Construction Insurance Bulletin

Safety should be your most important employee benefit. Everyone goes home healthy. So, what tools can you use to create a safer work environment?

As a contractor, you’re required to keep injury logs for the Occupational Safety and Health Administration (OSHA). Don’t do this just for them – use this tool.

Record every injury, no matter how minor. Any time the first aid kit is used, jot down why, what kind of injury, and who.

Insurance companies learned long ago that the frequency of accidents reflects more accurately the efficacy of a safety program than does the severity of any one accident.

Many small injuries suggests bigger safety issues than one big injury does.

Review and analyze your OSHA logs. Is any one person particularly injury prone? Is any one type of injury prevalent? Is any one job description, that is general labor, carpenters, drivers, suffering injuries more frequently? Do injuries point to a too crowded work space?

If the analysis suggests one person is accident prone, decide whether to keep that person employed or not – nobody wants to be on a construction site with accident prone coworkers – or retrain them in safety practices. Drug test accident prone people.

If one type of injury occurs regularly, review your personal protection equipment. For example, are steel tiers wearing appropriate gloves? Is everyone wearing safety glasses? Correct the issue and emphasize the safety concern in the next training session.

If one job category stands out, review that process with an eye toward safety. Communicate the concern to employees in this job. Purchase new or replace antiquated safety equipment. Discipline the employees to wear or use protective gear properly. Create a safer environment.

Speaking of the environment, do records indicate the work area is too crowded? Has a plumber been hit on the head with lumber as it was hauled in? Are employees fighting over power outlets? Rethink jobsite organization. Often these injuries indicate poor site management rather than labor safety issues.

This process is hindcasting. Analyzing past claims and discovering ways they could have been avoided.
After your review and analysis, forecast the future. Have these dominant injury issues been rectified?

Don’t accept injuries as part of the game, create a safe work environment; the best employees appreciate it as a benefit.

Workers’ compensation cost containment begins with loss control and safety fundamentals. The frequency of accidents – how many per hours worked/payroll/days – is a much better safety indicator than the severity – extent of injury – of the injury.

Theoretically, if the company has many accidents, it’s a function of time before they have a bad, or even catastrophic, one. It may just be bad luck to have one injury, and it’s a bad one.

Personal protective equipment is designed to reduce the severity of injuries while safety training tends to reduce the frequency. Therefore, safety training, job ergonomics, and awareness reduce injuries, and workers’ compensation costs, most.

The experience rating formula reflects these philosophies. The rating system compares expected losses to actual losses and sets a modification as a variance from that norm.

The “exposure unit” for workers’ compensation is payroll in one hundred dollar increments. Historical losses for an industry are compared to historical payrolls to determine a rate of loss per hundred dollars of payroll. A severity discount is applied to the expected losses. This rate is not your premium rate, just the rate of expected losses. The difference in the two rates includes the cost of claims service, loss control, administrative costs, sales commissions and taxes.

Actual losses below a certain severity threshold, and that varies state to state, are added together. In addition, severe claims are individually discounted on a scale from the threshold rate to a state maximum. These claims are added to the undiscounted frequency claims value. The resulting number is compared to the theoretical average expected losses as actual over expected. A three year historical period is used.

The resulting ratio is the experience rating. Poor experience will result in a number greater than one. Good experience, below one. For example, a company has an experience modification of 1.15. That company is paying fifteen percent more for workers’ compensation than his average competitor and forty three percent more than a competitor with a .8 modification.

That’s additional cost of labor. That’s a more satisfied worker who isn’t at risk of injury. That’s a competitive edge that safety provides by reducing the frequency of injuries first.

Not everybody reveres safety as we do. Keep an eye out for those contractors on your site. If you spot them, avoid them like the plague.

When the masonry contractor throws his mud pan off a scaffolding without looking, or an electrician is standing in a puddle, it’s time to clear the area.

But less dramatic concerns include spreading bad habits, distractions, and job shut downs.

Somehow bad habits spread quicker than good ones. If the crew next to you operates outside your comfort zone, speak directly to the on-site supervisor and request corrective actions. Be sure your crew sees this interaction. If this confrontation does not result in safer conditions, move your crew to an alternate work area if at all possible. Demonstrate safety as the number one priority.

Suppose the other crew is not wearing protective eyewear. Maybe your crew is unlikely to get injured as a result, but how about your liability exposure? Your shard lands in their eye, and you’re paying regardless of their lack of diligence. Get the general contractor involved if necessary.

Your well-trained crew may be distracted by another group acting unsafely. Distractions create potential injury scenarios. The site moves ahead more productively when people work without a sideshow.

Severe infractions that can bring OSHA regulators or local officials in to close a site. Without being in the wrong, site closure costs you money. Report poor work conditions to the site supervisor immediately. Of course, document reasons and requests whenever you demand safer operations.

Remember: you are responsible for the safety of your employees and the profit of your company. Unchallenged unsafe conditions leading to site closure does not protect either employees or profit.

Take in the big picture when assessing your own site safety. Your crew works within a system. If one part of that system is unsafe, the site is unsafe. Do what you can to fix those situations.

Control traffic through all work areas to prevent distractions, overcrowding or unsafe conditions. Two perimeters should be guarded: the entire work space whether a construction jobsite, a restaurant kitchen, or a manufacturing floor; and the immediate work area where your crew or individual are working.

The safest work space is a very controlled environment. Jobs are dangerous by nature and require training and equipment to be done safely. Unfamiliar or unwanted people do not belong in the work space because they bring uncertainty and bad habits with them.

Labor intensive work sites should be designed with one entrance and many exits. Everyone entering needs to have proper safety gear and training regarding operational safety awareness. Part of that awareness is the sanctity of the individual or team work space.

The best example is excavating. While an excavator is loading trucks, people need to be further than the reach of the boom, in a complete circle around the machine. While a good operator can make an excavator look graceful, they are a hard hitting piece of equipment best avoided.

Manufacturers divide floor space into units. Only knowledgeable mechanics need to be in that space.

Prep space and cooking space is often divided in kitchens so knives are only used in a safe area and cross contamination is minimal.

Overcrowding creates poor work conditions and leads to injuries. Nothing is more frustrating than being bumped around while you’re trying to work. Adequate space leads to efficiency and safety. And reducing distractions keeps focus on task.

Every shift, supervisors should check the security of the gross perimeter and assure it has not been breached. Then, within the space where employees operate, the individual or manager should police traffic into their space. Control both perimeters for effective safety.

Having personal protection equipment is merely a good beginning. In order to work properly, employees must take the time to adjust the fit for the most effective use.

Harnesses must be worn while working at heights. All connection points should be snug but not restrictive. The harness must be tied off with a leash to an anchor, such as a chimney on a roof. The leash should be long enough to not restrict work, but not too long.

Hard hats must be snugged to the top of the head. Adjust the head band accordingly.

Eyewear needs to cover the entire eye including the sides. The fit should prevent slippage.

Footwear, especially steel-toed shoes or non-skid soles, still need to be comfortable for a long day of walking and working.

All equipment should be checked daily before work begins. If the fit isn’t correct, take measures to correct the defect.

Personal protection equipment is vital to an employees safety, and should become part of their everyday uniform. It needs to fit correctly and comfortably for this reason.

Make this routine part of basic orientation training. Then reinforce it with tool box safety topics.

Proper clothing is also important. Loose fitting clothing or neckwear can catch in machinery and cause serious injury. Construction sites require long pants and shirts to prevent cuts and scrapes. Gloves should be worn for many duties on a jobsite.

Many manufacturers and service businesses require uniforms. Uniforms are a good idea for several reasons. First, the company can control materials and fit which reduces injuries. Second, it is easier to control unwelcome traffic on the site. Third, wild clothing does not distract other workers.

Protective clothing and equipment reduces the number of and severity of accidents. It pays to take a few minutes to assure proper fit and function.

Building information modeling (BIM) software provides a digital three-dimensional, real-time tool that contractors, building owners, architects, and engineers can use to develop an overall view of a building throughout the design and construction process, allowing them to make informed decisions more rapidly. These programs can lead to significant gains in efficiency, together with major savings in time and money – as long as all parties involved work together in implementing them.

These guidelines can help reduce potential errors and risks of using BIM so that you can get the full benefits of this powerful resource:

• Once the BIM has been developed and distributed to project members, make sure that everyone is on the same page by taking precautions to prevent later changes or alterations by unauthorized parties without notifying the entire group. This can be a serious problem on larger projects with a number of consultants and contractors.
• Bear in mind that, although BIM can provide an estimate of total construction costs, it cannot factor in variations in the price of metals, petroleum –derived products, and transportation.
• Make sure that the project team leader is tech-savvy.
• Stress the need for every project member to communicate every idea they have, so that it can be implemented.
• Assign responsibilities clearly. BIM is a collaborative effort that requires everyone involved understand their roles, rights, and risks.
• Use specific contracts that identify all possible hazards and liabilities associated with BIM.
• Always bear in mind that communication among team project team members is the key to success with this technology.

To learn more, feel free to get in touch with our agency’s construction insurance experts at any time.

As a construction professional, you sign a contract for every job – essentially a warranty that your firm will receive a specific amount of compensation from the project owner for the completed project. The contractual agreement defines the terms and method of compensation and states other conditions, such as the duration and quality of the work, job specifications, and so forth.

Construction contracts come in three basic varieties. Here’s a quick rundown:

Lump Sum or Fixed Price Contracts set a total amount for all construction-related activities. These agreements often include incentives or benefits for finishing the job early and penalties (“liquidated damages”) for missing this deadline. Lump Sum contracts are preferred when the parties have set a clear scope and a defined schedule for the job.

Cost Plus Contracts involve payment of costs, purchases, and other expenses of construction They set a pre-negotiated amount (such as a percentage of material and labor costs), factoring in the contractor’s overhead and profit. Costs must be detailed and defined as direct or indirect There are a number of sub-types for these contracts, including: 1) Cost Plus Fixed Percentage; 2) Cost Plus Fixed Fee; 3) Cost Plus with Guaranteed Maximum Price; and 4) Cost Plus with Guaranteed Maximum Price and Bonus.

Time and Material Contracts. These agreements are usually preferable if the scope of the project is unclear. The owner and the contractor agreed on an hourly or daily rate, including additional expenses that might arise. The contract classifies costs as direct, indirect, mark-up, and overhead. Sometimes the owner minimizes its risk by setting a cap or a specific project duration that the contractor must meet.

Our construction insurance specialists would be happy to provide more information – just give us a call.

You’ve bid on the project and been awarded the work. Now all you need to do is sign the contracts and you’re underway. But wait a minute, there might be provisions in that contract that will cause you to wish you’d simply passed up the job. Are there agreements included that you might not be able to fulfill?

Have your counsel review any important legal document before signing it. We’re especially concerned about any provisions that might depend on your insurance to back you up. Although some of these provisions might be labeled clearly as insurance requirements, others just for coverage might not be so clear. For example, contracts commonly include a “hold-harmless” provision, under which the parties agree that if certain events occur, one party will take full responsibility for handling their repercussions. If this responsibility involves bodily injury or damage to the property of another, it could lead to a claim against the responsible party’s liability coverage. If you agree to be this provision, be sure your liability insurance covers all the types of events for which you’ve agreed to hold the other party harmless.

The best way to find out is to talk with us before signing the agreement. In most cases, your insurance covers the vast majority of responsibilities assumed under standard hold-harmless agreements. But there are no guarantees, especially if the agreement is non-standard or significantly broader than standard contract language. So the next time you’re pursuing a project that will require a hold-harmless agreement, give us — and your attorney — a call. Let us help make sure that when the time comes to shoulder the responsibility, your insurance will be there to help carry the load.

As a construction manager, you face the threat of litigation every day. “Just because you think you’re doing a good job, and even if you are, that’s no guarantee you won’t be sued,” warns a senior officer of a major insurance company.

These suits can and do target construction firms of all sizes – not just the big guys.

In one case, the manager of a small firm was working with the owner of a new high-end residence project to develop a project budget. When bids came in at 50% over budget, the owner sued the manager.

Or consider this example: During construction of a new school, an employee of a subcontractor fell from scaffolding and was injured. The construction manager had agreed to “supervise construction and overview safety programs developed by the contractor…” The injured worker sued his employer, the project owner, the design team, the general contractor – and the construction manager, whose piece of the settlement came to $200,000.

Construction managers can provide a variety of services, ranging from contract preparation and negotiation through cost estimation to code compliance, which will create serious liability exposures. Professional liability insurance can protect you and your business against expensive and aggravating litigation. Coverage also includes defense costs.

Carrying professional liability frees you up to do your job by delegating the management and resolution of any claims to the insurance company – whose experts can also provide contract reviews and advice for you and your potential clients. Many companies also offer construction managers advice on risk management to help keep potential exposures from turning into claims.

We’d be happy to help you select a policy that provides comprehensive protection at a cost you can afford. Feel free to get in touch with us.

Forklifts have revolutionized the construction industry. However, using them creates the risk of serious injury and death for drivers, other employees, and pedestrians.

although following the rules for forklift operation – safety checks, maintenance inspections, and so on –are time consuming, they’re essential for workplace safety.

To help ensure that your construction projects stay productive and accident-free, we’d recommend these guidelines:

·         Designate walking and driving paths. Many accidents happen because a worker was in the wrong place at the wrong time. Help prevent such incidents by clearly marking paths for foot traffic and forklift lanes. Yellow tape is easier to notice than signs, and won’t become covered with dirt or debris like floor marks.

·         Have the right tires. A blowout could cause an accident or halt productivity. The type of tire is perhaps the most important difference between forklifts that only operate indoors and those used indoors. While indoor forklift-tire sizes relate to truck weight, aisle and lift height, tires for outdoor lifts aim to prevent punctures.

·         Identify gradient inconsistencies.  The floor gradient is an important consideration because slight changes can cause a tip-over. This is the number one cause of death and serious injury to forklift operators.

·         Because forklift designs vary significantly, choose the appropriate model. The first factor to consider is the maximum load. Trying to lift a load that exceeds this capacity can damage the arms or cause a tip-over. When possible, assign drivers who have experience with the model you’re using. If this isn’t an option, make sure the driver understands the limitations of this forklift and can do pre- and post-operation maintenance checks.

Our agency’s specialists would be happy to help keep your staff and equipment safe on the job.