expert.