by Grant Davis | Construction, Insurance
Construction Contract Liability is a real thing!
When you sign a construction contract you are agreeing to all the terms and conditions of that agreement. Not just what you are going to build, the material and when you are going to build it but also the indemnity and hold harmless agreements along with the type of contractors insurance you promise to carry and the additional insured forms you will provide. All of this is negotiable, but you need to make sure you have a clear agreement about what you will be providing and if it is agreed that it can be changed, then that agreement is also in writing and well documented. Here is a page we have up that will help you understand your contractual obligations to provide the proper additional insured forms and why.
Again I will stress that these obligations can be changed, or you can agree to change them with the contractor or owner requiring them, but those changes must be in writing and well documented as they modify the agreement / contract that you are responsible for!
Even quality workmanship is not immune to potential claims of property damage or bodily injury. All operations carry the risk that injury or damage may occur as a result of the work, leading to costly lawsuits. Considering the complicated mix of contractors and subcontractors that contributes to each project, who is liable for this risk?
In insurance terms, “your work” as used in an insurance policy is a broadly defined term that includes operations performed by the policyholder or on the policyholder’s behalf, including material, parts or equipment in connection with the operations. Operations or work performed on behalf of the policyholder means work done by a subcontractor is considered the contractor’s work. Therefore, faulty electrical work performed by an electrician that causes a fire or other damage could be considered the contractor’s liability, but would be covered under a standard commercial general liability (CGL) policy.
Because a contractor or other involved party could be held liable for defects in a subcontractor’s work years after it has been completed, and filing the claim under the contractor’s CGL policy could cause the premium to rise, many construction contracts require subcontractors to provide insurance coverage for claims resulting from their completed work for a finite period of time, typically the one- to five-year range. Typical contracts also require that the subcontractor name the owner, the architect, the general contractor and other third parties as “additional insured” parties, entitled to coverage under the insured subcontractor’s CGL policy. Naming additional insured parties requires a separate endorsement to that policy.
This means that as a subcontractor, you can be held liable for claims of property damage or bodily injury resulting from a defect in your work. It is also critical to maintain this coverage into the future; failure to do so could lead to a breach-of-contract lawsuit brought by the contractor or other party.
It is important to understand this commitment when signing the contract–the insurance commitment doesn’t end with the project. Furthermore, in the event of a large claim, the subcontractor could be faced with a substantial increase in premiums on the policy.
To avoid litigation, it is crucial to know local regulations and adequately document proper performance. Know your company’s documentation practices relative to each subcontract, and carefully keep records of all processes.
It is crucial for subcontractors to respect this requirement if included in the contract. Failure to do so could result in breach-of-contract lawsuits. Naming additional insured parties can be complicated, and it is very important to work closely with GDI Insurance Agency, Inc. to ensure that your contractual obligations are satisfied.
by Grant Davis | Construction, GDI Insurance, Insurance, Solar Installers
Insurance for the Solar Panel Industry
Solar Panels are all over. How do you insure a solar panel, or a contractor that installs solar panels? What about a solar panel farm? Solar panel insurance offers this specific protection.
Solar Panel Insurance GDI 888-991-2929
With the focus on developing clean energy sources, new alternative energy facilities are popping up all across North America and are predicted to increase exponentially in the next decade. One of the least intrusive and most cost effective is solar energy. Solar cell manufacturing costs continue to fall and output efficiency continues to improve.
GDI Insurance Agency works has developed a competitive clean & green Solar Energy Insurance Coverage program to meet the needs of photovoltaic solar panel “farms,” with new features for more complete recovery.
What’s New with Solar?
- We have addressed the need for specialized valuation of solar array components;
- Additional insurance is provided for a greener approach to debris recycling;
- The opportunity to upgrade to a greener replacement when it is desirable;
- We even cover the incurred cost of an extended warranty or maintenance contract, if it becomes void due to a covered loss.
What about Tax credits?
- The tax credits/ financial incentives can be critical to your client’s profit. And, now there is a simple Solar Business Income Worksheet to help the client capture and quantify these items for Business Income Coverage.
Any other Business Income Coverage special features?
- When the client also purchases optional Ordinance or Law coverage, there is an extension of time if it is required to comply with an ordinance or law;
- And, our business income coverage includes loss arising out of a covered loss to property in transit, an important coverage when insuring the installation phase.
Are other optional coverages available?
- Equipment Breakdown Coverage, Ordinance or Law, Inflation Protection, Contingent Coverage on Leased Solar Arrays, as well as Flood and Earthquake at eligible locations.
- Coverage is available from day one of the installation project well into the future, when the solar array is providing clean power to the end user.
There is a lot that needs to be done differently than “normal insurance” to properly cover a solar farm, or contractor installing solar systems.
Matthew Davis, MBA, CPCU, AAI
by Grant Davis | Construction, Insurance, Workers Compensation
Controlling Construction Workers’ Compensation Costs
Has your construction business experienced rising workers compensation costs?
Are they caused by On-the-job accidents? Or just general annual rate increases? Or a combination of both? If so, your first response was most likely aimed at trying to reduce workers compensation costs and spending by asking for more premium quotes. While this may seem like the best approach the reality is typically getting more quotes can have a 5-20% impact on your insurance costs. While premium credits and modification factor reductions can reduce your premiums over 50%!
I always ask new clients what premium credits they received at the last renewal from your current insurance company, what credits were available they didn’t receive and what their companies 5 year risk reduction plan is to maximize premium credits and reduce your modification factor? Surprisingly over 90% of new clients I ask have no insurance cost reduction plan in place!
How does it start?
A sound safety program designed to continuously improve can yield significant workers compensation costs savings by reducing injuries and illnesses—ultimately reducing workers’ compensation costs in the long run. I have clients that tell me they don’t need to have a great plan because they aren’t having losses. To which I quickly reply that I met a gentleman that claims he once threw 11 straight 7’s in Vegas also! He was lucky, but statistics caught up with him. Insurance companies don’t respond to low claims because of luck! They give premium credits when you have a plan and work the plan and have a low claims frequency on purpose!
Here is a key hint for you: All insurance companies respond favorably to companies that take an active, aggressive and documented role in improving safety for their employees. By this I mean they offer premium credits!
It starts with a safety program! So here are 5 Steps to Building a Solid Safety Program
You can control workers compensation costs with five easily implementable steps designed to create a well-rounded safety program that produces a safer job site, achieves OSHA compliance and reduces accidents—saving your bottom line.
- Let GDI Insurance Agency, Inc. help your company develop your safety programs required by the OSHA standards.
- Integrate those programs into daily operations.
- Investigate all injuries and illnesses and create an Injury and Illness Prevention Program.
- Provide training to develop safety competence in all employees.
- Audit your programs and your worksite on a regular basis to stimulate continuous improvement.
Develop Programs Required by OSHA Standards
In addition to being a requirement for those in the construction industry, OSHA standards provide a good pathway to incident reductions. Many accidents stem from poorly developed or poorly implemented OSHA programs: not using the proper fall restraint system when working at heights more than 6 feet, improper use of personal protective equipment when working with hazardous job site materials and poor lifting techniques resulting in back strains are just a few examples.
OSHA construction standards require that written programs be developed and then communicated to workers. Experience shows that companies with thoroughly developed, OSHA-compliant programs have fewer accidents, more productive employees and lower workers’ compensation costs. GDI provides these plans for all our clients!
Integrate Programs into Daily Operations
Policies alone won’t get results; your safety program must move from paper to practice impacting your bottom line. Achieving this requires a strategic plan clearly communicated to workers, good execution, and a culture that both inspires and rewards people to do their best.
When developing your safety initiative, there must be an emphasis on helping your site foreman succeed. If the site foreman understands the safety program and is motivated to make it work, it succeeds; if not, the program is a source of struggle and an endless drain on resources. Providing your site foreman with knowledge and skills through training is critical to the success of your safety program.
A solid OSHA program, integrated into your worksite’s daily operation and led by competent site supervisors, is just the beginning. Successful safety programs are also proactive instead of reactive.
Investigate All Injuries and Illnesses
Accident investigations provide an excellent source of information on real or potential issues present on the job site. Because workers’ compensation covers a worker’s wages for injuries or illnesses that arise from or out of the course of employment, increasing claims drive up workers’ compensation costs. To reduce costs, you must reduce accidents. And the ability to reduce accidents is significantly enhanced when they are fully investigated instead of simply being reported.
Accident reports cite facts; accident investigations go deeper to uncover the root cause of an accident and make improvements to prevent its reoccurrence. To stop your workers’ compensation costs from rising unnecessarily, you must have an effective accident investigation process. Unless you can determine the root cause of an accident, recommendations for improvement will remain fruitless. Again, training proves beneficial because a site supervisor skilled in incident analysis is a better problem solver for all types of project management issues, not just safety.
All Accidents Should Be Investigated To Find Out What Went Wrong and Why.
GDI Insurance Agency, Inc. has the HR systems that support this documentation. Some may suggest investigating every accident is a bit over the top and only those that incur significant costs are worthy of scrutiny, but this approach is shortsighted. If your emphasis is only on those incidents that must be recorded on the OSHA 300 log, you ignore the single largest accident category: first aid-only incidents. Many firms focus solely on recordable or lost-time accidents because of the significant costs involved, but they don’t realize that the small costs and high numbers of first aid-only incidents really add up.
Reducing serious accidents means you must reduce your overall rate of all accidents—including first aid-only incidents. That only happens when every incident is fully investigated, and corrective actions are identified and integrated into daily job tasks.
Training and Auditing for Continuous Improvement
The final steps focus on training and auditing your program for continuous improvement. Training plays a significant role in safety and in reducing workers’ compensation costs. The goal of training is to develop competent people who have the knowledge, skill and understanding to perform assigned job responsibilities. Competence, more than anything else, will drive down costs. Site supervisors must have the knowledge and ability to integrate programs into each job on the job site so that employees know what is expected of them.
Once the programs are developed and implemented, they must be reviewed on a regular basis to make sure they are still relevant and effective. This might require a significant change in how you manage your safety program, but if your workers compensation costs are high, it may be time to make this leap.
Tangible Benefits
- Studies indicate there is a return on investment and that firms see direct bottom-line benefits with a properly designed, implemented and integrated safety program.
- A competency-based safety program is compliant with OSHA construction requirements and therefore reduces the threat of OSHA fines.
- A competency-based safety program lowers accidents, which reduces workers’ compensation costs. When incidents do occur, a competency-based safety program fully evaluates the issue and finds the root cause to prevent reoccurrence and provides a job site that is free from recognized hazards.
- A safer job site creates better morale and improves employee retention. Auditing keeps your programs fresh and effective, and drives continuous improvement.
- A competency-based program produces people who are fully engaged in every aspect of their job, producing high-quality craftsmanship.
How Can GDI Insurance Agency Assist You?
At GDI Insurance Agency, Inc., we are committed to helping you with your workers compensation costs by establishing a strong safety program that minimizes your workers’ compensation exposures.
This may seem like a lot of work. But consider what you are paying for your workers compensation insurance! Call me Grant Davis today and let me help you take control of your workers compensation costs! AKA: Lets lower that premium! 1-209-634-2929 I can also tell you more about our OSHA compliance, safety program resources and workers compensation insurance cost reduction programs.
by Grant Davis | Construction, Insurance, OSHA, Workers Compensation
Keeping Your Construction Safe
Hazardous conditions are a day-to-day reality for workers at many construction sites. To ensure safety on the job site, there are five crucial construction safety measures that every construction worker must follow:
- Double-check work areas. Both scaffolds and ladders are integral parts of most construction sites, and both are associated with a high number of injuries. Inspect both before use to ensure that they are safe.
- Be cautious with electricity and electrical equipment. Always follow the safety precautions provided for the equipment you plan to use or ask for proper instructions from a supervisor.
- Maintain fencing. Avoid dangerous areas with damaged fencing or that lack fencing altogether, and inform your site supervisor of the risk.
- Always wear protective apparel and equipment. This includes a well-fitted helmet, protective eyewear, ear plugs for working in noisy areas and protective gloves when working with toxic chemicals. Wear highly visible clothing as well.
Keep first aid nearby.Basic first aid for minor injuries should be available on-site so workers can receive treatment immediately.
Contractor Fined After Worker Fatality
Although in Alaska, The Department of Labor and Workforce Development fined a contractor $280,000 for failing to follow proper shoring and bracing procedures, leading to the death of a worker after a wall collapsed onto him during a demolition project. CA is much harder on construction safety!
The contractor was also fined for misclassifying his employees—including the deceased employee—as independent contractors in an effort to avoid paying unemployment insurance, workers’ compensation insurance and payroll taxes. There is no such thing as a 1099 employee. There are set rules that govern if a worker is a subcontractor (1099) worker, or a w-2 worker. Beyond this issue it is also felony workers compensation fraud to avoid paying workers compensation on these workers unless they pass the test… just call and ask your GDI Insurance Agency Broker for the rules we are happy to help.
Employers who mislabel independent contractors risk having to pay fines and overdue payroll taxes to the IRS. Furthermore, the state workers’ compensation agency could levy fines and press criminal charges. Also should one of these workers become injured the employer is responsible for the medical, loss of income and any disability themselves.
