Colsa Insurance Agency, Inc. Blog
Construction Firm Tips for Avoiding Insurance Disasters
When you're in the construction industry you already have lots to worry about: Keeping your workers safe in one of the most dangerous industries, uninsured or underinsured subcontractors, and finding experienced employees from a shrinking pool of talent.
Not only that, but lawsuits lurk in any project, exposing you to serious losses that can threaten the survival of your business. For these reasons, it's important that you understand your insurance coverages and that you know how to address any deficiencies that may exist in your risk management strategy.
To make sure that you are not left exposed, we recommend the following:
Choose the right insurance company
We can help you find an insurance company with the experience in writing policies in your industry and the resources to tailor coverage to your needs. Remember, some large projects and lenders require that you are covered by only an A-rated insurer.
Don't buy the cheapest policy
If the policy price is significantly lower than other insurers, that may be a red flag. Make sure the insurer will be covering what the project owner, your lenders and other stakeholders require. If you find out your policy is deficient after you've purchased it, you'll have to cancel it and buy a new one. There go your profits.
Understand your policy
All policies have exclusions and you should understand what the insurance company will cover and what it won't. We can sit down with you and review every line of your policy, including any additional insured endorsements or exclusions, so you know exactly what's covered and what isn't.
Don't buy insurance you don't need
We can do a thorough review of your business and its risks with your help. It's important your coverage meets your needs and that you don't carry coverage for risks you're unlikely to face.
Use the correct class codes
It's easy to misclassify certain employees, and if you err it can come back to haunt you. When it's time for renewal, go through your books and make sure you have job descriptions for all of your employees. Keep track of your staff so that you get it right the first time.
Also, keep track of new employees that you hire (or let go) during the course of the year, so that adjustments can be made to your policy.
Avoid the independent contractor trap
During the last few years, the IRS, the Department of Labor and a number of state agencies across the country have been cracking down on the practice of worker misclassification.
There are many implications for classifying someone who is an employee as a contractor, and all of them are costly. You could be looking at back taxes, owing additional workers' comp premiums, lawsuits, and more.
Don't understate payroll
If your insurer audits your business and they find that your numbers just don't add up, you could end up having to pay additional premium or risk policy cancellation.
Understand how 'claims-made' coverage works
"Claims-made" policies have lower up-front and ongoing costs and they only let you make a claim during the policy year during which a project is being built.
The biggest drawback of these policies is that if you have to file a claim years after the project is completed, you may be out of luck, especially if you've switched insurance companies.
Check your subs' insurance certificates
Know whether or not your policy will cover subcontractors or if they need to carry their own liability coverage. Verify that any subcontractors you use have valid and current certificates of insurance.
Keep your policies current and up to date
Many factors should prompt you to revisit your insurance policy: Hiring new employees, buying new equipment or vehicles, or opening a new office. These types of changes should prompt you to review your coverage with us to ensure you stay fully protected.
As lawsuits against employers continue rising amid the coronavirus pandemic, some businesses are requiring workers to sign waivers absolving them of liability and responsibility should they contract the virus.
Eight percent of executives surveyed by law firm Blank Rome said they would require that their workers sign waivers of liability before returning to the workplace.
While employers are trying to protect themselves from a liability that didn't even exist a year ago, some human resources legal experts have expressed concerns that they may not be necessary and may be unenforceable.
The moves come as employers are wrestling with numerous risks that the pandemic has wrought, and with the U.S. Senate having proposed legislation that would limit the liability of employers for workers who become sick during the pandemic. A number of states have also enacted laws or emergency regulations that make it harder for employees to sue employers for negligence over COVID-19.
COVID-19-spurred employee lawsuits have mostly centered on employers not providing the proper protections for workers, discrimination or for being laid off for refusing to come to work.
Legal experts caution that employers cannot require workers to waive rights they may have, such as access to workers' compensation benefits or the right to file a complaint with OSHA.
They also say that some employers may consider waivers as a green light to not take precautions against COVID-19, but in such cases the waivers would likely not be legal.
If a worker claims they caught COVID-19 at work and the facts back that up, they would likely have access to workers' compensation benefits (some states even require it). But if the employer was negligent, the employee could have further legal avenues to pursue besides workers' compensation, rights that cannot legally be waived, lawyers say.
So even if an employee were to sign a document waiving their right to file a complaint if they feel their employer is being negligent, they may still have recourse.
Requiring workers to sign waivers could present a number of legal issues, according to the law website nolo.com, including:
While employees who refuse to sign a waiver of their company's liability may have grounds to challenge their employer, some liability lawyers say that employers instead of a waiver can ask their staff to sign a social contract that requires:
This type of agreement won't protect an employer from a lawsuit, but it does spell out that they are following authorities' recommendation for protecting employees.
While employees who refuse to sign a waiver of their company's liability could have grounds to sue, those who sign this type of acknowledgement of new workplace rules and government guidance are less likely to be successful if they are fired for not signing. This is because the acknowledgement is not forcing them to give up any of their rights and is rather for their and their co-workers' protection.
These social contracts also would provide workers with a list of their responsibilities when working during the COVID-19 pandemic, and outline what their employer is doing to protect them.
COVID-19 is forcing businesses to face a number of risks, liability and insurance implications.
Companies could seek coverage for a variety of claims stemming from the outbreak, including workers' compensation, business interruption, liability and more.
And, now that it is a pandemic, the economic fallout may be expansive - hitting your company's operations in the form of lower sales or supply chain disruptions.
Now is a good time to understand which of your insurance policies could come into play.
Workers' compensation policies generally extend insurance benefits to employees for injuries and illnesses "arising out of or in the course of employment."
That wording makes it difficult for most workers to file a claim if they suspect that they got the coronavirus at work, presumably from another employee, customer or visitor to the workplace. But if an employer knows that the virus is in the workplace, coverage could apply.
Workers' compensation could come into play in the following instances:
However, workers' comp insurance would likely not cover employees who are working on assignment abroad for more than a short time.
One major fallout from the spread of COVID-19 is that it has cut into global supply chains, forcing manufacturers around the world to suspend production. This has been especially true for companies that rely on China for their parts and materials.
But now that the virus has exploded in a number of countries, the threat to supply chains will only increase. This has already started affecting companies in the United States. If your company's operations are affected or stopped due to the virus, you may be wondering if the business interruption coverage in your property policy or business owner policy may pay out.
Business interruption coverage replaces income that was lost due to a disaster, such as a fire on the premises of the company or one of its suppliers, or a hurricane that hinders a company from operating.
However, any hit to your income from coronavirus would not be physical damage, which is a prerequisite for this coverage. Viruses and disease are typically not an insured peril unless added by endorsement. In many cases, the policy may specifically exclude coverage for viruses and disease.
There is potential coverage through communicable disease coverage under proprietary insurance carrier forms if the insured is closed by a "public health authority" order for closure, decontamination, etc. But it's worth noting that these usually require the order to happen, so the insured cannot voluntarily decide to close and then claim coverage.
In terms of liability, a third party - customer, vendor or guest - could claim they were sickened on your property and sue your business for negligence for failing to provide a clean facility, which could trigger your commercial general liability policy.
Any company that deals with the public or customers, like a retailer, restaurant, hotel, daycare center or a gym, would be at greatest risk for this type of action.
While the chances of them winning such a case would be small, you could still face legal bills, which your CGL policy would typically cover. If there is coverage, it would come under the policy's "bodily injury" portion.
Some CGL policies exclude claims arising from a pandemic, virus or bacteria, so read your policy carefully. Many insurers also include broadly worded pollution exclusions that could preclude or limit coverage.
Business travel accident insurance
This insurance could cover employees who travel on business domestically or internationally, foreign employees of U.S.-based businesses and U.S. employees on offshore assignments. The insurance provides: