Construction Insurance Bulletin

Using safety equipment that’s appropriate, well maintained, and in good shape can keep minor accidents in home construction from turning into serious – and costly – injuries. The National Association of Home Builders and the U.S. Occupational Safety and Health Administration offer these safety tips for residential builders:

Head Protection

• Make sure that your workers wear hard hats when overhead, falling, or flying hazards exist, or when there’s a danger of electrical shock.
• Inspect hard hats routinely for dents, cracks, or deterioration.
• After a hard hat has taken a heavy blow or electrical shock, replace it even if you detect no visible damage.
• Maintain hard hats in good condition. Don’t drill, clean with strong detergents or solvents, paint, or store hats in extreme temperatures.

Eye and Face

• Workers must wear safety glasses or face shields for welding, cutting, nailing (including pneumatic), or when working with concrete and/or harmful chemicals.
• Because eye and face protectors are designed for particular hazards, be sure to select the type that matches the danger.
• Replace poorly fitting or damaged safety glasses.

Foot

• Make sure that residential construction workers wear shoes or boots with slip-resistant and puncture-resistant soles (to prevent slipping and puncture wounds).
• Require safety-toed shoes to prevent crushed toes when working with heavy rolling equipment or falling objects.

Hand

• High-quality gloves can prevent injury.
• Gloves should fit snugly.
• Glove gauntlets should be taped for working with fiberglass materials.
• Workers should always wear the right gloves for the job. For example, they’ll need heavy-duty rubber gloves for concrete work and welding gloves for welding.

Fall Protection

• High-quality gloves can prevent injury.
• Use a safety harness system for fall protection.
• Use body belts only as positioning devices – not for fall protection.

Natural disasters can do significant damage to construction firms. Some suffer direct hits, while others endure massive service demands and shortages of help and supplies.

Although you might escape massive destruction and distress, what other events might cause your company to suffer a crisis? IT failure? Burglary or vandalism? Professional liability? Fire? Loss of market?

Whether disaster strikes as a catastrophic or stressful disruption, the best way to prepare for them is crisis management. Now is the time to develop a plan that will allow you and your staff to mobilize the right resources in the right order quickly to get you up and running as smoothly as possible.

How do you develop such a plan? What’s the process? Who should you include? How often should you review and update it?

We can help by providing risk management advice and recommendations, together with materials and resources tailored to your needs and exposures. Although insurance might not solve all your post-crisis problems, it can certainly provide a solid foundation for your planning should the worst happen.

Don’t wait for a crisis to uncover the gaps in your current preparations. Start now.

For years, Owner-Controlled Insurance Programs (OCIPs) were only found on large, single-site projects. Every day, more contractors are being required to work under these types of arrangements, either on smaller projects or “rolling” OCIPs that cover multiple projects. This requires contractors to identify and deal with the variety of complex issues that these programs raise.

Don’t go it alone. Our Construction Insurance professionals stand ready to help. If you’d like to do some research on your own, the Insurance Risk Management Institute (IRMI) provides a wealth of solid safety guidelines that are updated frequently. Originally created as a resource for contractor risk management information, IRMI publishes one of the best and most extensive libraries of insurance expertise in the nation and is widely used by insurance agents and risk managers in all types of businesses.

“A Contractor’s Guide to OCIPs,” available on the Construction Business Owner Web site, offers valuable guidelines on the benefits and risks of these programs, together with tips on making the most from them, and dealing with such issues as loss costs, separating Construction Insurance costs from bids, and estimating labor expenses.

Check out the guide. Then give us a call on how to apply its principles to your business. When it comes to your protection, don’t let “owner controlled” mean “out of control.

Although business management and performance are the major factors that will determine which contractors survive the downturn in construction, the size of the contractor also comes into play. As a rule, project owners are more likely to continue with larger developments because of their greater value, higher investment, and longer lead time. Smaller projects are easier to cancel, which makes smaller and midsize contractors (with work backlogs between $5 million and $100 million) more vulnerable to cancellation.

If you’re experiencing losses on a project, your first step should be to deal with overhead, liquidity, problems, and ongoing business concern. It’s also essential to communicate any problems to your insurance agent and surety company immediately! Because the surety has a strong financial interest in preventing you from default on your bond, it will leverage its relationship with the bond underwriter to help you work through these difficulties and reach a mutually acceptable solution that will keep you on the job.

However, a contractor withholding critical information about a problem situation from a surety would lead to a far different result. Concern about the contractor’s deteriorating financial condition – which makes it a riskier bonding candidate – might make the surety restrict its future capacity, leading it to make the contractor either bid on only smaller projects that pose less risk to the underwriter or postpone bidding on all projects until the business can clean up its balance sheet.

If you have any questions about working with your surety, please feel free to get in touch with the Bond professionals at our agency.

A “coverage trigger” is an event that causes your Liability policy to pay a claim. There are two basic types of “triggers”: occurrence and claims made.

An “occurrence” trigger means that the policy will cover any injury or damage during the policy period. For example, if a roof that you installed four years ago collapsed last week, injuring five people, the occurrence trigger will apply and the policy will pay. It doesn’t matter when the roof was built or when the claim was filed – only when the actual injury took place.

A “claims-made” trigger, as the name suggests, focuses on the date the actual claim is made. Underwriting and rating provisions might limit how far into your past the policy provides coverage. However, the key question is: “did the claim come in during the policy period?” If so, a “claims-made” Liability policy will pay. Using the example of the collapsing roof, it doesn’t matter when the roof was built or when the event took place, the trigger won’t apply until the claim is filed.

If this claim is made during the current policy period, your insurance company will pay it. However, suppose the claim isn’t made for several weeks; and by the time it arrives, your current coverage has expired and you’re into a new policy period? In this case, the “claims-made” policy will pay the claim, since it was made during the new period.

One type of trigger isn’t necessarily better than the other. However, it’s almost always wise to keep the current type in order to provide relatively seamless coverage.

If you’re offered a Liability policy that offers broader coverage or more attractive pricing – but has a different trigger than your current insurance – consult with us before you make a decision. The only way to be sure you get the protection you need at a fair price is to consider all possible underwriting considerations and how the change in trigger might affect your liability needs.

Natural disasters can do significant damage to construction firms. Some suffer direct hits, while others endure massive service demands and shortages of help and supplies.

Although you might escape massive destruction and distress, what other events might cause your company to suffer a crisis? IT failure? Burglary or vandalism? Professional liability? Fire? Loss of market?

Whether disaster strikes as a catastrophic or stressful disruption, the best way to prepare for them is crisis management. Now is the time to develop a plan that will allow you and your staff to mobilize the right resources in the right order quickly to get you up and running as smoothly as possible.

How do you develop such a plan? What’s the process? Who should you include? How often should you review and update it?

We can help by providing risk management advice and recommendations, together with materials and resources tailored to your needs and exposures. Although insurance might not solve all your post-crisis problems, it can certainly provide a solid foundation for your planning should the worst happen.

Don’t wait for a crisis to uncover the gaps in your current preparations. Start now.

When you face what appears to be a minor claim, have you ever been tempted just to handle it yourself? After all, the loss is minimal, and you’re “saving” your insurance coverage for when you really need it. Some contractors also feel that filing too many small claims could increase the risk of losing the policy, or driving up their premium.

However, there’s more to consider. Bear in mind that every policy contains language to the effect that “No insured will, except at that insured’s own cost, voluntarily make a payment, assume any obligation, or incur any expense, other than for first aid, without our consent.” This means that that if you pay a small claim yourself, and anything goes wrong, the insurance company can say, “You’re on your own.”

For example, suppose someone walks through your job site and steps on a nail. It appears to be a minor puncture wound, and you agree to pick up the cost of an emergency room visit. You might feel that you’ve closed this incident quickly. However, a few weeks later, the injured person calls to say they have a raging infection in their foot and the doctor is checking them into the hospital for what proves to be a long and expensive stay.

If you then report this claim to your insurance company for the first time, will they step in and take over, or tell you that since you never informed them of the incident they’re not responsible? Even if the insurance company pays the claim, you’ve run an unnecessary risk.

What you should have done – as the policy wording suggests – is to inform your insurance company immediately and ask its consent for you to pay the claim. This approach would have made a substantial difference because notifying the company of the claim fulfills your obligations under the policy.

Why go it alone when you have a partner waiting to help?

The Coalition Against Insurance Fraud did an extensive study to learn why public tolerance of insurance fraud seems to be increasing. The coalition commissioned a national research firm to conduct a series of consumer focus groups, as well as a telephone survey of 602 households.

Respondents offered three main reasons for committing insurance fraud: 1) To save money or reduce costs; 2) to complete work that they couldn’t otherwise afford; and 3) to “get back” at insurance companies.

Although respondents acknowledged that fraud leads to higher premiums, they believed that premiums would keep rising even if fraud were eliminated. They also said that even though the public has a moral obligation to report fraud, most wouldn’t report a fraudulent act themselves. When asked why some people resist committing fraud, the most common reasons were a strong sense of right and wrong or a fear of being caught and punished. Respondents said insurers could discourage fraud by rewarding customers for good behavior, such as providing rebates or credits for not filing claims for a period of time and aggressively pursuing customers who do commit fraud.

Fraud costs U.S. businesses billions a year. Do your customers and employees recognize that fraud is increasing your costs of doing business – and thus your prices? Have you implemented polices that let your employees and subcontractors know that you won’t tolerate fraud and will prosecute it actively when discovered?

For resources and materials to help you combat fraud and curb the costs of fraudulent acts on your business and insurance program, give us a call. We’re here to help!

Chances are that you’d never buy a new truck or front-end loader without trying it out to make sure it could do the job. Do you do the same for those who will be operating the equipment?

Safety experts recommend that any employee who will be driving a truck should receive a road test of their driving skills before being hired. The examiner should be fully qualified to operate the vehicle, and be familiar with the prospective operator’s past experience. The test should include these skills:

• Use of all controls and traffic operations (including backing, parking, slowing, stopping, passing, and turning).
• Such general driving habits as alertness, stamina, and patience.
• Driving rules and regulations pertaining to the vehicle.
• Handling the necessary actions and equipment for loading and unloading the vehicle.

For each skill or knowledge area tested, the applicant should receive a pass/fail grade. Each area of weakness should lead to further training or to a corresponding limitation in the scope of the applicant’s approved activities. Keep records and scores of these tests as documentation in the event of an accident or claim resulting from the applicant’s actions.

For more detailed suggestions on the format or content of driver exams, contact your trade association, state department of motor vehicles, or one of our risk professionals. Don’t forget the benefits of a solid driver training/testing program on your Commercial Auto insurance rates.

Your drivers are taking your vehicles and your insurance coverage on the road every time they drive. Wouldn’t it be a good idea to make sure they’re capable of protecting both?

One of the most cost-effective advances in the construction industry has been the use of concrete pumps. Older style bucket operations took significantly longer and frequently affected the quality of the job. Modern concrete pumps allow crews to move massive amounts of concrete while maintaining the quality of the product. The bottom line: Concrete pumps move concrete quickly and efficiently in a wide variety of applications.

Despite the benefits, you’ll need to make sure that pump crews take special precautions to make the placement of concrete as safe as possible:

• Wear proper personal protective gear, including hardhats, safety glasses, rubber boots, and water-resistant gloves.
• Check that safety pins installed between the discharge hose and the boom are positioned properly.
• Make certain that no one’s working directly under the boom.
• Maintain at least a 20-foot clearance between the boom and power lines.
• Use a signal person if the pump operator can’t see where the concrete is being poured.

Although the pump operator plays an important role in the safety of the operation, job safety is the responsibility of the entire crew. Following basic safety suggestions can make concrete pumps safe to use, as well as cost efficient.