Insights on Insurance:Think Metal Theft Can't Happen To You?

One of the fastest growing crimes in the United States is metal theft. Copper, aluminum, nickel, stainless steel and scrap iron have become the desired target of thieves looking to make a quick buck. An increase in demand for these metals from Asian markets such as China and India has created a thriving international scrap trade, resulting in much higher prices.

Of particular concern is copper, now selling for approximately $4,400 a ton, up 50% since the beginning of 2009. Copper theft often includes gutters, flashings, downspouts, water lines and electrical wiring that can be quickly stripped from vacant buildings, industrial facilities, commercial buildings and construction sites. Air conditioning units are particularly attractive, and are often tampered with or stolen for their copper coils and pipes that connect to HVAC systems. The metal is then sold to recycling companies and scrap yards for a huge profit.

While the economy struggles, metal theft is expected to increase as people become desperate for any kind of income. The cost of metal theft to business owners nationwide is staggering. The U.S. Department of Energy estimates that losses from copper theft alone cost the U.S. economy about $1 billion a year.

Having adequate property insurance is critical if your business uses any of the higher risk metals, like copper or aluminum.  The theft of $100 worth of copper might cost your business $10,000 or more in repairs, lost productivity and profits over and above the replacement cost of the metal. For businesses that run the risk of metal theft from a construction site, or transport metal or items containing metal to a job site or customer, an Inland Marine policy is essential for additional protection.  If you own a vacant home, it is likely that a theft of copper or metals will not be covered by your insurance policy.

To combat the metal theft problem, at least 28 states and scores of municipalities around the country have passed laws tightening the restrictions on scrap dealers. In some instances, purchases of scrap metal are required to be held in reserve for a week or more before being resold in case it has been stolen. Some states require dealers to record the seller’s name, address and driver’s license. Several initiatives for legislation are now being deliberated in the Ohio House, include photographs and/or thumbprints of sellers, electronic sales reporting systems, and requiring that the proceeds be mailed only to the seller’s address.

David Carlson is the president of the Euclid Rotary Club; treasurer of the Euclid Chamber of Commerce; president of the Euclid Public Library Board; owner, Nationwide Insurance Agency.