Construction Insurance Bulletin

The craftsman’s motto, “measure twice, cut once” is a sort of microcosm of everything you need to know in order to bring projects in on time and under budget. Cutting corners, taking shortcuts, neglecting necessary expenses, that might help you save time and money in the short run, but best case scenario, it’s going to wind up costing you more in labor and budget to redo it later on. Worst case scenario, you build a faulty home that collapses in the first year, if it manages to pass inspection in the first place, and then nobody ever hires you again.

The first thing to go when people take shortcuts tends to be safety. A rush job makes for an unsafe work environment, and results in an unsafe living environment. No matter how much time and money you save on the job, it’s no good if you wind up paying it back in legal fees and time spent in the court room.

So how do you save time and money without taking dangerous shortcuts?

1. Be Pragmatic When Buying Tools And Materials

   Simply put: there’s not much that a $200 hammer can do that a $10 hammer cannot. Don’t cut costs on quality, but shop around, and don’t overspend on fancy tools and materials that you don’t need.

1. Overestimate All Costs

   If you promise your client that you’ll have the addition done in a week, and then a nasty thunderstorm hits on day seven, you’re going to wind up trying to finish up the roof in the middle of a heavy downpour. Promise a two week turnaround on the same project, and the client will be delighted to see the project finished six days early. Don’t make “best case scenario” promises. As they say, plan for the worst, hope for the best.

1. Pay A Little More For Experience When You Need To

   A $12-a-hour lackey might be able to install a kitchen sink if you give him the whole weekend to do it. A $30-an-hour professional plumber might be able to get the same sink installed in an afternoon. Saving money often means spending a little more now so you can spend considerably less in the long run.

1. Don’t Overcommit Yourself

   You’re going to burn through a lot of gas and a lot of daylight if you’re running three jobs at a time and driving all over town to get to them. If client #2 can’t wait a few days for you to finish up a job for client #1, they’re probably a pain in the neck to do business with anyways.

It all comes down to common sense, really: Pace yourself, set realistic goals, spend wisely, and always put safety first.

Two things that we often neglect when planning a new project: Terrain and climate.

Oftentimes, a well-built home fails to last simply because it was built for a different kind of terrain, or a different kind of weather. A Spanish style California home, for instance, wouldn’t last a decade being bombarded with the heavy snow and ice of the Midwest. And you know those island homes built on stilts in case of flooding? Great idea for a humid climate with softer ground, but try that on a hillside in Arizona, and the slow shifting of the rock-hard surface is going to have that house teetering over to one side before the next presidential term is over.

If you have multiple degrees in engineering, architecture, geology and physics, then you might be able to build whatever you like on any terrain, in any climate, based strictly on your own knowledge. Unfortunately, most of us never had the opportunity to spend 24 years in college before going out into the workforce, so how do we find out how to go about building safe, sturdy, comfortable homes anywhere in the world?

The most effective way to determine how best to build in an area with which you’re not entirely familiar is to simply take a look around the older buildings in the neighborhood and take some notes. What materials do they use? Are they well-insulated or is that not a major consideration in this region? Is anyone building homes on the sides of hills, or do they prefer flat ground? Ask local homeowners and builders, find online forums for construction professionals in the neighborhood.

Some structures are pretty universal. You don’t need to do a week’s worth of research to build a tool shed or a warehouse. Utilitarian buildings aren’t meant to be cozy or easy on the eyes. Likewise, if you’re putting an additional room on the home, then simply matching it to the rest of the building will ensure that it lasts just as long. When your goals are a little more ambitious, when you’re trying to create a home that will make the client happy and look great in your portfolio, “when in Rome” is the motto of the day. If you don’t see any two story homes in the area, that’s probably for a reason. If you don’t see anyone building right by the lake, then shifting tides and muddy soil are probably a major concern.

By adapting to the techniques and materials used in the oldest homes in the same area, and avoiding borrowing any ideas from the team whose two story home toppled over and put their firm out of business last year, you get to “learn from the other guy’s mistakes,” and you can focus on just building a great home.

You don’t need special training to haul an armful of 2×4’s across the jobsite, and most anyone can manage a hammer and nails, help to pull a rope to lift a wall, or attach hurricane ties to the joints. A lot of the skills that are required on a jobsite are easy enough to pick up as you go. Even the stuff that seems impossible to the greenest gofer on the first day of the job usually sinks in with a little on-site experience.

But, that doesn’t really describe every job on the site, does it? No experienced foreman hands the new guy a box of copper and says “Go install the wiring right quick.” Are there some tasks on the site that demand less training and expertise than their respective unions would like to think? Well, that’s a debate for another day. But it’s hard to deny that there are some jobs that not just any knucklehead can get done.

Masonry

Laying tiles and brick isn’t the most complicated job on the site, but quality masonry is a little more nuanced than slinging cement and gluing bricks together. Stonemasonry, for instance, involves the use of actual stone, and results in a wall that can last for decades with little to no maintenance. Basic brick-laying is something that you can learn in a weekend of apprenticing, but serious stonemasonry demands real training and experience.

Plumbing

Sticking two pipes together isn’t rocket science. You might or might not be able to hook an entire office building up without help, but most anyone who’s worked on a building project can figure out most of the basic tasks involved with plumbing. A big part of what a professional plumber brings to the table is an intimate knowledge of building regulations, safety standards and other laws and guidelines regulating the field. A professional not only ensures that the pipes work just fine, but that you don’t get hit with an order to tear those pipes out of the walls and start over because you failed to file the proper paperwork.

Drywall

You don’t need special licenses or permits to lay down some drywall, but it really isn’t something that any gofer hopping off the back of a truck can handle. It’s not so much that drywall is difficult to do, but that there’s an artistry to it if you don’t want to wind up with big globs of plaster sticking out under the wallpaper. On that note, painting is a task that’s easy to do, and not so easy to do right.

Over time, you’ll learn where each worker’s strengths and weaknesses lie. Not every task requires a special license, but some do demand a little more experience than others.

Being stuck at home on workers compensation after an injury is easier for some than it is for others. If you’re only working construction in order to pay the bills, and your real passion is daytime TV, then you’re one of the lucky ones. For others, it’s easy to go a little stir-crazy after the first week of reruns, game shows and soap operas.

It’s easy to fill your time with various activities. You can play Xbox all day, you can watch your favorite movies, you can build a model ship or take up Sudoku. It’s not so much a matter of finding something to do, it’s a matter of finding something important to do. For many of us, work isn’t just a way to keep a roof over our heads, it’s a way to contribute something to the world. We take pride in driving by an office building and saying “I installed the A/C ducts in there.” Somehow, putting together a jigsaw puzzle just doesn’t deliver the same sense of gratification.

So it’s not just about filling your time up, keeping your hands busy, it’s about finding a way to make a meaningful contribution, even while temporarily unable to ply your trade. In other words, even if you stay busy, you can still wind up feeling depressed if, at the end of the day, you look at how you’ve been spending your time and you think “Who cares?”

Finding a way to fill your time that is actually meaningful is more challenging than simply filling your time with whatever distractions you can find. A meaningful pastime is…Something that you’re interested in.

• Something that you’re interested in.

• Something that makes a difference on some level, and…

• Something that is accessible.

Something that interests you means that it has to be meaningful to you, first and foremost. Meaningful in a broader sense could be helping a cause that you believe in, or just taking some photographs and entering them in a local contest. As for accessibility, well, if you broke your ankle at work, then this is not the time to volunteer for an AIDS walk.

The frustrations that we encounter when cooped up at home are not just about staying busy. If all we want to do is stay busy, we can buy a pack of cards and play solitaire for eight hours a day. It’s about doing something that enriches your own life, and which returns a feeling that you are contributing something to the world.

Easier said than done, certainly. But just because you’re stuck without work for the time being doesn’t mean that you’re completely out of options.

You’re not going to last very long in the construction business if you turn down any job with even the slightest hint of danger. In building contracts, your whole business is dealing with pneumatic drills and sledgehammers and table saws all day long, oftentimes three stories up in a building with no walls on it. The trick is being able to identify unmanageable, unnecessary danger, and knowing when to say no.

The source of danger doesn’t always come from the nature of the job itself. Roofing a two story home offers the risk of falling and spending the next couple months on worker’s comp, but that risk is relatively slim if you have the right tools, the right people, and the right timeline and budget to do the job safely. On the other, something as simple as building a doghouse can lead to serious injury if you’re trying to rush the job along for a client with unrealistic expectations.

The cornerstones of safety on a job site come down to the following:

• The time and budget to do the job safely. A client asking you to do a $2,000,000 job for $500,000 could well be the biggest contract a fledgling company has ever been offered, but it may well be the last one they’re ever offered if they wind up understaffed and under-equipped in order to stay within the budget.
• A crew with the requisite experience to handle the job without incident. Some tasks we learn on the job. Electrical wiring, welding and operating heavy machinery usually aren’t those. Don’t take a job if you don’t have, or can’t get, the people you’ll need to do the dangerous parts.
• A safe work environment. If you’re hired to install sunlights in a section of a shopping mall and the proprietors refuse to close that section off while you’re working there, an injury is effectively guaranteed. Construction is best conducted in an environment that the construction company is able to control.
• Proper insurance coverage. Adequate coverage doesn’t ensure that nobody’s going to get hurt, but it does ensure that you’ll be prepared should that happen.

If you don’t have these cornerstones in place, then it really doesn’t matter how well trained your people are in responding to an emergency, because they’re not going to be able to keep up with the emergencies that are taking place no a daily basis.

If you work in construction, it’s not uncommon to encounter asbestos, lead, and other hazardous materials on a remodeling or deconstruction job. When that does happen, here are the appropriate steps you’re going to want to take:

Clear the Area

If you find asbestos in a home, you’ll want to clear the area right away. Lead exposure can take years to create any lasting damage in the human body, but even mild exposure to asbestos can be dangerous.

Report

As soon as possible, report your findings to the proper authorities. In more cases than not, this will be the EPA. False alarms do happen, it’s not uncommon for some other material to be mistaken for asbestos, but the EPA will typically have some tests conducted in order to determine what it is that you’re dealing with. You’ll also want to let your client know that anyone who has been living or working in the building has potentially been exposed to the hazardous material.

For Asbestos and Other Hazards: Get a Professional

If you’re removing asbestos, you need to be certified, and if you are certified, you still need to report to the proper authorities that you’re going to be taking asbestos out of an old home.

If you would like to get certified to remove asbestos in order to prevent any findings from slowing a construction job down too much, you can get started at the EPA website. https://www.epa.gov/asbestos/training

For Lead: Proceed With Caution

You can remove lead on your own in most states with or without certification, but it can be a tricky process. Make sure that anyone involved in the job is wearing a dust mask, goggles and gloves, and be sure to clear the area to ensure that lead dust doesn’t get on anything. Sweep and clean the area thoroughly when you’re done.

Replace

Asbestos is more troublesome than it’s worth, but it is very good at one thing: preventing fire damage. It is nearly impossible to get the stuff to burn. Following the removal of any hazardous building material, you have to take a moment to consider why it was installed in the first place. Lead pipes are easy enough to replace with PVC, while asbestos removal should be followed up with the installation of something to replace it, like fiber-cement siding.

Finally: You’ll want to keep an eye on the health of yourself and your crew. The real threat is prolonged exposure, and most remodeling jobs are over and done with by the time the effects of exposure to hazardous materials can really be felt, but as always, it’s better to be safe than sorry.

Maritime construction is a niche field within the construction industry. Most of the people who work in this area of construction will specialize in it, and they’ll carry the requisite special qualifications, training and licensing to prove it. Jobs like underwater welding are very different from welding in the dry environment of a workshop or an above-ground job-site. As such, the insurance demands for maritime construction is very different as well.

Waterborne Equipment

Many insurance policies actually feature an exclusion on this note. If you take your equipment out on the open water and something should happen to it, your basic policy is probably not going to cover the loss.

Watercraft Liability

Whether you’re getting to the jobsite on a speedboat or a rubber raft, watercraft liability will be a requisite if you’re doing any maritime construction. Any damage in which your vessel might be implicated, you’ll want liability for it.

Marine Floater

“Floater” sort of takes on a double meaning here: Any installation you’re building in order to work on a project, you’ll need some coverage for it. On land this could mean a scaffolding, on the sea it might mean temporary constructs that allow your team access to the exterior of the project without having to swim to get there.

Adverse Weather

Choppy weather is to be expected on the sea, but it can turn bad in ways that can cost you weeks worth of work. Storms, the shifting of the tides and simple bad sailing conditions can set your schedule back quite a bit. Insurance to protect you from adverse weather conditions is doubly important on sea as on land.

Knock for Knock

A common insurance agreement in offshore construction is the “Knock for Knock” arrangement. What this means is that all parties involved will cover their own ends, even if it could be proven that another party was at fault. You see Knock for Knock used in all sorts of construction projects, but it is especially popular in marine construction. Many deals are made with this agreement on smaller projects simply because there are so many additional angles to cover on the sea, and this simplifies the process a bit.

Maritime construction insurance is one of the reasons that this is a specialty field. This, along with the special training, equipment and materials required. If you ever want to explore that niche, the investment of time, money and energy to get started may prove to be well worth it, of course. It’s easier to dominate a niche than it is to dominate an entire industry.

In legal terms, an act of God isn’t, in fact, a religious experience. Well, that’s not to say that an act of God couldn’t be a religious experience, it’s just that that’s not inherent in the legal definition of the term. An act of God essentially comes down to the unforeseen and the unpreventable. You can reduce the likelihood of accidents on the job site by making sure that you don’t allow any drinking, fighting or general carelessness on site, you can reduce the likelihood of accidents on the road through proper auto maintenance, but you can’t prevent a flood or an earthquake no matter how many safety courses you attend.

Acts of God will exempt a party from strict liability and from negligence in common law. Many building contracts have a provision allowing for acts of God to excuse unexpected delays in a project’s completion. However, damages and delays owing to a natural disaster may be disputed as acts of God in some circumstance.

The key word is “unforeseeable.” If someone falls off of a scaffolding and spends the next four weeks in a cast because of an earthquake, then that will usually be chalked up to an act of God. If they saw a storm coming in, decided to keep working, and then got struck by lightning, then the “act of God” claim may be contested.

“Act of God” is sort of a liability free-pass card, exempting you from responsibility for things that you couldn’t possibly have predicted. There are a few steps that you can take to ensure that there is no gray area, no room for doubt when you need to lean on this legal term:

1. Keep tabs on the weather. Don’t assume, for instance, that a storm “isn’t going to be as bad as they say.” It might not be so bad, but do you want to bet your career on it?

1. Keep all of your safety equipment in tip top shape. You don’t want to give people any wiggle room to say that that safety harness would have snapped eventually with or without the earthquake.

1. This goes for your vehicles, as well. It’s hard to claim a small flood as an “act of God” when your truck was the only one slipping and sliding across the road.

An act of God can be a sort of Get Out Of Jail Free card when it comes to liability, but you can’t play it every time.

Anyone who knows how to swing a hammer can probably erect a shed. If you have a little bit of experience in building, then you can probably take a wall out of a home to extend the living room, or put one up to split the master bedroom into two. If you work in construction as a professional, you’re expected to know just about everything, and if you don’t know it, then you know somebody who does. So what is that a high-end builder does that an everyday construction foreman doesn’t?

Well, it’s really about the market and the approach to designing and building something. A skilled construction crew can build a home just as well as a high-end construction team can do it, but a high-end construction crew is catering to a wealthier market, and typically building custom structures that are designed not only to be lived in, but to appreciate in value by leaps and bounds. You don’t hire a high-end crew to put together an apartment building or build an additional room onto your house, you hire them to build a dream home.

Here’s what to consider if you’re thinking of pivoting into high-end construction:

• There’s a lot of money in it. Like we said, you’re catering to a wealthier demographic. You’re likely to take fewer jobs, but you’ll typically earn quite a bit more on each contract. This is true whether your team is the one building the house, or you’re just doing the wiring and light fixtures. On the other hand…

• It’s a smaller market. If you’re looking to build mansions and Summer getaway homes, you’re going to be making more money, but probably doing far fewer jobs. Unless you live somewhere like Beverly Hills, you’re also looking at a much longer drive to get to the jobsite every morning, as you’re going to be moving all around your territory to work with your clients.

• It’s collaborative. You need to collaborate with your client from the start, and throughout, on the design of the house. Some professionals can’t stand this part.

• It’s mostly marketing. If you can build a cabin, you can probably build a mansion. You need to convince your potential clients that your team is specially suited to building homes that are lavish and aesthetically pleasing. A selective portfolio goes a long way towards building this trust.

High-end construction isn’t for everyone. Some markets just don’t create enough demand to support a new high-end construction companies, some professionals are more comfortable with the work they’re already doing. Specializing is a great way to keep your foothold in your field, but you need to make sure there’s a market for your specialty.

Security and insurance are two services that are forever intertwined. The more secure your job site, the less you’re going to have to pay for insurance. This applies to almost every field: With a safer car, you pay less for auto insurance. With better cybersecurity for your office network, you pay less for business insurance. If you take care of your body, your health insurance is cheaper, and so on.

The less of a risk you are taking on a day-to-day basis, the less money you’re going to be paying for insurance, and even better:

The less likely you are to ever need to cash in on your policy in the first place.

It’s good to know that someone has your back in case you get into an auto accident, for instance, but isn’t it better to not get into an auto accident in the first place?

Keeping security staff on the grounds can help in a number of ways:

• Quick response: Security staff can be tasked with handling emergency protocol, from directing ambulances to offering first-aid (basic first-aid training being a licensing requirement for security officers in many states)

• Discouraging theft and vandalism: The secret about security guards is that most of them aren’t actually allowed to engage physically with suspected criminals except in a life or death situation. But, the presence of the uniform goes a long way towards discouraging would-be criminals from targeting your job site over an unguarded location.

• A friendly face: A security officer works as both a guard and a receptionist, helping visitors around the site and taking notes as needed.

• Lower insurance: Because of the services that a security officer provides, you can expect lower insurance costs, and fewer instances where you will need to call on your insurer in the first place.

When arranging a budget with a client, it may be a good idea to talk about budgeting for security staff. Obviously not every building project demands round-the-clock security, and even on jobs where security can be a big help, you might only need them around on nights and weekends.

In any event, simply not leaving a building site unattended overnight can go a long way towards lowering your insurance costs and making sure that someone is there to handle it should there be a problem that arises when nobody on your team is around to manage it.