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Construction Insurance Bulletin

Why Construction Companies Need a Safety Committee

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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.

Start Your Renewal Process Early This Year

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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.

EQUIPMENT FLOATER INSURANCE: DON’T LEAVE YOUR OFFICE WITHOUT IT!

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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.

BUILDING VALUATION: CLOSING THE ‘UNDERINSURANCE GAP’

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When settling Building Insurance claims, it can be tough to determine the real cost of replacing or restoring damaged property. Unfortunately, the methods that policyholders, insurance companies, and agents usually use to set the right amount of coverage all have their weaknesses; according to insurance experts, this means some buildings might be underinsured by up to 40%!

This shouldn’t be a surprise. Basing the amount of coverage on the purchase price of a building doesn’t factor in possibly significant changes in the value of the location. The same problem applies with using real estate appraisals, which are based on the sale price.

Although setting coverage by estimating square footage and material costs can be fairly accurate, these methods depend on the validity of the data plugged into the formulas. What’s more, changes in zoning or building regulations can have a significant impact of the value of the building.

As a construction professional, you can’t afford to “guestimate” the cost of building repair or restoration after a loss. For example, you probably have a strong grasp of arcane and complex zoning and building ordinances in your everyday work.

We’d be happy to provide a complimentary review of the valuation of your buildings for coverage purposes and recommend any needed changes. We can then explore opportunities to improve the accuracy of building valuations for your clients — and ours, so that we can help close that 40% “underinsurance gap.”

Safety Tips For Your Construction Fleet

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In your construction business, you use vehicles every day and insure them with commercial auto insurance for construction vehicles. Unfortunately, accidents can happen as you drive on the road or operate the vehicles on a job site. Utilize several safety tips as you protect your construction crew, fleet and company.

Create a Vehicle Operating Policy

Your employee handbook should include your company’s policy for proper vehicle operation. It will include details about driver expectations and safety procedures. Include any information your insurance company requires, too. With this policy, you help your employees understand safe driving practices and minimize accident risk.

Inspect Vehicles Annually

The pickup, dump and flatbed trucks you operate on the road must be inspected annually before you and your employees may legally drive them. Schedule inspections and any required emissions testing with a qualified inspection station. For the excavators, cranes, bulldozers and other vehicles in your fleet that don’t require an annual inspection, implement regular maintenance checks to ensure these vehicles operate properly. Keep accurate and updated records of every inspection as you prove that you’ve met your legal obligations, prioritize safety, and protect your employees and company.

Train Employees

Your employees must know how to operate vehicles safely before they start the engine. Give every employee an operating exam, and retest annually as you verify that they can safely operate the vehicles on the road or job site.

Between annual exams, provide trainings on safe operating procedures. Every employee should know defensive driving techniques, all Department of Transportation (DOT) guidelines, job site safety procedures and what to do after an accident.

Establish a Troubleshooting Reporting Procedure

While your employees may operate your fleet vehicles, you ultimately hold the responsibility for the vehicles’ safety. Set guidelines that outline how your employees should report any issues they find as they operate the vehicles. Employees should know where to find the forms, how to complete them and where they should be delivered. You must then follow through and fix any reported problems.

Conduct Risk Management Surveys

To promote safety, you should know and minimize as many risks as possible. In addition to educating operators on the risks of the specific vehicles they operate, monitor drivers as you identify and address risky behavior. Be aware of risks on the job site, too, such as loose dirt, drop-offs or right turnarounds, as you keep your vehicles and employees safe.

Your construction vehicles provide invaluable service for your business. Take proactive steps to keep your fleet in top working order and equip your employees to operate those vehicles safely. For more safety tips, talk to your construction insurance agent.

CONSTRUCTION IS A RISKY BUSINESS!

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Anyone who works in construction knows the dangers — and costs — involved.

Accidents are expensive. For starters, a mishap will increase your General Liability and Workers Compensation premiums, as well as expenses for lawyers and other personnel brought in to investigate the incident. Other costs include reduced productivity and diminished morale, disruption of project work schedules, and other fees (such as OSHA fines). What’s more, you might well come under media scrutiny, leading to a loss of reputation that can be difficult — if not impossible — to repair.

On an industry-wide basis, workplace accidents make it harder to attract and keep new workers to meet current and projected needs. Although worker attrition is problematic throughout the economy, it’s a particular concern in construction. The industry historically has had trouble attracting and retaining good workers, due partly to its negative image as a dirty and dangerous occupation. Ironically, the high attrition rate — which is closely linked to unsafe working conditions — perpetuates itself because newer workers on a job site are more susceptible to accidents.

Reducing your risk of loss from accident is a two-part process. For starters, you’ll need a comprehensive insurance program that offers the best protection at the best price. Just as important, make sure that you develop, update, and enforce job site safety programs, with incentives to get your workforce involved.

Our insurance professionals stand ready to help you keep your workers safe — and your costs under control. Just give us a call.

How To Assess Tradesmen For Your Contractor Business

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The construction industry relies on skilled tradesmen who specialize in different jobs like plumbing, electrical or drywall installation. As a contractor, you may hire dozens of tradesmen for a project. Assess a tradesman’s skill, experience and qualifications in several ways as you ensure the job is done right.

Ask for References

A plumber may say she has experience repairing water treatment system pipes, but you must verify her experience before you hire her. Contact the references she provides and ask about her quality of work, reliability and timeliness. Use this information to decide if the subcontractor is right for your specific project.

See Proof of Insurance

If a tradesman installs the wrong material or otherwise delays the construction project or damages the existing building, you could be liable. Ask the tradesmen you hire to verify insurance coverage, and keep a copy of their current business owners or liability policy in your files.

Evaluate a Tradesman’s Subcontractors

The tradesmen you hire may employ subcontractors, too. Assess these subcontractors as you verify that everyone on the job site will maintain high-quality work and safety standards. If you cannot personally vet the subcontractors, include a clause in the contract stating that the tradesmen are responsible for the actions and behavior of their subcontractors.

Sign a Safety Policy Agreement

Because every construction site includes safety risks and potential hazards, you will need a safety policy agreement for each project. It outlines specific job site risks and details ways to reduce accidents, and you and the tradesmen will both review and sign the agreement.

Agree to a Contract

You and the tradesmen you hire should agree to and sign a contract that includes details like the work requirements, timeline and payment. Prepare new contracts for each project and tradesman, store a signed copy in your records and provide a copy to the tradesman.

Perform Regular Assessments

You may work with the same tradesmen for years, but you should still perform regular assessments for each new project. These assessments ensure that the tradesmen you hire continue to provide quality work and maintain a safe environment.

Monitor the Job Site

While your assessment of tradesmen is important, continue monitoring the job site. Be sure your tradesmen continue to comply with their contract. If you see concerns or violations, address the tradesman directly and ensure changes are made. With regular monitoring, you catch problems while they’re still manageable and keep the project operating smoothly.

Your construction business relies on a variety of skilled tradesmen. Assess each one carefully as you produce quality work, maintain safety and protect your reputation and business.

COMPLETED OPERATIONS COVERAGE IS ESSENTIAL FOR CONTRACTORS

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An accounting firm on a building’s top floor accused the roofing contractor of ruining its computer network equipment, even though the contractor wasn’t working on the building at the time. The contractor had finished replacing the roof in September.

Heavy snows fell that winter, and it started melting rapidly when March brought above-normal temperatures. The accounting firm’s systems support analyst came in to work on a Monday morning to find pools of water in the server room and the servers inoperable. Given that the first four months of the year are a somewhat busy time for accountants, the firm could not remain without its computer network for long.

It rush-ordered new servers, paid a premium for express shipping, then paid even more to have technicians remove the ruined servers, install the new ones, load the data from backup records kept off site, and perform network testing, all within a period of a few days. The cost to the firm was high, both in terms of repair and replacement costs and extra expenses for its accountants to access an alternative network. The firm sued the building owner and the roofing contractor to recover thousands of dollars in losses.

This is where the contractor’s Completed Operations Liability insurance coverage came in handy. This insurance covers the contractor’s legal liability for bodily injuries or property damage that his work causes after he has finished it. Before the insurance applies, however, the incident must meet several conditions:

    • The incident must be an “occurrence.” The policy defines this as an accident, but it can also be damage that happens over time because of harmful conditions. The roof suddenly letting melting snow gush all over the servers is an occurrence. So is the roof allowing melted snow to seep into the walls over a period of months, causing plywood and insulation to rot?
    • It must occur during the policy term. It is not necessary for the contractor’s mistake to happen during the policy term, but the injury or damage must occur then. The contractor finished the roof in September, his liability insurance policy renewed in January, and the damage to the servers occurred in March. The policy that took effect in January applied, not the one in effect in September.
    • It must occur away from the contractor’s own premises. Liability insurance does not apply to damage to premises the contractor owns or rents.
    • The injury or damage must arise from the contractor’s work. This means that the contractor’s portion of the job led to the injury or damage. The roof was supposed to keep water out of the building; water entering the building implicates the work done.
    • The contractor’s work must be completed or abandoned. It’s complete at the earliest of: When all the contract work is complete; when all the work at that job site is complete; or when the customer puts the work to its intended use. The contractor finished the roof in September and the building owner put it to immediate use, so the insurance company will consider it to be complete.

The insurance will not apply to bad work that did not cause damage to something else unless a subcontractor did the job for the contractor. If the building owner discovered the problem with the roof before the accountant’s servers took a shower, the insurance would not apply to fixing the roof. It also doesn’t cover liability for the building becoming unusable or less usable because it contains the contractor’s defective work. Work with one of our insurance agents to ensure that you have the proper coverage. Completed operations losses can be catastrophic; financial protection is essential!

9 Construction Site Erosion Control Techniques

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As a contractor, your contractors pollution insurance covers any erosion you cause. You want to follow all federal, state and local erosion control guidelines, though, as you prevent runoff, protect ecosystems and avoid fines. Consider nine effective construction site erosion control techniques.

    • Reforestation

      Restore or restock woodlands around the property to increase soil retention and reduce degradation. Fairly simple to install, you only need seedlings or saplings, dibbers and measuring ropes.

    • Buffer Strip

      Narrow strps of permanent vegetation slow runoff and trap sediment. The root system controls soil erosion caused by winds and reduces landslide risk, too.

    • Geotextile Roll

      Made from coconut, straw or similar fibers and bound together with mesh rope, geotextile rolls cover newly graded soil and prevent bank erosion. Vegetation can be planted over the geotextile roll to increase stability. Over time, the materials will biodegrade and cause no harm to the environment. Easy to install and low maintenance, this erosion control technique is best for small streams and stable water levels.

    • Brush Mattress

      A system of branches and stakes, a brush mattress is often used on banks near perennial streams. This biodegradable erosion technique can be washed away in heavy rain, but it is easy to install and maintain.

    • Gabions

      Use gabions, cages or containers filled with  small rocks, on banks that are highly prone to erosion. While gabions aren’t always pretty, they are sturdy, easy to customize with rocks or concrete, and useful almost anywhere. Always ensure the supportive footing is secure and regularly inspect the gabions for mesh damage.

    • Riprap

      Rubble and rocks of all sizes and types form a riprap. It is an effective control erosion technique on embankments, bridge abutments, shorelines, streambeds and other seaside locations. Use a riprap on slopes with a rise that’s less than 2:1 or the riprap could become unstable and erode.

    • Rootwad Composites

      Stabilize stream banks, lower stream flow velocities and provide aquatic habitats for wildlife when you install rootwad composites. They incorporate interlocking tree material on the base of stream slopes. Complicated to install, this erosion control is cost effective.

    • A-Jacks

      Placed at the base of slopes, A-Jacks consist of interlocking cement stakes. They increase stability and are useful for high erosion areas. While they’re available in a variety of sizes, they do not biodegrade.

    • Tree Revetment

      Anchor wood to the bank with a tree revetment. It reduces water flow velocity but is not recommended for high erosion areas. This technique requires ongoing maintenance, too.

With these nine erosion control techniques, you protect your job site and the environment. Determine which technique is right for each individual project, and update your contractors pollution insurance policy regularly to protect your business

PROTECT CONSTRUCTION WORKERS FROM HARSH WEATHER

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The weather outside is frightful, whether it’s January in Buffalo or July in Phoenix. Extreme weather conditions can be a major problem for construction workers, most of whom have to perform their tasks outdoors. During the summer, high temperatures and humidity can cause dehydration, heat stroke, cramping, exhaustion, and rashes. The need for workers to wear protective clothing, such as long denim pants and heavy boots, exacerbates the heat’s effects.

Those parts of the body not covered up become vulnerable to sunburns and skin cancers resulting from exposure to the sun’s rays. Summer lightning storms can cause fatal injuries to workers. During the winter, low temperatures and high winds can combine to make conditions bitterly cold. This can lead to hypothermia and frostbite, in addition to a greater potential for slip and fall accidents due to the presence of ice and snow.

For these reasons, all contractors should make protection against extreme weather conditions part of their regular safety procedures. Some regulations from the federal Occupational Safety and Health Administration require this. For example, one regulation requires employers to provide personal protective equipment and special training to workers if they will work under conditions so severe that they qualify as environmental hazards. Among the required protective equipment is clothing to cover an employee’s eyes, head, face, arms and legs. Another regulation requires employers to provide equipment protecting employees from over-exposure to the sun.

Some steps contractors can take to prevent illness or injury resulting from weather conditions are:

  • Learning the signs that indicate the weather is making a worker ill
  • Monitoring workers for signs of illness
  • Training workers on how to protect themselves from the elements
  • Setting an expectation that workers will dress appropriately for weather conditions
  • Providing shade during hot weather and heated areas during cold weather in which workers can take breaks
  • Scheduling work for cooler periods in the summer and warmer periods in the winter

Workers should dress in layers during the coldest weather and should, to the extent practical for the work, keep exposed skin covered with gloves, hats, and scarves to protect against frostbite. During hot, sunny weather, employees should wear wide-brimmed hats, long-sleeved shirts made of light material, and ultraviolet-resistant sunglasses. They should also apply sun block at regular intervals during the day.

In addition to higher Workers Compensation costs, employee injuries and illness rob a contractor of the productive services of good workers, divert management’s attention from the core business, and make the employer less attractive to good, skilled workers. Although contractors cannot completely protect their workers from the effects of extreme weather conditions, with some simple steps and training they can make losses from these conditions less likely and less severe.