Construction Insurance Bulletin

As an independent contractor, you carry insurance to protect yourself against financial liability from your work. Many jobs require contractors to show that they have a pollution liability policy, which will pay for bodily injury and property damage claims, as well as the expenses of cleaning up toxic waste materials –costs that a standard general liability policy does not cover, and could run into millions.

Any contractor whose business involves risks of hazardous waste exposure, such as asbestos abatement or waste depository, needs pollution liability insurance.  This policy will protect you from liability both during the job and if there’s any problem from hazardous waste materials at a later date (“completed operations” coverage).

Pollution liability insurance could also be valuable if you own an industrial site that you believe is free of hazardous waste. The inspection you had performed on the property before you bought it might have missed some underlying hazardous substance that could create liability exposure down the road.

If you have a pollution-related incident at a job site or from one of your completed operations, it’s is too late to buy pollution liability. You can purchase this coverage from a number of insurance companies. The premium will depend on the amount of the policy, the deductible you choose, and whether you buy it on a stand-alone basis or in combination with other types of commercial insurance.

Before deciding whether to purchase pollution liability, be sure that you have the information you need to make the right choice. As always, we’d be happy to offer our advice at any time – just give us a call.

The explosive growth of applications for iPhones and iPads includes a variety of tools that construction professionals can use for instant access to a wealth of information.  Here are eight apps that can help save you time and money on the job:

1.      SmartBidNet. Use this iPhone bid management app for rapid and secure access to the information needed to track the bid process with subcontractors and companies.

2.       GoBIM. This app provides access for navigating 3D building information management (BIM) models and their associated data. The size of the model the app can handle depends on the number of triangles, parameters, and materials.

3.      FingerCAD allows users to use their fingers for computer-assisted technical drawings, save the final design, and print or e-mail it.

4.      Architect’s Formulator provides more than 200 formulas for electrical, carpentry, excavation and plumbing calculations. It can also be used to design everything from steel buildings to parking areas – and even swimming pools.

5.      Carpenter’s Helper helps measure such construction elements as roof pitch, rafter lengths, and stair lengths.  It includes a graphical interface that will calculate stair, roof, and floor projects.

6.      Builders Helper. This iPhone app deals with a number of elements in constructions projects: rafters, columns, concrete, stairs, drywall, painting, decking, roof, flooring, and more.

7.      Fast Concrete Pad Calculator provides a helpful tool for determining the quantities and costs of concrete, rebar, and waste materials on a project.

8.      Drywall Calculators, Use this app to estimate the number of drywall sheets needed to finish the input area.

To learn more about these high-tech tools, just give us a call at any time.

It’s a regular occurrence for contractors.  Another party (an owner, general contractor, lien holder, other contractor, or government entity) asks you to add them as an additional insured on your insurance policies. This party often makes it clear that if you want to do business with them, not adding them is not an option.

However, this isn’t necessarily a good idea. For example, you probably bought your excess liability coverages – such as those under an umbrella policy –to protect you from catastrophic financial loss. If an additional insured, who might be well within their rights, is added to your basic coverages and protected up to your basic coverage amounts, will they also be allowed to “piggyback” up to your highest limits of protection?

We’d advise you not to set up any procedure that automatically makes all of your coverage limits available to any additional insured. Add them to the specific coverages and the specific limits they request, but go no further. If in doubt, consult with your attorney about contractual requirements and possible gaps between what the entity is requesting and what your coverage will actually provide.

Once you’re certain what you’re being asked to do, and have decided to meet this request, there’s one more action to take before adding the additional party to your coverages. Contact us to determine if your current policy already meets the needed conditions, or what modifications (if any) might be required to do so. Remember – we want to help you meet your needs, but our focus is always on protecting you, even if this means against unreasonable demands from other entities. We’re here to help.

Before taking calculus, it’s probably a good idea to define your terms. The same principle applies if your business faces a construction defect claim.

Insurance experts define a “construction defect” as a failure of a structure to perform as expected in a way that causes harm to the work itself and/or other property or work due to faulty design, workmanship, and building products or materials.

Depending on the situation, a construction defect claim might involve allegations of damage (physical injury and/or damages (monetary loss from failure to perform properly). These lawsuits often involve “completed operations” claims under the commercial general liability policies of developers and contractor or errors & omissions claims against design and other professionals. Manufacturers and others in the stream of commerce are also vulnerable to product liability claims.

Construction defect litigation often arises from business disputes –for example, a general contractor might refuse to pay a sub, alleging that its work was defective – or from a building owner’s claim that damage to his property from a hurricane or earthquake was due in part to construction that failed to meet specifications above and beyond the minimum standards required by code. A number of such suits were filed in the wake of Hurricane Sandy, which devastated several Mid-Atlantic states in October of 2012, causing up to $75 billion worth of damage.

What’s more, construction defects can remain latent for extended periods. Claims are often made after a routine inspection of a building or home (for example, by a mortgage lender) uncovers shoddy work. Depending on the state, the statute of limitations for filing a lawsuit might not expire for 10 to 15 years after completion of a project.

To learn how you can protect your business against the threat of construction defect lawsuits, just give us a call.

Chances are that you’re using chlorinated polyvinyl chloride, (CPVC) – a thermoplastic material in pipes and related products—because it’s less expensive and easier to install than copper or iron piping.  Failure of CPVC components can lead to extensive water damage; and repairs can be costly and complex because these pipes and fittings are located above ceilings, behind walls, and below floors,

In case of a piping mishap, here’s what to do:

• Identify the material. CPVC pipes and fittings are usually yellow, cream, orange, or gray.  Don’t confuse them with components made of its distant cousin polyvinyl chloride (PVC), which has different chemical properties, physical characteristics, and functions. In general, it’s not advisable to combine CPVC components with those made of PVC.
• Preserve the failed part for forensic analysis. This involves a complex  chemical/materials evaluation that requires unique skills and specialized examination methods, using such advanced techniques as gas chromatography-mass spectrometry, and fourier transform infrared spectroscopy. To avoid contamination during analysis: 1) don’t tape labels on the damaged part; 2) handle it as little as possible; and 3)  if you can’t leave the part in its installed position, wrap it in aluminum foil before placing it in a plastic bag (the materials in these bags can leach out).
• Never break open cracked pipes and fittings to see what’s inside. |Leave this to a forensic scientist under controlled conditions.

Because CPVC failures can have a variety of causes from raw material flaws and manufacturing defects, to improper installation and maintenance, determining which party is responsible can be difficult. However, safety proper procedures for installing and maintaining these components can go far to reduce this risk.

A word to the wise …

Although the term “symbols” has many definitions, some of the most interesting ones are those on the “declarations page” of your commercial auto policy. This is the page that indicates all of the coverages you’ve purchased. In a column preceding each coverage, you’ll usually find a number, or numbers, from 1 to 9. In specific circumstances, the numbers might be higher.

These numbers, called “symbols”, specify exactly which of your vehicles has a particular coverage. So the choice of the symbols is important to be certain that you have the protection you need. For example, the symbol “2” is defined in the policy as “any owned auto.” If this symbol is next to your liability coverage, it means that every vehicle you own that meets the eligibility requirements for a commercial auto policy will automatically enjoy the specified amount of liability coverage.

Many small businesses might find it easier to list each vehicle specifically. But as your firm — and your number of vehicles — grows, you’ll enjoy more flexibility by using the available symbols properly. It’s just as important to be certain which obligations certain symbols impose on you. For example, a symbol “7,” defined as “specifically described autos only,” requires that for an auto to be covered, it must either be listed in the policy or, if newly acquired, meet certain conditions.

Don’t let an oversight or misunderstanding about the meaning or implied obligations of these symbols’ meanings lead to a costly uninsured loss. Our commercial auto professionals will be happy to review your current coverage provisions with you at your convenience.

Bad things can happen even on the best-run construction projects. Unfortunately, many small and midsize contractors don’t consult their surety underwriter soon enough after they run into difficulties on the job that might trigger a bond—an event which could put them out of business.

Although management and performance are the major factors determining which firms will survive troubled projects, the size of the contractor is also important, The reason: owners have an incentive stick with larger, more complex operations due to the their greater size, importance, and longer planning lead times. Because smaller projects are easier to deep-six, small and midsize contractors (those with work backlogs between $5 million to $100 million) are usually more far vulnerable to the threat of cancellation.

If you’re experiencing losses on a project, the first step is to develop plans for dealing with overhead, liquidity, workplace problems, and ongoing business concerns. Be sure to inform your bond surety about this immediately. The reason: because the surety has a vested interest in helping prevent a bonded default, they’ll do all they can to help you work through your difficulties.

However, if you withhold critical negative information about your situation, the reaction might be far different. Concern about your company’s financial condition, which makes you a riskier bonding candidate, might lead the surety to slash the size of bonds in the future. The surety might compel you to either bid on only smaller projects that pose less risk to the underwriter or postpone bidding on any new projects until you can demonstrate that your financial condition has recovered.

As always, honesty is the best policy.

For more information, please feel free to get in touch with us at any time.

Webster, defines “accident” as “an undesirable or unfortunate happening that occurs unintentionally and results in injury, damage, or loss.”

Accidents cost the construction industry hundreds of lives, thousands of injuries, and hundreds of millions in lost profits, year in, year out.

Whenever there’s an accident in your workplace or on the job site, it’s essential to conduct a thorough and comprehensive inquiry. Bear in mind that goal of this investigation should not be to lay blame for the mishap, but to determine what happened – and why – in order to prevent it from recurring.

Whoever you put in charge of the investigation should:

1. Get to the accident site of as rapidly as possible; Make sure the area is safe to enter and that the victim gets any emergency medical treatment immediately.
2. Record evidence, use a camera and film (or smart phone with a date and time stamp), audio recorder, pen and notebook (to do interviews or make sketches), measuring tape, and specimen containers for hazardous substances (if needed). Be sure to include copies of accident report forms and checklists.
3. Find witnesses and find out what happened by asking the six key questions: who, what, when, where, why, and how. Interview everyone involved and ask about possible factors (the supervisor’s orders, training levels, type of equipment, working conditions, etc.) Don’t blame the worker involved, even if he or she takes responsibility for the incident.
4. Document every aspect of the investigation, using the accident report form.
5. Do not release the report without management approval (to protect the privacy of those involved).

Finally, be sure to review the results of every accident investigation at your next safety meeting.

An ounce of prevention …

If your business use several types of vehicles, it’s important that you classify them properly for insurance coverage purposes. Either of two policies might apply, depending on whether the policy defines the vehicle as “mobile equipment” or as an “auto.”

As you might expect, Commercial Auto insurance covers your autos, while your General Liability policy covers mobile equipment.

It’s clear that bulldozers and pickups are autos. However, when it comes to mobile cranes and other types of self-propelled equipment, the waters get a bit muddier – and if you attach a crane or drilling rig to a pickup or flatbed truck permanently things can get even trickier.

Why should you care? Two words: coverage and cost. Depending on the policy under which the vehicle falls, coverage might vary in both specifics and the amount available to pay claims. Because the two types of policies rate coverage differently, the premium will change. There’s one mistake you definitely want to avoid: In the confusion, make sure you don’t wind up paying for a single vehicle under both policies!

However, there’s a silver lining in this potential dark cloud. The specialists at our agency can review your list of vehicles and assign each its proper policy, without charging you twice. It’s our job to get things right. If you’re unsure whether your current coverage is treating your trucks as cranes, or the other way around, just give us a call. We’re here to serve you.

Most construction projects include the use of scaffolding, which can leave your workers vulnerable to injury. To help you prevent falls on site, industry expert recommend that managers follow these proactive guidelines:

• Slow down or consider efficiency building alternatives. Although the pace of construction work is important, it can easily lead to careless and costly mistakes, including gaps in safety on the jobsite. “You don’t have to sacrifice speed for safety, as long as you’re working at the highest level of efficiency, and being safe plays its own role in this process,” says Mike Mumau, president of Kee Safety – North America.
• Keep your workplace organized. Careful placement of tools can reduce the risk that they’ll injure workers by falling from scaffolding – and make it safer to move around on the scaffolding.
• Identify potential hazards and find solutions in advance. For example, if you’re working near power lines, keep scaffolding far enough away to prevent electrocution risks. If scaffolding needs to be moved during the project, have a plan before each move.
• Provide training. Make sure your workers are trained and up to date on OSHA requirements. “Training in the setup and construction of scaffolding can ensure a solid work space for overhead workers and guarantee a rig that will not inadvertently collapse from instability,” warns Mumau.
• Keep reviewing the site throughout the project. Be sure to identify any new hazards that might arise during construction. During the course of the job, workers tend to become increasingly more comfortable with “routine” activities – which might easily lead some of them to neglect safety precautions inadvertently (or blatantly).

Our construction safety specialists stand ready at any time to offer a complimentary review of your job site safety programs. Remember, the safer your workers, the healthier your bottom line – and the less you’ll pay for insurance.