Road-Test Employees, As Well As Vehicles

Jan 04

t1larg-smallChances 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 the vehicle’s operators?

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

  • use of all controls; traffic operations (including backing, parking, slowing, stopping, passing, and turning)
  • general driving habits, such as alertness, stamina, and patience
  • driving rules and regulations pertaining to the vehicle
  • handling the necessary actions/equipment for loading and unloading the vehicle

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

For more suggestions on the format or content of driver exams, contact your trade association, state department of motor vehicles. Don’t forget the benefits of a solid driver training and testing program in keeping your Commercial Auto insurance rates under control.

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

For more information, feel free to get in touch with or one of our agency’s risk management professionals.

Materials And Waste Management: Prevention Pays

Dec 14

Infraestructura-para-el-manejo-de-deshechos-470x260 - SmallEach year around 1,000 trips or slips on construction sites result in fractured bones or dislocated joints, often leading to permanent disability, harming workplace morale, reducing productivity, and raising insurance premiums. Many of these accidents are due to negligence in dealing with building materials or waste.

Safe site operation requires co-ordination between the client, contractor(s), and suppliers. Before beginning a project, agree with the client on arrangements for handling materials and waste. Larger projects should include this agreement in the construction phase plan.

To reduce the risk of mishaps in storing materials, experts recommend that you:

  • designate storage areas for materials, waste, and flammable or hazardous substances
  • don’t allow storage to ‘spread’ on walkways or store materials where they might obstruct access or interfere with emergency escape routes
  • store flammable materials separately and protect them from accidental ignition
  • install guard rails if materials are stored in high places
  • keep all storage areas tidy
  • plan deliveries to keep the amount of materials on site to a minimum

In dealing with waste, decide how to manage waste streams produced during construction and assign responsibility for collecting and disposing of these materials on site.

Waste risk reduction guidelines include:

  • Have all flammable waste materials (such as packaging and lumber) cleared away regularly to reduce the risk of fire
  • Make clearing waste a priority for all workers, and be sure that everyone is on the same page
  • Include enough space for waste bins and containers in accessible locations, and set a schedule for collection
  • Provide carts or chutes for safe removal of waste from the building safely

Our construction insurance professionals stand ready to advise you on keeping your workplace safe.

Green May Be The Way To Go, But How Will Your Insurance Apply?

Dec 07

const1112-01Environmentally-friendly construction, also known as “green” construction, is increasing rapidly in the United States. Concerns about global climate change, U.S. dependence on foreign sources of energy, and rising energy costs are inspiring individuals and businesses to construct buildings with a reduced carbon footprint. This trend has important implications for settlement of insurance claims when green buildings suffer damage.

A green building is one that has met the requirements for Leadership in Energy and Environmental Design (LEED) certification. The U.S. Green Building Council developed LEED in 1998 as a way to help building owners identify and use practical and measurable designs, construction, operations and maintenance practices that are environmentally-friendly. Green buildings are, compared to standard buildings, more energy and water efficient, produce less carbon dioxide, and have a healthier indoor environment.

Some states and municipalities have begun to adopt building codes that require elements of green construction. California has imposed tougher water efficiency standards on new residential construction; New York City is considering more stringent energy-use standards for large buildings. The impact of these requirements on construction costs will vary by location. Green construction might require specialized materials and methods; in the near term, contractors with expertise in these methods may be relatively scarce.

Therefore, in some places the cost of complying with green building codes could be higher than building with standard materials and methods, and that will impact insurance coverage.

The factors that will influence the claim include:

  • Whether the green building code applies to new construction only or also to major renovations.
  • What the code defines as a “major renovation.” Some codes might consider renovations affecting more than a specified percentage of the building’s area as a major renovation.
  • How will use of green building materials affect the building’s appearance? The property owner might lose enthusiasm for a repair if a change in appearance will lower the building’s market value.
  • How will the new materials interact with the existing building components? Will integrating the new materials increase rebuilding time and cost?
  • Are qualified contractors available in the area?
  • Will wait times for green contractors and materials result in costly project delays?
  • How does the building code apply in the event of a large natural catastrophe, such as an earthquake or hurricane? Must property owners meet the higher standards at a time when hundreds of properties have suffered damage.
  • After a catastrophe, will there be long wait times for contractors to haul away debris because of overwhelmed landfills and recycling centers? Will there be long wait times for building inspectors to visit and approve all of the effected properties?

Standard personal and commercial property insurance policies provide very limited amounts of coverage for ordinance or law” losses — extra costs incurred to meet local building requirements. Additional coverage is available; property owners in areas with green building codes should speak with our insurance agents about options and costs.

Research and publishing company McGraw-Hill Construction has predicted that the market for non-residential building retrofitting with green construction will grow to $15 billion by 2014. Property owners and insurance companies will have to address these questions much more often in the near future; the time to answer them is before the losses occur.

Wrap Up Policies; The CCIP Solution

Oct 26


Wrap-up or “Wrap” Construction insurance can be a highly effective tool on large or complex building projects to reduce premiums, minimize cross-litigation, and speed the claims process by providing General Liability, Workers Comp, and possibly other coverages for the general contractor and most – if not all –subcontractors under a single package policy. There are two basic types of Wrap coverage: owner-controlled insurance programs (OCIPs) and contractor-controlled insurance programs (CCIPs).

Although each type has its advocates, more and more project owners prefer have the general contractor sponsor the program because they:

  • often use the same subcontractors, who are familiar with the safety requirements of the program – an essential element in a successful OCIP; Shouldn’t this read CCIP?
  • usually have more control than owners over safety programs and are more experienced in the administration of OCIPs: payroll reporting, claims management, working with the insurance company, and so forth
  • have a financial incentive to minimize accidents and injuries on the project (because insurers usually require the general contractor to pay a six-figure deductible, andin many cases, to prefund these potential losses)
  • often have more financial resources than the project owner to provide letters of credit, collateral, or sureties the insurance company requires for projected and developed claims under the program.

However, in some cases, an OCIP can be a better solution than a CCIP. For instance, many owners might be ready to assume the risks of a Wrap-up – and to share the savings with the general contractor for a job completed safely. Picking the best approach for each project should be a win-win for all parties involved. Our Construction insurance specialists would be happy to offer you their input.


How CPVC Works And Why It Fails

Jul 27


Contractors often install pipes, water-based heat transfer systems, sprinkler systems, and drain lines components made of chlorinated polyvinyl chloride (CPVC) because they’re less expensive, and easier, to work with than those made of metal. These pipes and fittings can cause serious – and costly – damage when they leak or burst.

CPVC components can fail for a variety of reasons. Because this material is a thermoplastic made by combining raw materials, one or more ingredients might be faulty. Errors in manufacturing can lead to defects in the extrusion or injection-mold processes. Other potential risks include inadequate warnings, and improper shipping and handling.

To minimize your exposure to losses when working with products made of CPVC, construction risk management professionals recommend that you:

  • Use proper handling and storage procedures – for example, avoid exposing CPVC components to sunlight.
  • Make sure that the booster pump pressure is not too high when designing the piping system.
  • Do not use CPVC components in pressurized-air applications.
  • Review assembly techniques carefully.
  • Check the type of adhesive used, and the amount (the Goldilocks principle).
  • Set the right amount of dry time.
  • Inspect the alignment of pipes and fittings.

Last, but not least, do not mix CPVC pipes and fittings with those made from its distant cousin, polyvinyl chloride (PVC), which has different chemical properties, physical characteristics, and capabilities.

Of course, most of these precautions apply just as well to installing pipes or fittings made of any material.

As always, our agency’s Construction insurance professionals would be happy to offer their advice on keeping your workplace as safe as possible.


Potential Contract Bond Problems? Let Your Surety Know!

Jul 20


Most public construction projects, and many private projects, require the general contractor to carry a contract bond: a financial guarantee to the project owner from a “surety underwriter” (surety) that the contractor will meet the contract provisions.

Unfortunately, contractors sometimes run into setbacks that can keep them from fulfilling their contract obligations and trigger a bond default – an event that could put them out of business.

Smaller and midsize contractors (those with work backlogs of $5 million to $100 million) are often more vulnerable than their larger counterparts to this risk. The reason: Smaller building projects are usually easier to cancel because the owners are more likely to stick with larger, more complex projects, due to their greater importance and longer planning lead times.

If you’re experiencing, or can reasonably expect, problems in meeting your contract terms – such as excessive overhead, a liquidity squeeze, cost overruns and/or scheduling delays – it makes sense to develop contingency plans that address such concerns.

Just as important, make sure to let your surety know about your situation immediately. After all, the surety has a vested financial interest in avoiding a costly default by working with you and the project owner to work through these difficulties.

Never withhold bad news from your surety. When, not if, the surety learns about your deteriorating financial condition (even if you’re able to meet the terms of the contract), you automatically become a riskier candidate for future bonds. The surety – or any other bond underwriter – will probably limit you to bids on smaller projects with less financial risk, or keep you from bidding on any projects until you can demonstrate financial stability.


Errors & Omissions Insurance Helps Protect Small Contractors

Jul 13


A difficult economy is squeezing small contractors to do more jobs within narrower margins, exposing them to costly errors Customers are more demanding and quick to claim negligence when they aren’t satisfied with the results.

When a small contractor makes a mistake that results in a loss, he must often spend the time and his own money to fix the work – usually costing thousands of dollars. Expensive mishaps happen every day on jobs such as these:

  • Carpet Installer: A contractor picks up the wrong carpet at the dealer and mistakenly installs it in a customer’s home. The installer has to remove the incorrect carpet and replace it with the correct product. Total contractor loss: $3,000.
  • HVAC Contractor: When installing a new cooling unit on the roof of a commercial building, a contractor fails to complete the foundation support. The unit breaks through the roof, destroys the equipment, and causes significant damage to the building and personal property, costing the contractor: $25,000.
  • Fence Erection: A contractor misreads the site plan while installing a fence. As a result, the fence is installed significantly over the property line and has to be removed and reinstalled. Total contractor loss: $35,000.

The General Liability policies of these contractors would not cover these losses. However, Contractors Errors & Omissions (E&O) insurance can pick up the tab for claims of negligence, providing financial protection and peace of mind for contractors in today’s “litigation society.” Insurance companies have tailored policies for small contractors in a wide variety of specialties – everything from HVAC dealer/ distributors, janitorial contractors, and locksmiths, to septic-tank cleaners, masonry contractors, and interior-tile and stone artisans.

To learn how Contractors E&O coverage can help protect your business, feel free to get in touch with us.


Insuring Your Project: Installation Floater Or Builders Risk?

Jul 06


Construction projects involve significant financial risk for the contractors and subcontractors who must pay workers and purchase materials. To help protect themselves against these financial losses, builders have a number of insurance options. Two of the most widely used coverages are Builders Risk and Installation Floaters. The choice you make depends on the nature of each job.

Builders Risk insurance pays for damage to materials or partially completed work due to accidents, fires, weather damage, material defects, and incorrect installation or workmanship. This coverage ensures that the time and money that the builder has invested in the project aren’t lost when the costs of repairing, repurchasing or reconstructing add up and diminish profits.

Installation Floaters cover specific items that a contractor is planning to install. For example, a roofer might buy a policy to pay for the cost of roofing supplies, both during transit and while stored at the work site. An Installation Floater covers either all risks or specific sources of losses for moveable property (materials or equipment) specifically named in the policy.

Because of its more narrow coverage, an Installation Floater generally costs less than a Builders Risk policy. However, it leaves the builder more vulnerable to losses that aren’t covered. This coverage would be appropriate for a contractor performing a specific installation task, or a subcontractor who takes on limited risk to perform a specific duty for a contractor as part of a larger project.

As Construction insurance professionals, we’d be happy to recommend the type of coverage best suited to protect you against losses on each job. Just give us a call at any time.


Protect Yourself With Builder’s Risk Insurance

Apr 20

A gas line explosion…A short circuit that fries electric wiring…Even a lightning strike…Any building site under construction or renovation is highly vulnerable.

Builder’s Risk insurance will pay for loss or damage to a structure (and, in some cases, of the materials, fixtures and/or equipment used to build or renovate it) caused by a variety of perils – such as windstorms, hail, theft, and vandalism. The policyholder can also extend coverage to include;

  • Property in transit to the job site or stored at a secure offsite location.
  • Scaffolding, construction forms, and temporary structures on the site.
  • Removing debris from covered property.
  • Paying firefighters to save or protect property.
  • Replacing blueprints or construction plans.

As a rule, Builders Risk insurance does not cover losses due to mechanical breakdowns, floods, earthquakes, water damage, or rioting.

These policies are often written for a three month, six month, or 12 month coverage term. If the project is not completed by the end of the initial term, it may be extended in many cases, but usually only one time. Coverage ends when the property is ready for use or occupancy.

The amount of coverage, usually based on the project budget, should reflect the total completed value of the structure (including costs of materials and labor), but not the value of the land.

Depending on the circumstances, either the building contractor, developer, or owner(s) can buy Builders Risk. If a bank issues a construction loan, it will usually require the borrower to purchase a policy. In many cases, showing proof of insurance might be mandatory under city, county and state building codes

For more information on this valuable coverage, please feel free to get in touch with our Construction Insurance specialists at any time.


Why You Need Construction Liability

Jan 06

No matter how much care you take to keep job sites safe and finish projects according to specifications, accidents happen. Consider these scenarios:

  • an improperly installed kitchen cabinet shelf in a home you built collapses, injuring the owner
  • one of your employees posts a blog accusing a competitor of shoddy workmanship
  • a visitor to your worksite trips over an air hose, falls, and fractures her leg

To protect your business against the financial threat of costly litigation from such all-too-common mishaps, you need construction liability insurance.

This coverage will pay costs and legal expenses, up to the amount of the policy, for something your business did, or failed to do, that damages a third party, related to 1) your products or services (products and completes operations); 2) allegations of slander (personal and advertising injury); or 2) injury on your premises or job site (medical expenses).

As a common business practice, both residential and commercial clients will require you,and your subcontractors, to show evidence of construction liability insurance before starting a job.

In general, residential contractors should buy coverage two to three times the amount of the construction budget. Commercial contractors usually carry policies in the multi-million dollar range. Firms that face higher risk of damages, for example, roofing contractors or those in specialized trades, tend to have more coverage. Some contractors prefer to pay their premiums up front, while others make a down payment and finance the premium over the policy period (six months to a year).

No matter how large or small your business, having comprehensive construction liability insurance is always the best policy.

We’d be happy to review your situation and recommend the coverage that’s best suited for you.