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Monthly Archives

August 2009

Aug 01
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MANAGING CLAIMS IN CATASTROPHIC INJURY

By Construction Insurance Bulletin

Construction can be dangerous work. The majority of injuries to workers and members of the public are relatively minor; the injured persons fully recover in short order. However, catastrophic injuries, while rare, can devastate a person’s life, cost enormous amounts of money, attract unwanted media attention, and harm a contractor’s reputation and business.

There is no single definition of catastrophic injury. Organizations might define it in dollar terms, such as an injury that incurs liability of $250,000 or more. Others might define it in terms of the injury’s severity — a broken arm might not be considered catastrophic, but a crushed or severed arm might be. Still others might define it in terms of a change in an individual’s earning capacity — an injury that prevents a person from working or reduces his wages for less than a year might not be considered catastrophic, but one that permanently reduces or eliminates earning capacity might be.

Whatever the definition, there are some things a contractor can do to manage a claim effectively. A few steps the contractor can take before an injury occurs can pay dividends later:

  • Plan ahead. Most construction businesses are too small to have their own risk management departments, so form a partnership with one of our agents experienced in insuring construction risks and obtain coverage from a company with expertise in handling construction claims.
  • Form good relationships. Many companies that insure contractors are willing to have a meeting involving the customer, agent, loss control and claims staff. Take advantage of this and form good working relationships with the people who will respond to a severe claim. If the contractor uses a third party administrator for claim handling, meet in advance with the appropriate staff and get their contact information.

After a loss occurs, the company can do several things to manage the claim:

  • Work with our agent, insurance company, and others to evaluate the claim and prepare possible legal defenses.
  • In cases where the contractor’s liability is clear, make quick contact with the claimant and the family. Work with the medical facilities to ensure that the claimant does not receive a bill.
  • Be truthful with the claimant, family, investigating authorities, and the media.
  • Begin the claim investigation as soon as possible to determine the facts and build a defense strategy.
  • In cases where the contractor’s liability is unclear, identify possible legal defenses. These can include contributory negligence on the part of others, no negligence on the contractor’s part, intervening causes, product defects, and others. Use these defenses to get the contractor dismissed from the case.

Good communications are the keys to successfully managing a catastrophic injury case — with the claimant and family, medical providers, insurance adjusters, and other interested parties.

  • Be prepared to answer the claimant’s questions or to find the answers. Frequent and meaningful communication with the claimant should assure him that the company cares about his situation. A claimant who feels that someone is paying attention to his needs is less likely to hire a lawyer.
  • Working with medical providers will keep the contractor informed as to the claimant’s progress, expected therapies and treatments, and projected length of disability.
  • Work with the insurance company and medical providers to minimize and resolve disputes.
  • Stay involved with the insurance company’s handling of the claim. The company’s goals might not be the same as the contractor’s.

No contractor wants to see someone harmed because of construction operations. However, severe injuries can and do occur on job sites. With careful pre-planning, proactive involvement after the fact, and prudent claim management, a contractor can do the right thing by the claimant and protect his business at the same time.

Aug 01
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LIMIT FINANCIAL RISK BY UNDERSTANDING THE DETAILS OF AN OCIP

By Construction Insurance Bulletin

With increasing regularity, construction project owners are creating Owner Controlled Insurance Programs (OCIPs) to cover many of their loss exposures during projects. These programs, also known as “wrap ups,” are insurance policies that cover all construction and contractors working on the site. They allow owners to control the insurance program instead of relying on the contractors to purchase adequate insurance. In theory, owners pay less for the coverage “in bulk” than the individual contractors would pay on their own. Also, OCIPs often include an integrated owner-contractor safety program designed to reduce the frequency and severity of losses. Finally, with everyone covered under one program, questions over which contractor may have been responsible for a loss become irrelevant.

Contractors who have contracts for jobs involving OCIPs need to consider several factors. What firms, operations and locations will the OCIP cover? OCIPs often do not cover truckers, vendors, suppliers, and contractors doing high-hazard work like demolition. They may also exclude coverage for contractors below a certain number of employees or payroll. Does coverage extend to locations off the primary job site, such as storage facilities, fabrication sites, and staging areas? Does it cover contractors’ employees when they must travel off the site to obtain supplies, tools or documents?

Another consideration is when the program’s coverage ceases. If it provides Completed Operations coverage, how long will it last? Some OCIPs may provide coverage for up to three years after the completion date, but state law or contract indemnification clauses may extend a contractor’s potential liability beyond that. The contractor should verify that its own Liability policy will supplement the OCIP.

A major issue is the scope of the OCIP’s coverage. It might provide Liability coverage only, liability and Workers Compensation, or coverages in addition to those two. It will probably not cover automobile liability, so the contractors will need full coverage for this risk. Does it cover damage to the work and pollution liability? The contractors will need individual Builders Risk or Installation Floater policies and Pollution Liability coverage otherwise.

The adequacy of the insurance limits is another important consideration. The combination of the primary and excess limits should be high enough to fund any catastrophic losses. Do the limits apply separately to each location or to all locations collectively? Does the policy reinstate them annually or do they apply in aggregate to the whole project? How many parties (owner, contractors) are sharing the limits?

Because each contractor will continue to carry individual coverages for other work, it is important to determine how the OCIP will coordinate with them. The contractor should obtain assurance that the OCIP coverage will be primary and that its own policies will be excess. The contractor may also need Difference in Conditions coverage to fill in gaps left by the OCIP, such as property losses from flood or earthquake. The contractor’s insurance company should reduce its premium in recognition of the OCIP’s primary coverage.

The contractor also needs to consider whether the OCIP makes it responsible for any deductibles or penalties. Will the contractor be responsible for deductibles from all losses or only those for which it is liable? If it’s the latter, how will the owner determine which contractor is responsible? Will the liability question extend to “no fault” coverages like workers’ compensation?

Whenever an OCIP is involved in a project, the contractor should review the requirements very carefully and ask these and many other questions. The contractor should work closely with our insurance agents to ensure that any coverage gaps are filled and that the limits are adequate. OCIPs are an inevitable part of the construction industry today. Contractors who handle them properly can limit the financial risk they present.

Aug 01
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PAY PROPER ATTENTION TO WORKSITE CLOTHING AND PROTECTIVE GEAR

By Workplace Safety

Although many of us enjoy expressing our unique style through our clothing, the jobsite is simply not the place to make a fashion statement. If you aren’t wearing the proper clothing and personal protective gear, you are putting yourself at serious risk.

For example, there have been cases of workers suffering from severe injuries simply because they were wearing clothing that fit too loosely. When you get close to machinery, your baggy shirt or pants could be drawn into the machine, taking you with it.

If you want to stay safe on the jobsite, you have to dress for the occasion. Here are a few things to keep in mind:

Just say no to jewelry

Although you might be tempted to wear your favorite watch, ring, necklace or bracelet to work, you’ll be better off leaving your jewelry at home. When you wear any type of jewelry on the jobsite, you are putting yourself at risk for a serious hand injury. Just imagine if your watch or ring were to get caught in a piece of machinery — the results could be devastating.

Shield your head

If you are on a jobsite where there are overhead hazards, you should wear a hard hat at all times. Your head is the most important and fragile part of your body. A severe blow to your head can cause a concussion, hearing problems, memory loss, confusion, seizures and even loss of smell.

You can significantly reduce your risk of a head injury simply by wearing hard hat. A survey by the Bureau of Labor Statistics (BLS) reveals that most workers who have suffered impact injuries to the head were not wearing head protection at the time — and the majority of these workers were injured while performing their normal jobs at their regular worksites.

Wear safety glasses

If you are working on an extremely dusty jobsite or in an area where debris is flying through the air, wear safety glasses at all times. Without the proper eye protection, some of this debris could easily enter your eye — causing discomfort, an eye injury or even blindness. On top of that, if you’re constantly squinting to keep dust or fragments from entering your eyes, you’ll have a hard time seeing what you’re doing — which could lead to mistakes and accidents. Put on your safety glasses to protect your eyes and your vision.

Although you might not like the way you look in safety glasses, a hard hat and other proper worksite clothing, remember that these items could ultimately save your life. Don’t worry about making a fashion statement at the workplace. Instead, focus on choosing the appropriate clothing and protective gear to keep yourself safe and accident-free.

Aug 01
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SAFETY MEETINGS: MORE VITAL THAN YOU THINK

By Workplace Safety

Most workers roll their eyes at the mention of a safety meeting — but what they might not realize is that these meetings have a greater purpose than just lecturing workers with a “boring” speech. Proper safety training can spell the difference between life and death on the jobsite.

Safety meetings 101

In a safety meeting, the company’s management and safety experts have an opportunity to teach employees how to perform their jobs more safely. This crucial training could prevent countless accidents in the long-run.

Some studies show that 90% of all jobsite accidents are caused by “unsafe acts.” These types of accidents are often the result of a worker not making the safest choices on the job. However, if workers attend all safety meetings and pay attention to the information being presented, they’ll know how to steer clear of unsafe acts and avoid accidents on the jobsite.

Pay attention!

If you’ve been working on a particular jobsite for many years, you might assume you already know everything there is to know about safety in your workplace. As a result, you might tune out during safety meetings and let your mind wander.

However, it is crucial to pay attention in these meetings even if you think you’ve heard it all before. After all, you might just learn something new. For example, you could learn about the latest, cutting-edge protective equipment or a smarter, safer and more effective way to do your job. All workers should pay close attention and take safety meetings seriously because the lessons they learn could help save their own or another worker’s life.

Understanding the risks

Are you still not convinced that safety meetings are necessary? Then you might want to consider the potential costs of having an accident on the jobsite. Here are a few ways a jobsite accident can directly affect you:

  • You could lose your income: If you are seriously injured in a jobsite accident, you might not be able to work. If that’s the case, your paycheck might decrease or disappear altogether. Who will pay the bills if this happens? What if you are the sole breadwinner in your family? You and your family could be devastated financially.
  • You could suffer from chronic pain: If you are injured on the jobsite, you might still be able to work — but you could suffer from severe aches and pains for the rest of your days. Think about how excruciating it would be to work through back aches, knee pain or splitting headaches every day.
  • You could die: In the worst case scenario, a workplace accident could kill you. Think about how your loved ones would feel knowing that you died from an easily preventable accident at work.
  • You could become disabled: Although you might survive a serious jobsite accident, you could become disabled. Imagine spending the rest of your life confined to a wheelchair.
  • You could lose a co-worker: Because we spend so much time with our co-workers, they are often like family to us. How terrible would it be to watch your co-worker die because of a mistake you made on the jobsite? What if you could have prevented his death by stopping him from taking a misstep? Safety training teaches you how to look out not just for yourself but also for your fellow workers.

As you can see, there are many good reasons for safety meetings. Not only could you learn vital new safety methods, but these meetings also give you and your co-workers a chance to talk to your supervisors about any safety or health concerns. So as boring as safety training might seem, listen up and absorb all the information you receive. This information could save your life one day.

Aug 01
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PROTECT YOUR HANDS AT ALL COSTS

By Workplace Safety

As a worker, your two most important tools are your hands. Unfortunately, those two vital tools suffer through a great deal of wear and tear. On the worksite, your hands might be exposed to harsh weather conditions, dirt, chemicals, fuels, grease, solvents, oil and other unforgiving substances. Plus, if you’re handling sharp tools and heavy equipment constantly, you’re putting your hands at risk every day on the job.

Because your hands are two of the most important and frequently used parts of your body, it’s critical to protect them at all costs. If you take proper care of your hands and think before acting on the job, you’ll greatly reduce your risk of a serious hand injury. Here are a few ways to keep your hard-working hands safe, secure and strong:

Wear protective gloves

Wear the proper hand protection for each job you perform. For example, if you’re handling rough or abrasive materials, leather gloves will go a long way toward protecting your hands. Leather gloves can also help you get a better grip on heavy objects and shield your hands from things like cutting tools, thorns, sticks and other sharp objects.

On the other hand, if you’re working with chemicals, petroleum products or solvents, you’ll need to wear special gloves that are designed to protect your skin from these substances. No matter what kind of gloves you’re wearing, it’s important to find the right fit. If your gloves are too small, they might not fully cover and protect your hands. However, if your gloves are too large, they could get caught in moving machinery parts.

Moisturize every day

If you work with grease, chemicals, paint or other harsh substances, you might want to apply a special hand cream before work to protect your skin against dermatitis. You should also apply hand lotion after work each day, especially if you work outside often and suffer from dry, calloused or cracked hands. Hand lotion can help soothe painfully dry skin and add moisture back to your hands, which will prevent further cracking.

Shield your hands from harm

If you work with cutting tools, sharp objects, rotating equipment or other machinery, it’s important to realize that your hands are always in danger. Think before you act and always follow proper safety guidelines. Although you might have gotten away with nothing more than minor hand scrapes or cuts in the past, your next hand injury could be much worse if you aren’t careful.

When working with potentially dangerous machinery or equipment, always keep these hand safety rules in mind:

  • Stay focused on the job at hand. Avoid distractions, keep your eyes on your hands at all times and work carefully and deliberately.
  • Before lifting a box or any other object, check the item for splinters, nails, broken glass and other dangers.
  • Keep your hands away from rotating equipment. Never use your hands to stop rotating parts.
  • Pay attention to your fingers when lowering heavy objects to ensure they don’t get pinched.
  • Never use your fingers to test the temperature of liquids or machinery.
  • Keep your hands clear of loads that are being mechanically moved or lifted.
  • If you do suffer from a hand injury, report it to your supervisor and seek medical treatment immediately.

Although our hands are our most important tools, we often take them for granted. We overuse and abuse them and sometimes forget to protect and care for them. Take care of your hands both on and off the job, and they’ll continue to take care of you.

Aug 01
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SAFETY COLOR CODING: BRILLIANT!

By Risk Management Bulletin

How well do employees know the meaning of the colors used for safety signs and tags in your workplace? Although red is associated with danger in nearly everyone’s mind, the warnings indicated by other colors might not be so obvious to all workers. That’s why OSHA requires color coding — and why you need to train your employees in recognizing the meaning of these signs at a glance.

Here are the most common codes:

  • Red = Danger. OSHA recommends using red, or predominantly red, for danger signs or tags, with lettering or symbols in a contrasting color (usually white against the red background). Red is also used for fire apparatus and equipment, safety containers for flammables, and safety devices such as switches for emergency stopping of machinery, stop bars, and buttons.
  • Yellow = Caution. These signs and tags are all yellow, or predominantly yellow, with lettering or symbols in a contrasting color (usually black). Yellow is often used for physical dangers such as slipping, tripping, falling, striking against, and pinch points.
  • Orange = Warning. These orange, or predominantly orange, signs and tags generally have black lettering or symbols. Orange is often used for potentially dangerous parts of machinery or equipment that might cut, crush, shock, or otherwise injure a person.
  • Fluorescent Orange/Orange-Red = Biological Hazard. These signs and tags have lettering or symbols in a contrasting color (usually black). This color designates infectious agents and wastes that pose a risk of death, injury, or illness.
  • Green = Safety Instructions. These signs usually have white lettering against the green background. Some part of the sign might also contain black lettering against a white background. Green is used to designate first-aid equipment, emergency eyewash stations, and so forth.
  • Fluorescent Yellow-Orange. This color is used, with a dark red reflective border for triangular signs on slow-moving vehicles.
Aug 01
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IF YOU LEASE, YOU MIGHT BE LIABLE

By Risk Management Bulletin

If you’re a tenant, you might feel that you’ve avoided many loss exposures, such as fire damage to the structure, normally associated with ownership of buildings. But have you read your lease lately? Really read it?

Many leases contain extensive insurance requirements that the tenant must agree to maintain. Although these usually include liability arising from the tenant’s actions and responsibility to cover their property for loss, sometimes overlooked is the extent to which the tenant might have agreed to cover exposures normally assumed to be the responsibility of the building owner.

For example, in retail shopping areas, there’s often an abundance of external glass windows. Although these are clearly the property of the building owner, many leases transfer any responsibility for damage to the windows to the tenant. The idea is that because the tenant most directly controls the potential loss exposures for the glass (such as vandalism, accidental breakage, maintenance inspections, and so forth), the tenant should provide the insurance. Similar reasoning might lead to the tenant being held responsible under the lease for other loss exposures not directly attributable to their own negligence.

If you’re a tenant, now’s the time to pull out that copy of your lease. Review it with your legal counsel to see if there might be language or agreements that need addressing. Then let us review the lease for the insurance implications (and be forewarned — they won’t all be contained in a paragraph titled “insurance”).

Our risk management professionals can help you take ownership of your loss exposures by sitting down with you to review what your lease requires, how well your current program meets these requirements, and the options for making any necessary changes to your protection.

Aug 01
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TAKE THIS DISASTER PREPARATION QUIZ

By Risk Management Bulletin

To follow up on the article “Is Your Workplace Disaster Ready?” in the previous issue of Reducing Your Risk, we’d recommend using this self-assessment checklist for business owners developed by the Institute for Business & Home Safety (IBHS).

“10 Questions: Is Your Business Ready?”

Your answers will help determine how well you handle an emergency:

  1. Are you concerned that a natural or human-caused disaster might disrupt your normal business operations?
    __Yes __No __Unsure
  2. Have you determined what parts of your business need to be operational as soon as possible after a disaster and planned how to resume those operations?
    __Yes __No __Unsure
  3. Do you and your employees have a disaster-response plan to help assure your safety and to take care of yourselves until help can arrive?
    __Yes __No __Unsure
  4. Could you communicate with your employees if a disaster occurred during or after work hours?
    __Yes __No __Unsure
  5. Can your building withstand the impact of a natural disaster, and are your contents and inventory adequately protected?
    __Yes __No __Unsure
  6. Are your vital records protected from the harm that a disaster could cause?
    __Yes __No __Unsure
  7. Could you stay open for business if your suppliers can’t deliver, your markets are inaccessible, or basic needs (water, sewer, electricity, transportation, etc.) are unavailable?
    __Yes __No __Unsure
  8. Do you have plans to stay open even if you can’t stay in or reach your place of business?
    __Yes __No __Unsure
  9. Have you worked with your community, public officials, and other businesses to promote disaster preparedness and plan for community recovery?
    __Yes __No __Unsure
  10. Have you consulted with an insurance professional to determine if your insurance coverage is adequate to help you get back in business following a disaster?
    __Yes __No __Unsure.

Results: Your score indicates how well-prepared you are for a disruption.

  • 7 – 10 Yes answers: You’re well on your way.
  • 4 – 6 Yes answers: You have lots of work to do.
  • 1 – 3 Yes answers: You should get started immediately.

Our risk management professionals would be happy to work with you in developing a disaster management plan tailored to your needs. Just give us a call.

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