Risk Management in Construction
Importance of a Relationship with your Agent
Formulating your team into a successful one requires more than just relying on your insurance broker to find the most competitive prices. A successful construction insurance program relies on many factors other than the best price when assessing risk management.
An insurance agent represents your insurable interests. By creating relationships with the insurance carrier, you are getting to know their underwriters, claims department, litigation management staff, and defense lawyers. These relationships will help build trust that will ultimately benefit both parties, especially if the agent is industry specific.
Your independent agent needs to be readily educated in the Subcontract Review Manual, OSHA regulations, and your company-specific handbook. Your agent will have to educate you on potentially dangerous contract language for your residing state and guide you in safety policies and procedures.
Agents also need to understand the exclusions in the policy and discuss the possible coverage gaps with the carrier’s underwriting team and address those coverage gaps before any accident occurs. The next time you read your general liability policy you may see any of the following:
- cross suits exclusion
- subsidence or earth movement exclusion
- subcontractor limitations
- total pollution exclusion
- contractual limitation and care
- custody & control exclusions
- OCIP/Wrap-up Exclusion
When these show up on your policy, you may want to dive in and fully understand their meaning. Exposure to these exclusions are problematic for crane rental companies.
When searching for your carrier, be sure to have an underlying knowledge of what type of insurance policies you are looking for. Here is a list of coverages to ask your agent about.
Construction General Liability Coverage: General liability is going to cover property damages and bodily injuries that your business may have caused others due to operations. Most general liability coverages don’t only cover current projects, they also include coverage on past projects that have been completed.
Commercial Auto: Commercial auto policies cover the liability that comes from the use of business automobiles. Most policies will cover at-fault accidents and damages that occur from the wreck.
Workers Compensation: Workers’ compensation is required by law if you have any employees. It covers the costs of injuries that may occur while working for your company.
Contractors Equipment/Installation Floater: Since many constructors use their personal tools to go from job to job, there is a chance of theft of this equipment. Contractors’ equipment policies cover the costs for your stolen or damaged equipment. Some policies include installation coverage for materials that have yet to be installed but have been damaged or stolen.
Excess Liability: “This policy is for contractors who are looking for increased limits of liability on their general liability, workers compensation, or commercial auto insurance policies” (landesblosch). Most common liability insurance policies will have a $1,000,000 limit. Excess liability will help you customize and reach a new limit requirement.
Contractors Pollution (For Larger Operations): During a project, you might be responsible for pollution incidents including: “Discharge, dispersal, seepage, migration, release or escape of pollutants into or upon the land, the atmosphere, or any watercourse or body of water” (landesblosch). If you are a large contractor or working on a large project, there might be some pollution insurance requirements. This coverage is a way to help ease the cost of pollution cleanup costs, fines, or liability.
Contractors E&O (For Larger Operations): This is another coverage for larger projects or contractors. This policy covers damages that may occur due to faulty equipment, workmanship, or materials.
Having an underlying understanding of your policies is crucial to risk management in the construction industry. If you have any questions or want to receive a quote, contact us at CoVerica.com or call us at (972) 490-8800.
Ron Thompson, CoVerica risk management solutions for heavy construction.