Construction Insurance Bulletin

Your construction business requires a reliable vehicle. This spring, perform several maintenance procedures on your truck. Routine maintenance equips your truck to operate properly all season and prolongs the life of your vehicle.

Inflate Tires

Your vehicle’s tires, including the spare, must be properly inflated and have adequate tread. Check for wear, buckles or bulges, too, since a compromised tire could easily pop as you drive over rough ground on the way to job sites.

Fill Fluids

Change the oil to ensure your vehicle operates at peak performance this year. Replace or refill the transmission, brake, power steering, and windshield washer fluids also, and purchase extra fluids in case you need to top them off during the year.

Tune the Engine

Inspect the engine, including the battery, powertrain control, and ignition. They must be in good working order so that your vehicle operates efficiently.

Replace Belts and Hoses

Your vehicle’s belts and hoses affect various engine parts that are essential for operation. Inspect the belts, hoses and clamps for wear, and replace them if necessary.

Boost the Brakes

Inspect the brake system and replace the linings, rotors or drums if they’re damaged or worn. Remember to also change the brake fluid.

Inspect the Suspension

Your vehicle’s shocks and struts improve your ride, so inspect the suspension. Replace noticeably worn parts.

Improve the Lights

Improve visibility when you buff scratches from the headlights and taillights. Replace any broken lights or fuses also.

Charge the Air Conditioner

Charge the A/C so your vehicle remains cool as you drive to and from job sites. If you notice leaks or damage, schedule a repair.

Replace Wiper Blades

Replace worn, cracked or broken wiper blades. They improve your visibility during all weather conditions.

Detail the Interior and Exterior

Wash the entire exterior of your vehicle, including the undercarriage, to remove winter ice and grime. You can also wax your truck to protect its finish, and touch up any scratches that could turn into rust or affect your brand image. Clean trash out of the interior also and wipe the surfaces as you create a tidy vehicle.

Stock Supplies

Check your tool box and first aid kit, and replace any broken or missing items. Additionally, stock invoices, mileage reports and business cards so you’re prepared to manage and share your business.

Purchase Adequate Insurance

Double check that your commercial auto insurance policy includes adequate coverage. It should include liability, medical, uninsured and underinsured, comprehensive, and collision coverage with adequate limits to protect your assets.

In addition to these spring maintenance tips, schedule regular maintenance throughout the summer season. Proper care protects your truck and your construction business all summer.

Unpaid invoices wreak havoc with your construction business. When a client doesn’t pay, you can take these steps.

Remain in Contact

If you don’t receive payment by the due date on the invoice, contact your client and ask if the work was done satisfactorily and when payment will be made. Sometimes, clients face emergencies or other challenges that prevent them from paying the full amount owed. In this case, arrange a payment plan or other alternative. However, if the client does not respond, contact them every day by phone, email or text until you receive payment.

Document your Case

Keep excellent records in case you need to contact collections or take the client to court. Your documentation should include your signed contract, expense receipts, invoices, and verbal and written communications with the client.

Hire a Collections Agency

Instead of calling the client every day, hire a collections agency to do this task for you. They typically charge a 30 percent fee to recover unpaid funds.

Send a Letter from your Lawyer

A simple letter from your lawyer with a threat to send the invoice to collections or take the client to court may prompt immediate payment.

Go to Court

You may be able to file a claim in small-claims court if your client owes between $2,000 and $7,500 and your state’s laws support this option. For higher amounts, consider further legal action. Remember, though, to weigh the legal fees against your unpaid invoice to ensure you don’t lose money going to court.

Remain Civil

Never complain about the client to others or on social media. Maintain a professional attitude as you protect your reputation and business.

Pursue Alternative Recovery Avenues

Even if the client doesn’t pay, you may be able to file an insurance claim to recover the unpaid invoice. Alternatively, ask your accountant if you can write off the bad debt on your next tax return.

Change Future Billing Practices

Use this hard lesson to change your future billing practices.

1. Write an accurate proposal for each job. It outlines the exact work you will do, project timeline and payment expectations.
2. Give the client time to examine the proposal and ask questions.
3. Consider a staggered payment plan where you receive part of the payment upfront with the remainder due in installments.
4. Require payment of each installment before you start the next part of the project.
5. Sign a contract that clearly states the specific work you will do and payment due dates, late fees and the steps you will take to recover payment.

An unpaid invoice affects your construction business, so take these steps to get the payment you’re due.

As a general contractor or subcontractor, you prioritize safety on every job site. A site-specific safety plan (SSSP) is one document you must have to fulfill OSHA requirements and establish guidelines that protect everyone who works on the project.

Consider these tips for writing a thorough site-specific safety plan.

Write a Unique SSSP for Each Job

Each construction project you perform will require a unique SSSP, so don’t recycle SSSPs from past jobs. Write a new SSSP that addresses specific challenges for each project.

Cover All Your Bases

In general, an SSSP will be thorough for each project and cover a variety of areas, including:

• Job hazard analysis
• Safety chain of command and related roles and responsibilities
• Methods for managing tiered subcontractors
• Hazard communications
• Training qualifications
• Daily safety huddles
• Methods of work procedure
• Disciplinary action plan
• Incident response plan
• Crisis plan
• Housekeeping plan
• Fall protection plan
• Equipment crane plan

Address each of these areas, if applicable, in your SSSP.

Assign Roles and Responsibilities

Whether you’re the GM or a subcontract on the job site, include the roles and responsibilities in your SSSP. This section identifies and names the project manager, emergency contact person and competent person and the responsibilities these key personnel will take for the major safety components on the job site each day.

Create a Thorough Incident Response Plan

Despite your best efforts, accidents can happen on any job site. The incident response plan outlines the steps your contractors should take if someone suffers an injury, property gets damaged or equipment breaks. Most incident response plans require investigation forms, witness statements, at least one post-incident meeting and drug and alcohol testing for involved employees.

Specify Required Training

Your SSSP will include documents that prove that each worker on the job site has professional training for their job. You may require certification proof or another document as you ensure the competence of each worker to perform his or her job properly and safely.

Update the Job Hazard Analysis as Needed

The job hazard analysis (JHA) should include the project’s tasks, hazards and safety controls. It must be detailed and cover all aspects of the project from start to finish. You will update the JHA as your project progresses, and the daily huddles can supplement the JHA since you can list the day’s hazards and controls on the daily report form.

On your construction site, you face multiple hazards each day. Write a site-specific safety plan that addresses hazards and outlines safety procedures. For more information on what to include in a SSSP and how to ensure safety, talk to your insurance agent.

Winter weather still rages strong in many parts of the United States in February, and you must continue to remain vigilant as you promote safety on the construction site.

Whether you’re a veteran construction worker or new to the industry, follow these winter safety tips.

Track the Weather Forecast

Know the weather forecast so you can decide if it’s safe to work outdoors. Check your local weather center and the National Weather Service for accurate temperature and storm information and predictions.

Wear the Right Gear

Multiple clothing layers can be bulky, yet the right gear also keeps you warm, dry and safe as it protects you from hypothermia or frostbite. Start by wearing layers of clothing that manage moisture, protect you from the cold and shield you from the elements. Then add heavy gloves, a hat and sturdy nonslip shoes for added safety.

Check the Work Site

Every morning, spend a few minutes evaluating the work site for hazards. You may need to remove accumulated ice and snow, trim broken tree branches or set up portable heaters. Remember to spread salt, cat litter or sand on the exposed surfaces, too, as you create a safe job site.

Secure a Warm Break Area

Plan to take your breaks in a warm area as you limit exposure and stay safe. Set up a heated tent or trailer or arrange for another warm indoor area near the job site where you can get warm during your work breaks.

Limit Outdoor Exposure

You may be required to work outdoors when temperatures plummet, winds blow and snow falls, but certain conditions make outdoor work dangerous. Try to work indoors during the worst winter weather, work during the warm parts of the day, break large jobs into small tasks or schedule frequent breaks in warm indoor locations so you can stay safe.

Skip the Coffee

Coffee will keep your hands warm, but it also contains caffeine. This chemical can make your heart rate rise, which gives you a false feeling of warmth and can cause you to take unnecessary risks. Drink water instead of coffee as you stay hydrated.

Know the Signs of Hypothermia and Frostbite

You and all your co-workers should know the signs and symptoms of hypothermia and frostbite, two dangers of outdoor exposure, and the procedure getting medical attention quickly if necessary. Those signs include:

• Prickling skin
• Numbness
• Changes in skin color
• Clumsiness
• Shivering
• Slurred speech
• Weak pulse
• Drowsiness
• Confusion

This winter, take several steps to maintain safety on the construction job site. You should also talk to your insurance agent. Update your liability coverage and learn additional tips that keep you safe all winter.

The construction industry relies on independent contractors who perform specialized services like plumbing, painting and drywall installation. To prioritize safety on the job site and ensure quality work, consider implementing a drug testing policy for the independent contractors you hire.

Benefits of Drug Testing

Regular drug testing promotes safety on the job site. Additionally, it improves productivity and quality of work, lowers absenteeism and boosts morale.

Your company also builds your reputation when you implement drug testing for your independent contractors. In certain cases, you can lose contracts and be blacklisted from jobs if your independent contractors work while they’re visibly high or otherwise produce shoddy work because of drug use. Protect your business and reputation when you implement a drug testing policy.

Prepare a Contract

When you work with an independent contractor, you both typically sign a contract that outlines the exact project, timeline and pay rate. Include your drug testing policy in this contract.

Consult your specific state’s laws regarding drug testing as you prepare the contract. Check with your construction insurance agent for details on any drug testing protocols they require, too.

Typically, you may perform a drug test on every new independent contractor and after an accident when you suspect drug use was involved. You may also choose to perform random drug testing if you have reasonable suspicion of drug use, which includes:

• Direct observation of drug use or associated symptoms such as uncoordinated movements, slurred speech or erratic behavior.
• Reports from reliable sources that the independent contractor is using drugs.
• Evidence of tampering with drug test results.

The independent contractors who apply to work for you must agree to your drug testing policy. You are then responsible to enforce it equally for all employees.

Select a Drug Testing Company

Most drug testing occurs in an independent third-party facility that’s certified by the Drug and Alcohol Testing Industry Association (DATIA). You will schedule the appointment, and the independent contractor is responsible to drive to the facility where he or she will provide a urine sample. You receive test results in several hours or several days depending on the facility and results.

Address the Test Results

If the independent contractor tests positive for drugs or refuses to take the test, you must perform disciplinary action, which can include dismissal. Exceptions include a positive test for prescribed medications that the employee reported and takes responsibly. Outline your dismissal procedure in the employment contract to reduce surprises and liability for improper discipline.

As a construction professional, you must maintain safety and quality on the job site. Drug testing can help, so create a specific drug testing policy for your independent contractors.

A project architect or engineer typically carries responsibility for the design of a house, high rise or other structure. However, contractors now also play a role in project design and may be liable if something goes wrong. Consider the benefits of purchasing professional liability insurance and the process for gaining this valuable coverage for your contractor business.

What is Professional Liability Insurance?

Contractors like you already purchase general liability insurance. It protects you if the actions of you or an employee cause bodily injury or property damage on the job. Professional liability insurance adds another layer of protection. It covers negligence and design errors that may occur as you take on a variety of job site responsibilities.

Contractor’s Professional Risk Exposure

In today’s construction projects, contractors may do more than build the design that’s created by an architect or engineer. For example, you may be responsible for hiring a design firm, designing certain aspects of the project or altering a current design to incorporate more functional features. In addition to the design responsibilities, you may assume professional liability risks because you hire independent contractors, estimate costs for a project and schedule projects.

Why Purchase Professional Liability Insurance

The numerous tasks you perform as a contractor carry liability risks, and you face a variety of situations for which you are responsible.

• Design errors and omissions
• Time delays
• Budget overruns
• Required rework
• Third-party bodily injury
• Property damage
• Pollution damage

To cover these liabilities, you could pay the associated costs out of pocket or purchase professional liability insurance. This policy can take care of your financial responsibility, offer a layer of protection and reduce risks that jeopardize your company now and into the future.

How to Purchase Professional Liability Insurance

Contractors who need professional liability insurance may purchase it in several ways.

• Add an endorsement to an existing general liability or umbrella policy.
• Purchase a stand-alone policy.
• Select a separate project policy.

To decide which option is right for your company, consider the types of projects you do, your financial status and your budget. Individual project contracts may also include details about the type of liability coverage you must purchase. Talk to your insurance agent, too, to verify the availability of the coverage you need and want.

Based on your specific business, duties and job responsibilities, you may need to purchase professional liability insurance for a specific project or as a permanent addition to your contractor company. Talk to your insurance agent about your needs as you ensure you have the right protection for your business.

New Year’s Resolutions for Risk Managers

Whether your business has downsized or grown over the past few years, the waters seem a bit calmer now; and it’s a good time to overhaul your risk management program.

Resolve to address the trends in liability claims:

•             Cyber liability is a rapidly growing source of claims.  These claims tend to be costly in terms of reputation as well as expensive to mitigate.  Spend some money avoiding these risks, particularly when you are on shared access on-site.
•             Building Materials and supplies.  The insurance industry is scared of finding the next asbestos claim.  Do not use known toxic products in construction.  Keep in mind environmental issues are an increasing source of claims.  Indoor air quality is a near-future catch-all vector for asthma, CPOD, and other respiration conditions lawsuits.  The formaldehyde sheet rock incident was quickly remediated; but use that as a lesson for mastic selection or supply sourcing.
•             Keep your work space dry.  Mold and mildew flourish at 15-18% moisture content.  Before buttoning up closed spaces, take time with a moisture meter and record the results.  This step is vitally important for new or replacement roofs.  Dry these areas thoroughly until moisture content is below 15%.
•             Employment practices.  With a greater number of women entering and thriving in the construction industry, resolve to treat these valuable employees on equal terms with their male associates.  And educate all employees about sexual harassment and bullying.  Zero tolerance is your best written policy for this liability.
•             The officers and directors of every public company are under attack from customers, employees, and regulators.  Review your D&O coverage thoroughly.

Resolve to be more proactive than in the past.  Check behind every delegated task.  Personally walk sites, shops, offices, and site trailers to assure fire and life safety equipment is available and properly functioning.  Verify OSHA logs and internal safety data is up-to-date and communicated properly.

Resolve to review your risk management program thoroughly and begin shopping your insurance coverage, including new insurance carriers early, at least 120 days before your preferred expiration date.  Get in sync with your agent or new agent on this matter.

The turmoil of the construction industry has sent shockwaves through the insurance industry as well.  Calmer times are ahead.  Just be sure your one of the first ones settled.

Construction is the industry with the most injuries and fatalities in the United States. To make the industry safer and cut the number of employee injuries and fatalities, the federal government, state governments and even local government passed laws mandating safety committees, their make-up, and even meeting content. Nevertheless, there are many reasons why construction companies should embrace safety committees.

How Safety Committees Benefit Construction Companies

Talk to a safety professional and you soon realize that the most effective committees are committees that involve members from every level of the company or a company facility or job site.

When company executives and laborers and everyone between them participate, safety committees help prevent unsafe work practices and environments. Committees also cut employee exposure work-related injuries and illnesses. These accomplishments spur other employees to get involved in the company’s workplace injury and illness programs.

An active safety committee shows employees that the company care about employee health and safety; itself a motivator that improves productivity.

Another bottom line enhancer is that a strong safety record cuts workman’s compensation claims and in turn, reduces workman’s comp premiums.

When safety records are impressive, construction job sites are safer and accidents to visitors and passersby go down. In turn, premiums for commercial general contractor policies may plateau or even go down.

Moreover, a safe workplace record impresses project owners and makes a construction company a more attractive candidate for selection.

Measuring Safety Committee Value

Many companies mistakenly undervalue the value of environmental health and safety programs (EHS). Companies usually do not measure EHS correctly if at all. But, by using standard tools in the toolbox of business managers and in a way that executives understand company financial statements. Results of EHS can integrate and display as part of the overall EHS business strategy. Some popular tools used by EHS professionals to measure the return on investment (ROI) of EHS include:

• Six Sigma
• EMS/ISO 1400
• Baldwin Measurement

OSHA offers a tool called Safety Pays that helps figure out the ROI for a company’s safety program.

No matter what tool a company uses, construction companies that are committed to safety almost always sees a higher ROI for its efforts when compared to companies for which the safety committee is simply a means for compliance.

Turbulence in the contracting business, probably at an all-time high.  Businesses are shrinking or expanding constantly.  As a risk manager, you must embrace reality and try to resolve the current state of affairs.

Start your renewal process today by comparing your policy estimated payrolls with the summary W-2 sheet produced by your accounting department (must be completed by February 1).

Review the 1099s and check these recipients against your files to assure certificate compliance and proper risk transfer techniques.

After reassessing your payroll exposures for the coming year, estimate your current premium.  Talk to your agent about optional markets at that premium level, insurance companies have different appetites for different size risks.  Find several appropriate insurers.

Many insurers now demand loss control inspections prior to commitment to offering any quote.  Get your reports in order.  Make sure loss control measures are in place and working.  Order loss runs from your current carrier to have on hand.

Most important: leave enough lead time for the inspections to occur.  At least ninety days, so new insurers can inspect your operations.

The insurance markets retool every few years and create new identities, new brands within the industry.  Currently, insurance companies are deciding what size accounts they will seek, single lines like workers’ compensation or general liability, or supporting lines requirements: like workers’ compensation, general liability or automobile liability.  Ask your agent what the current view is among their companies.

The key to having choices is starting early now.  Don’t leave yourself at the mercy of the renewal carrier.

While your reassessing your policies, rethink your program as well.  Your program consists of the risk management decisions that have subtle but important impacts on your insurance costs.  For example: what is your best expiration date?  In the construction industry, January first or April first are popular choices in a well-managed risk management program.

One secret within the insurance industry: rates tend to change on calendar quarters.  If rates are increasing on April first, you can always renew on March thirty-first if you have enough lead time.  But you need to know in advance and have friendly underwriters, and proactive agents.

Calendar quarters allow for government filings to be used as a basis for the insurance auditors, and audits go smoother.  Corporate financial years can be good, especially if they fall on calendar quarters.  Decide your best expiration date (and you want all liability lines to share that date)and begin 120 days in advance gathering quote information and loss data.  Shop early.

By definition, you operate away from your premises. Let’s say that a hailstorm damages two of your bulldozers on a job site – or a carrier transporting one of your backhoes is hijacked at a rest stop. Did you know that Property insurance will not reimburse you for these losses!

To cover loss or damage to construction equipment when it’s on the job or in transit, you need an Equipment Floater policy. This type of coverage goes back as far as the 17th century when Lloyd’s of London extended insurance on ship cargos beyond ocean voyages to their final destinations. Because this property was essentially “floating,” these policies came to be known as Floaters.

Equipment Floaters for construction businesses cover a variety of mobile equipment – from bulldozers and backhoes to forklifts, bobcats, and cranes – when they’re away from your premises. (Please note that coverage does not extend to cars, trucks, and vans, for which you should have, Commercial Vehicle insurance).

You can buy an Equipment Floater policy on either a “named peril” basis – which lists the specific risks covered – or as an “all risk” policy – that includes losses from all causes not specifically listed. In most cases, the policy will not pay for losses or damage from such reasonably foreseeable causes as mechanical breakdown, wear and tear, and improper loading or use of the equipment.

As Construction Insurance professionals, we’d be happy to help you choose an Equipment Floater that’s best for you. Feel free to get in touch with us at any time.