Viewing entries in
Commercial Property

Commercial Insurance Policies and Extra Expenses

Commercial Insurance Policies and Extra Expenses

Wading through your existing insurance policies can be daunting. Knowing what you are and aren’t covered for can be a challenge, especially when you are faced with circumstances beyond your control. If you have experienced property damage to a business property that interfered with your business, your commercial insurance may cover business losses and extra expenses.

Commercial insurance policies are incredibly important to have in order to keep your business up and running, no matter what. Natural disasters or fires can be devastating to a community, and businesses that can stay open or reopen quickly will be able to support those communities looking to rebuild. Having the financial protection of a commercial insurance policy means not having to worry about how you’ll recover, but how soon you’ll recover.

Dealing with extra expenses

Some commercial insurance policies have provisions for extra expenses you may incur as a result of your property being damaged by fire or a natural disaster. If your property is damaged and you are losing business because you have to shut down for a period of time, you may be compensated for those business losses by your insurance. Other business losses could be because customers can’t access your business due to the fire or natural disaster shutting down roads.

There may be extra expenses that aren’t expressly covered in your insurance policy, but that could be covered by your insurance. For instance, a small company owned a property that was damaged by fire. The owner was able to set up a temporary office until a suitable alternative was found about two months later.

In this case, his extra expenses were setting up a new office and eventually moving to a more permanent location. As per his commercial business insurance, extra expenses that are covered include expenses that are incurred trying to avoid or minimize the amount of time your business is closed or not operational. This means that moving expenses and other costs associated with continuing operations at another location are covered by your insurance.

Additional expense coverage can be used to replace personal property that you use in your business, like furniture and other office supplies. A commercial insurance policy could compensate someone for the business income loss they might face.

Other extra expenses

Another commercial insurance extra expense comes in the form of preventative measures taken to save a property from further damage. After a storm, water trucks and generators were brought in to a property to save the landscaping, which was a golf course. Since the land was essential for the continued operation of the business, the extra expenses of the water trucks and generators to save the grass would be covered by their commercial insurance policy.

These expenses would be covered because they serve to minimize the time a business is not operational and, ultimately, reduce the total amount of loss a business faces during the time they are closed.

Commercial Insurance

Commercial insurance is designed to keep your business running for as long and as well as possible. If you do face closures or damages because of a natural disaster or a fire, your commercial insurance may cover additional expenses you may face in the course of preventing further losses. Most expenses that you face that minimize your total business losses may be covered by your insurance, as will extra expenses incurred to make sure your business can operate at any sort of functional level.

There are details and stipulations in commercial insurance policies that dictate what extra expenses qualify. If you do have a commercial insurance policy, go over it with your insurance agent to see what sort of expenses you may be covered for if the unexpected happens.


THE SKYLINE DIFFERENCE

Other brokerages take a cookie cutter approach to insurance and outfit their customers with generic coverage.  Skyline is different.  We believe insurance should be built on innovation and experience. We appreciate the fact that every engagement is unique and understand proper coverage requires a deep understanding of the underlying business and individual.

"The opportunity to safeguard your concerns is a privilege we never take for granted."
 
 
 

New York Labor Law

New York Labor Law

  • What it means for property owners, their agents, managers and commercial tenants.
  • What you need to know to protect your assets.
  • How GNY can help.

New York Labor Law:

New York State’s Labor Law (NYLL) represents an onerous burden for property owners and managing agents in New York, making them financially liable for virtually any work-related accident on their premises. So as building owners and managing agents routinely hire contractors to do work on their properties, they routinely face huge liability exposures.
To insulate themselves from high-value lawsuits brought by injured workers, building owners and managing agents should enter into hold harmless and indemnification agreements, backed up by the contractors’ own insurance, which transfers liability for such injuries from themselves to the contractors and subcontractors whose negligence caused the injuries. Failure to do so can cost building owners millions of dollars.

GNY can help navigate this challenging landscape.


Three Key Sections:

1. Section 200 requires building owners and managing agents to provide workers with safe places to work.

2. Section 241(6) makes building owners strictly and vicariously liable for worker injuries at their buildings if improper or inadequate safety equipment causes a worker’s injury. Damages from resulting lawsuits can be reduced or eliminated if building owners can show that the injured worker was partially or fully responsible for his injuries.

3. Section 240(1), commonly known as the Scaffold Law, makes the building owners as well as their contractors and project managers “absolutely liable” for all gravity-related construction accidents at their buildings, subject to a few hard-to-prove exceptions. The building owner is liable even if it did not hire the injured worker or his employer, even if it did not know that the worker or his employer was working at the building, and even if the worker is partially or fully responsible for his own injuries. These lawsuits often result in summary judgment for the plaintiff on the issue of liability, leaving only the damages portion of the lawsuit to be tried against the building owner and property manager. Because these lawsuits often present serious injuries, verdicts in such cases can be quite high.

  • A good safety record will not protect building owners, managing agents and construction contractors from liability under any of these statutes. In addition, litigation can become a part of your loss history, which may drive up your insurance rates. Don’t let this happen to you.

  • GNY Recommends The Following Steps To Protect Your Business And Assets Under These Statutes: 

1. KNOW YOUR CONTRACTOR:

  • Verify the contractor is properly licensed, insured and experienced in the type of work it is being hired to perform.
  • Verify whether the general contractor uses subcontractors. If the general contractor uses subcontractors, find out how it screens its subcontractors and confirm with your contractors that its subcontractors are properly insured.
  • Verify there are written agreements in place between the building owner and its general contractor, as well as between the general contractor and its subcontractors, with proper indemnification and insurance-procurement clauses. The contractor and subcontractors should name the building owner and the managing agent as additional insureds on their liability policies on a primary and non-contributory basis.
  • Verify before entering into contracts with your contractors that the contracts make the contractors responsible for worksite safety and for having a safety-and-employee training program in place.
  • Verify contractors have obtained all necessary permits before they begin their work.
  • Verify your contractors and their subcontractors do not have a history of Occupational Safety and Health Administration Law violations.

2. USE RISK TRANSFER TACTICS:

Using written contracts to transfer the risk of liability and damages from you to your contractors can protect you from claims of serious injury and potentially large damage awards. The following clauses have proven successful:

  • Hold Harmless and Indemnification Agreements

Every contract between you and your general contractors, as well every contract between your general contractors and their subcontractors, must contain a clause requiring the general contractors and their subcontractors to “defend,” “indemnify,” and “hold harmless” the building owner and the managing agent from liability, loss or other damages that arise because of any of the contractors’ negligence. It is important that this agreement be properly worded, dated and executed before the work begins.

  • Insurance Procurement Requirement

Contractors and their subcontractors must agree to add building owners and their managing agents as additional insureds to their insurance policies for any liability arising out of their work. The limits of these policies should be at least $1 million for a primary commercial general liability (CGL) policy and $5 million for an umbrella policy. Also, the additional insured coverage should be written on a “primary and non-contributory basis.”

  • Insurance Requirements and Certificates of Insurance

While it is common practice to request a Certificate of Insurance (COI) from contractors and subcontractors, the certificate alone does not confer or prove the existence of additional-insured coverage on your behalf. A proven “best practice” is to require your contractors to submit a copy of their primary liability and umbrella policies for review by an insurance professional. All COI’s and insurance policies must be provided to the building owner or managing agent before the work begins. The COI and insurance policies should also show that the building owner and managing agent are named on the primary and umbrella policies as additional insureds.

GNY will review your contracts with your contractor or subcontractors free of charge. Simply ask your broker to forward the contracts and insurance policies to your GNY underwriter.


SPECIAL CONSIDERATIONS FOR ...

 

COMMERCIAL PROPERTY OWNERS:


NYLL’s unfavorable liability provisions can adversely affect the owners of commercial buildings when tenants hire contractors to perform construction, alteration, repair or maintenance in their units, and those tenants are inadequately insured or indemnified by the contractors they hire.

As part of their commercial leases with tenants, building owners should use the same strategies suggested above for the transfer of risk from themselves to their contractors:

  • Obtain copies of the CGL and umbrella policies and COI’s from all commercial tenants and their contractors.
  • Set up a notification system alerting you to renewal dates for these policies.
  • Make sure tenants have sufficient CGL and umbrella policy limits.
  • Require tenants and their contractors to name the building owner and the managing agent as additional insureds on their CGL policies on a primary and non-contributory basis.
  • Require tenants to sign agreements indemnifying and holding the building owner and managing agent harmless for liability arising out any of the tenants’ work in their units.
  • Review your leases with an attorney to ensure these clauses have been included in the leases.

GNY will review the relevant contractual clauses and policy provisions for you free of charge. Simply ask your broker to forward the contracts and insurance policies to your GNY underwriter.


RESIDENTIAL CO-OPS

To protect the board, the shareholders and the co-op corporation, the same risk-transfer strategies mentioned above should be in place whenever a shareholder in a co-op has work done in his unit. This work ought to be done under an Alteration Agreement, which should require the shareholder’s contractors to indemnify and hold harmless the shareholder, the co-op and the managing agent, and to name these entities as additional insureds on the contractors’ general-liability policies on a “primary and non-contributory” basis.

The Alteration Agreement should also require the shareholder to indemnify the co-op and the managing agent and to have proper liability insurance in place to cover these exposures. The co-op must mandate, preferably in the lease agreement, that contractors cannot begin work in a unit until the shareholder submits to the co-op and the co-op approves all of these construction contracts and insurance policies.

Insurance companies insuring contractors have come up with broad exclusions and limitations designed to protect them from having to defend and indemnify you as additional insureds under their policies. This is very unfair to the co-op. By showing you what to look for in these policies, GNY can help protect you and your finances.

GNY will review the relevant contractual clauses and policy provisions for you free of charge. Simply ask your broker to forward the contracts and insurance policies to your GNY underwriter.

GNY can also supply you with an exemplar of an “Alteration Agreement” incorporating these conditions for the co-op, the shareholder and the contractors to sign.

Unexpected Costs and Coverages for Business Losses

Unexpected Costs and Coverages for Business Losses

When most people think about insuring their business, the first thought that comes to mind is making sure their insurance policy covers their building and inventory. This is understandable—if a fire wipes out your entire shop, you want to make sure that you’re going to have a place to set up shop again. However, many do not think about the indirect losses that happen as the result of having to shut the business down temporarily. Covering lost income and paying for the operating expenses that continue to exist while you close or relocate the business is just as important as covering the building and contents. Business interruption coverage is a coverage specifically designed to cover a business for those indirect losses that hit you when you are forced to close up shop, whether for a short time or permanently.


Business Interruption Coverage

The biggest benefit of business interruption coverage is the provision for lost income while your business is closed. Having lost income covered is especially beneficial for small businesses for which missing out on even a couple of months’ worth of income can make or break them. Also, there are continuous expenses, such as utility bills, that don’t stop coming just because you aren’t able to open your doors to customers. Those bills cause additional costs even when there may be no revenue coming in. Depending on the specifics of your policy, business interruption coverage can step in and cover you for these losses.

Beyond lost income and operating expenses, there are additional indirect losses that can occur. Business interruption coverage is meant to cover costs that come up while attempting to keep your company running. You may have additional expenses for things such as: relocating to a new space, overtime pay for the extra hours that are needed, and other costs that come up as you work through alternate methods of doing business while your insurance company works to restore your building and business property.


Cyber Insurance

In addition to business interruption coverage, another incredibly important coverage to consider is cyber insurance. Insurance has adapted in this age of technology and cyber losses, introducing a whole new level of risk and loss that you may never even have considered. Hacking and digital information theft is rampant. It seems as though there is story after story on the news of hackers getting access to customers’ financial information through businesses' computer systems. The theft of your and your clients' information not only puts your company in a tight financial spot, but also causes a loss of reputation. Customers are less likely to put their trust in a company that treated their information without the proper security. Cyber insurance can cover you for those losses and help restore your customers’ faith in your stability.                                                                                                          

Running a business is no easy feat, no matter what the size. Insurance may seem like just another thing to check off a to-do list, but by protecting your business, you are protecting your investment and your future. If your business does suffer a loss and you need to make a claim, ensure that you have all the coverage needed to get on your feet again and to restore you to the same financial place you were before. If you are concerned that your business may not have the right coverage to protect against those types of losses, make sure to contact your agent to review your policy.  

For more information about potential unexpected costs and coverages for your business, contact Skyline Risk Management, Inc. (718) 267-6600 to voice your concerns. 

When Bad Things Happen: Product Liability & Foodborne Illness

When Bad Things Happen: Product Liability & Foodborne Illness

Could you image how much work and dedication goes into owning a successful restaurant?

If you're a restaurant owner then you know what it is like to work day after day, year after year, growing your business. For those of you in the midst of growing our business, imagine a day where you reached a point of fulfillment. Picture your restaurant flourishing beyond your wildest dreams. You've hired the right professionals to operate your restaurant and now you've retired. 

Everything is going great and then one day you get a phone call... 55 people are sick with food-borne illnesses, which they got from eating at your restaurant. 

Turns out while you where on vacation in Bali the people you hired to run your business decided to purchase spinach from a new vendor and now you're facing 55 different lawsuits. The media is jumping down your throat and people are very sick. Worse of all, you could have prevented this from happening. Yup, you blew it because you decided to decline insurance coverage, which protected from this exact situation.

Don't think this could happen to you? Ask the owners of Chiptole Mexican Grill what they think about insurance coverage for food-borne illness.


Chipotle

Chipotle's firestorm was about more than one risk. It was about product safety and workplace safety coming together to ignite a chain of sick customers up and down their chain of restaurants. The reports were about norovirus and E. coli making customers sick and the eventual spread that followed.

When employees come to work sick and then touch food and food preparation areas, it really doesn't matter if the food products are all that safe. In fact, the Centers for Disease Control and Prevention (CDC) reports that one in six Americans become ill every year from contaminated food or beverages.

Whether the contamination started in the food supply chain isn't all that important if your employees are ill when they walk in the kitchen door. Loyal employees are gold, but sick loyal employees are like explosives waiting for detonation. Whether you are a Mom and Pop shop or a franchise, you must mitigate the risk.


Trade Name Restoration Coverage

The best answer to the significant financial loss of your  business ill be a Business Interruption/Trade Name Restoration (TNR) policy. The coverages provided in this stand-alone policy go further than your general liability coverage when it comes to saving your client's business from financial devastation.

  • Business Interruption
  • Loss of profits
  • Trade Name Restoration
  • Crisis Management

Contact your insurance professionals at Skyline Risk Management, (718) 267-6600 for information about Business Interruption/Trade Name Restoration (TNR) polices. 

Small Business Subcontracting Faces More Scrutiny (Compliance)

Small Business Subcontracting Faces More Scrutiny (Compliance)

Gone are the good old days of wheeling and dealing. If you're working with subcontractors, you need to keep an eye on compliance. It doesn't matter if you're working on federal, state, local or prime contracts – you need to know the legal ramifications of every action, and explain them to your subcontractors.

As a construction contractor, you pay close attention to your local subcontracting community. You need to know where you can get great work done when you need it. You even need to know where you can get cheap work done now and then. You know the subcontractors in your area, but are you familiar with the legal ramifications of working with subcontractors on federal contracts?


Get It Right the First Time

Unless you fancy yourself the center of a federal investigation that could end up costing you millions, it's imperative to stay on top of compliance right from the start. You must employ robust compliance measures when working on any and every government contract.

If you don't, you could find a number of government agencies banging on your door. Just a few of the organizations that deal with subcontractors include:

  • The Small Business Administration (SBA)
  • The Federal Acquisition Regulation (FAR)
  • The U.S. Department of Transportation (DOT)
  •  Disadvantaged Business Enterprise Program (DBE)

While we won't go into all the federal regulations, these agencies enforce (as that would take a number of full-length books), a few examples should help illustrate how these organizations work. Take note that negligence is not punished as severely as purposeful actions. 


Tired Trickery

Nationwide Supply and Fence found themselves in a lot of trouble in 2015. They claimed to have used a DBE-qualified company on a number of federally funded projects. In reality, the company had hired a non-DBE company to supply the materials. Then they directed the DBE company they claimed to be working with to make it seem as though they were providing the materials – not the non-DBE business.

This dog-and-pony show resulted in $1.75 million in fines to settle allegations stemming from the project. In addition, one of Nationwide Supply and Fence's former officers was personally dinged over $350,000 to settle further allegations resulting from the trickery.


Masked Markups

Nationwide wasn't the only company in trouble. Yonkers Contracting in New York found themselves ordered to pay over $2.5 million after they violated a DBE program on a federally funded contract.

The company hired Global Marine Supply to provide steel on a DBE federal contract. Global Marine Supply bought the steel from a non-DBE company, then added a 1% markup and sent it to Yonkers. All the while, Yonkers Contracting knew exactly what Global was doing and had signed off on it.  


SKYLINE

As is clear from the above examples, construction contractors can’t afford to ignore subcontracting requirements on federal contracts. If you do so, you could be held accountable for quite a costly sum. Focus on reducing your compliance risk by making sure all subcontractors understand DBE guidelines. 

Have questions about compliance regulations for your business? Contact Skyline Risk Management, Inc. (718) 267-6600 to voice your concerns. 

Top 5 Reasons for Contractors to Consider Environmental Insurance

Top 5 Reasons for Contractors to Consider Environmental Insurance

Most construction contractors are acutely aware of their need for General Liability, Workers' Compensation, and Inland Marine insurance. Rarely will a construction contractor even consider that their company may be tied up in court for performing work that damaged the environment, but it happens, and it happens more frequently than you would imagine.


The U.S. Environmental Protection Agency has determined that contractors working in the construction industry have a significantly high potential for contributing to environmental damages. The EPA considers general contractors, subcontractors, engineers, and architects as the group of usual suspects when it comes to environmental pollution and the resulting damages pollution causes. 

Unfortunately, only a small percentage of active contractors recognize the significant risk of environmental claims that can result from their activities because claim activity is something they pay little attention to until if affects their livelihood.


Environmental Example:

XYZ Grading Services was hired to excavate some trenches on the perimeter of a residential construction project. The soil that was excavated was temporarily piled up on a nearby vacant industrial property. When the excavated trenches were backfilled by the contractor, the excess soil was spread across the construction site and used for grading purposes.

Not long following the completion of the construction project, dioxin was found in other soil at the industrial site where the excavated soil was temporarily stored. After further testing, dioxin was also found in the soil that was spread around the residential construction project. After EPA testing had been completed, it was determined that the contamination had also seeped from the surface into a water supply.

A number of parties to the project were found liable for the pollution which included the XYZ Grading Services and became responsible for a multimillion-dollar cleanup. XYZ Grading Services, a family owned business that had survived for three generations, no longer exists.


Important Reasons for Consideration

Certainly, a typical environmental pollution case should motivate contractors to consider environmental insurance, but if not, consider the following reasons below:

1.      Most General Liability and Professional Liability policies exclude coverage for pollution claims.

2.      Spills of toxic chemicals that are stored and used at job sites such as solvents, finishers, and fuel can lead to a pollution claim.

3.      Exposure resulting from hazardous materials such as fiberglass, asbestos, lead paint, and mercury that is not properly disposed of.

4.      Storm water run-off from project sites due to lack of a safe drainage strategy.

5.      Inadvertently puncturing an underground pipeline or storage tank that causes the release of hazardous materials.

All of the episodes listed above can affect General Contractors and subcontractors as well. Any contractor or subcontractor that becomes a party to a project can be held directly or indirectly responsible for a pollution claim and the significant costs of remediation.


Environmental Insurance Coverage

Fortunately for construction-related contractors, there is a stand-alone Environmental Insurance product that can provide financial protection for defense costs, settlement agreements, and judgments awarded by the court.

Typically, Environmental Insurance Coverage will provide several coverage options:

  • Can be purchased on a claims-made or occurrence basis.
  • Will provide coverage for third-party claims of bodily injury or property damage and environmental damage that results in remediation costs.
  • Can be site-specific for properties owned by the contractor.
  • Coverage for storage and staging of equipment used at a covered job site.
  • Ability to expand the definition of pollution conditions.

SKYLINE

Knowing that your contracting business is operating in a highly regulated and litigious industry, it is incumbent upon each general contractor and subcontractor to transfer the very present risk of polluting the environment and the costs associated with cleaning up the mess you caused. 

To better under your pollution risk and the most effective way to transfer your risk, contact the insurance professionals at Skyline Risk Management, Inc. (718) 267-6600.

Contractors are Now using Drones for Large Construction Projects

Contractors are Now using Drones for Large Construction Projects

Drones are becoming a household concept. More and more industries are looking for the best way to utilize drones safely and effectively to help save time and money for any task. Drones are even becoming something discussed around the home for personal use, especially when dealing with repair and maintenance issues around the house. However, using a drone for business is not that cut and dry. At home they may cause issues, however, businesses must adhere to regulations for their industries as well as insurance issues that could ultimately cause more trouble if ignored. The construction industry sees drones as a huge asset to their business. However, if the proper steps to obtaining and using drones are ignored, the fines and lawsuits could easily put a construction company out of business. Therefore, it is important to know and follow the rules before purchasing a drone for your site.


The Preliminary Work

Before you even purchase a drone, first you must complete some preliminary research and work. For instance, did you know you must receive approval from the FAA to operate a drone? The FAA has guidelines that must be learned and understood when applying for approval for use of a drone (or UAV: Unmanned Aircraft System) on a construction site. In addition to applying for approval from the FAA, you must have a new section of your employee handbook or operations manual that deals with the use of drones, risk management, and safety procedures. This includes proper employee training regarding drones and their proper usage on a job site. In addition to training your employees and receiving an FAA approval, you must prepare to hire drone operators or train current employees on drone operations and have those operating employees pass the required aeronautics test for them to serve as a drone operator.

Finally, the last piece of preliminary work that must be completed before purchasing your first drone is the insurance test. It is important to contact your insurance provider or broker to determine the following items:

  • Does your insurance cover drones?
  • If not, do you need a policy or rider that will cover drones on your worksite?
  • How much will this extra coverage cost, and is it cost effective in the long run?
  • Once coverage is purchased, how long will it take to go into effect?

Your insurance broker should be able to sit with you to discuss these and other issues which may pop up as the results of drone usage on a job site. Most importantly, when dealing with insurance, never assume anything.  Many policies specifically exclude drone usage and specific policies need to be purchased just for this type of issue.


Continuing Issues

Once you have set everything in motion and have purchased your first drone, your job has not ended. Each job site must be analyzed properly to ensure you are within the proper guidelines of the FAA in regard to drone usage. For instance, drones are not allowed to fly over people that are not directly involved with your project.  Therefore, if you are in a busy commercial district, it may be wise to leave the drone at the office or only do work with the drone during off business hours. This and many other regulations will play a constant issues for each job.

Furthermore, since drones are a relatively new technology, the issues involving drones are constantly changing and being updated.  Should you choose to utilize drones for your construction projects, dedicate an individual within your company to constantly check for updates regarding drones in your industry and adjustments you may need to make to accommodate their usage.

Finally, be prepared to always mitigate risks for each job that may occur. Drones are a great opportunity to save money and keep employee injuries down. However, they are new and still being analyzed and understood. Therefore, there is still quite a bit of unknown risk involved. Each job site may offer a different risk as well, therefore, it is important to know your risks in advance and prepare accordingly.  

Interested in using drone technology for your construction company? Contact the experts at Skyline Risk Management, Inc., (718) 267-6600 to get proper coverage for all your business needs. 


4 Steps to Mitigate Risk In Your Supply Chain

4 Steps to Mitigate Risk In Your Supply Chain

It's becoming increasingly difficult to avoid litigation in today's society. Many businesses, big and small, have been hit with lawsuits that hinder profits. Some firms even have to file for bankruptcy as a result of these claims.

To avoid such lawsuits, it's important to use common sense. Make sure your workplace is as safe as it can be. Fall into compliance with any and all regulations. Write out all your safety policies and procedures, and then make them readily available for all to read.

Just Imagine

Think about a scenario where a company hires a contractor to remove natural gas lines. This contractor is known and trusted, but he then hires two subcontractors to help with the project. One of these contractors makes a grave error, which results in two employees suffering from severe burns.

So who is on the hook for medical bills and the forthcoming lawsuit? In this example, the original company that hired the contractor is now responsible. Now, this may not be a big deal. If your company has workers' compensation and employer liability insurance, then you might be all set.

The Scary Thing About Contractors

Contractor lawsuits can be scary ordeals, and they're becoming increasingly common in today's contractor economy. In industries where the majority of employees are contractors (say 50-75 % of employees), the risks are greatly magnified.

It's hard to manage employees and ensure safety when the workforce is out of your company’s immediate supervision. In those cases, employees complying with your company's safety procedures and policies cannot be guaranteed.


The First Step to Protection

If you own a company or manage a supply chain, then protecting your business should be high on your priority list. While contractors can bring vulnerabilities, you understand that it's impossible to get many jobs done without them. Using contractors is just a part of doing business these days.

To keep your company protected, there is one thing you can do – create a verification process. Had the perfect contractor pre-qualification process been in place, the situation described above could have easily been avoided.

Here's how to implement a verification process:

1. Emphasize Safety

Create safety expectations and standards. Communicate these rules to any contractor before hiring. Hold meetings with your regular contractors regarding safety. Offer safety policies and procedures in written format for all involved.

 

2. Dig Deeper

Dive into the data. Look at objective measures to grade the contractor's performance. Use supply chain risk management audits with written protocol to ensure objectivity.

 

3. Create Criteria

Once you have settled on criteria by which you will judge your contractors, clearly communicate these criteria to any contractors you may hire.  Let each contractor know that safety is more important than price and your company will select the safest people to work with, not just the cheapest.

 

4. Manage

Keep company-wide rules and standards in place by maintaining a real-time database of every contractor. Continually update this database. Any possible user should be able to access the information at any time of the day.


Your Verification System

By keeping an up-to-date database of verified and reliable contractors, your company will avoid the vast majority of frivolous lawsuits that are a result of the contractor economy.

Your system can verify that every contractor has the necessary insurance and endorsements. This would remove a company's liability if an issue and lawsuit were to occur. In this scenario, both the contractors would be fighting a lawsuit – not the company.


It's Worth It?

If you keep updating your contractor verification system, you will mitigate a significant amount of risk in your supply chain. Not meeting contractual requirements and regulatory issues will become a thing of the past. In the present, you'll find reduced risk and often cost savings. 

 

If you have questions about sub-contractor insurance standards contact Skyline Risk Management, Inc., (718) 267-6600 to voice your concerns. 


OSHA's New Final Rule on Silica Dust

OSHA's New Final Rule on Silica Dust

It took some time, but OSHA finally made a decision on silica dust. The ruling, which takes effect on June 23, 2016, provides significantly more stringent rules and regulations. Construction companies and employers will have one year after the judgment takes effect to comply fully. The goal of the ruling is to limit all employee exposure to respirable silica as much as possible.

OSHA's decision culminated from a yearlong push to reduce employees’ exposure to this dangerous dust for the first time since 1971. In theory, the new regulations should be beneficial to the industry. However, many battled long and hard to ensure the law would not get passed. Why?


The Industry Against Regulation

Nearly every employer within the construction sector was against adding additional rulings with regards to silica dust. Many claimed the current rules did more than enough to combat the dangers of silica– when enforced properly. OSHA didn't agree, nor did they believe laws were being enforced properly.

Construction industry insiders also claimed the new regulations would hinder profits and be exceptionally costly to implement. Again, this was not OSHA's concern; when it came to silica dust, employee safety was the only concern.


Why Is Silica So Dangerous?

Nearly 2.3 million workers in the United States are exposed to silica in the workplace every year. This can lead to numerous health issues, including death, lung cancer, lung disease, kidney disease, and more. Even inhaling a small amount of silica dust can lead to significant health issues. Many times dust is inhaled during workplace activities like sawing, drilling, jackhammering, milling, and crushing.


The Major Changes

The new OSHA ruling regarding silica dust offers significant changes. The major one is the sharp reduction in acceptable levels of silica dust per cubic meter of air. 250 uG of silica per cubic meter of air used to be acceptable. Now, they only permit 50 uG of silica per cubic meter of air on a construction site.

This isn't the only change, either. OSHA went further and requires engineering controls like water and ventilation to make sure the acceptable limit is not exceeded.

OSHA now requires that respirators be provided if engineering controls cannot keep levels below the exposure limit. Restricted access to any high-exposure areas is now a requirement.

Written exposure control plans are mandatory now, too. A competent individual must be put in charge of implementing these written plans. Medical exams must be offered to all employees required to wear a respirator for more than 30 days each year.

Employers must also train employees on the dangers of silica dust and what they can do to avoid it. A detailed record must be kept of medical exams and silica exposure over time.


Silica Dust, OSHA, and Upset

Overall, the silica dust rulings have not been met with great fanfare from those within the industries. However, OSHA is not backing down. The regulatory agency claims many concessions were made when creating the new rulings, especially with the benefit of construction companies in mind.

OSHA has created many special programs for small to medium-sized businesses in high-hazard industries. These programs are designed to help these employers efficiently meet regulations while reducing costs. Many of the programs offer free and confidential help, including tips on complying with the new standards, advice on identifying any hazards within the workplace, and improving or implementing safety and health management systems. 

Have questions about Silica dust and Silicosis?

Contact Skyline Risk Management, Inc., (718) 267-6600to voice your concerns. 


4 Builders Risk Coverage Trends Affecting Contractors

4 Builders Risk Coverage Trends Affecting Contractors

Construction of the Twin Towers - NYC - Early 1970s

Construction of the Twin Towers - NYC - Early 1970s

Construction is big business in the United States, and it's booming. Due to this fact, the market for builders risk insurance has soared. Yet many insurance agencies have not been able to turn this potential source of considerable revenue into any type of profit.

Many cite the lack of insurance agencies offering builders risk insurance to the unique nature of these policies. Every single carrier offers different types of policies, and many find that builders risk plans tend to be significantly more complicated than other property policies.

Plus, a single construction company may be required to hold numerous different types of policies. This can be confusing for even the most knowledgeable contractors. As such, it's important to pay attention to recent trends in the industry. This will ensure you can accurately obtain builders risk coverage for your business:


1. Flexible Limits

Demand has skyrocketed for flexible limits regarding builders risk coverage. Changeable limits are vital for ordinance, law, landscaping, and temporary structure projects. You can wrap the heightened sub-limit into a premium charge for your business if you seek this type of coverage. Builders love increasing the sub-limit above the traditional $100,000 average, and the premium is usually worth paying for such a feature.

 

2. Soft Costs and Delays

Agents and brokers have a job to scrutinize any project that seeks builders risk insurance and ask every "what if?" possible. Many items are only examined after a loss, especially when soft costs and delayed expenses are considered. Investigate these issues by conducting meetings regularly and educating your workforce on builders risk hazards. 

 

3. Policy Warrants

Many insurance companies are now requiring warrants to go along with builders risk insurance. For example, a company will say there are certain things you must have as part of the project to ensure your builders risk policy will kick into effect in the event of an emergency. Most of the time, these warranties are loss prevention techniques that a contractor or builder may not have had on the job site initially.

 

4. One-Stop Shopping

Back in the day, there were dozens of different types of coverage forms constructions companies and builders could utilize. These coverages included separate installation, general liability, riggers liability, and so many more. Different sectors within the construction market could get what they needed quickly and easily.

However, things have changed. With crossover between markets and trades increasing in the construction industry, there is a need for a one-size-fits-all policy for builders. To that end, insurance companies have come through. Complex construction operations now require a builder's policy that covers any and every construction operation and project.


Understanding Builders Risk Coverage

By diving deep into builders risk and noticing current trends, you'll stay ahead of the game and ahead of competitors Remember to read the fine print and understand that every builders risk policy is unique.

 

If you have questions about Builder's Risk policies contact Skyline Risk Management, Inc., (718) 267-6600 to voice your concerns. 

6 Parking Lot Perils You'll Wish You Avoided

6 Parking Lot Perils You'll Wish You Avoided

Parking lots don't get a lot of love. Owners of multi-family real estate buildings tend to keep their property building well  maintained; meanwhile, their parking lots are often a different story. Often, the parking lots are a different story. It's exceptionally difficult to rent out a poorly maintained unit. Renters can gloss over a poor parking lot, but they can't ignore an apartment in horrible shape. 

While paying little attention to your parking lots is understandable, the practice can come back to bite you. Many owners of multi-family real estate properties don't realize they can be held liable for activities that occur in their parking lots. From accidents to mishaps and to criminal activities – you could be on the hook if it happens on your grounds.


Here are 6 factors to ensure you avoid claims:

 

1. Simple Signage

It's imperative that your parking lot has clear signage that directs people where to go, including information on exits, entrances, and how how traffic should flow. These exits for foot, bike, and vehicle traffic should be well  maintained and free of any and all obstacles. Make sure to keep gates in great shape, too.


2. Perfect Pavement

Potholes and cracks can lead to lawsuits. Even the slightest crack can be considered a tripping hazard, and a lawsuit could follow. Parking lots should be smooth, free of cracks, and be cleaned of debris regularly.


3. Look at Lighting

How you light your parking lot will not only affect your liabilities, but will also influence how safe your tenants feel at night. Many prospective tenants consider nighttime lighting as a huge factor in deciding whether to rent from you or not. If a crime or accident happens at your place and a light is broken, – a lawsuit will often be forthcoming.



4. Winter Weather Worries

Owners of multi-family units buildings are usually responsible for snow and ice removal in the winter. This means you'll need to keep the parking lot clear and ensure residents have the ability to get to work. You'll need to contract out for this service. Just make sure the contractor has adequate general liability insurance and workers' compensation insurance.


5. Valet Service

While most owners won't have to deal with this aspect of insurance, a valet service will require additional policies. Adding in a human element will always increase the cost of coverage. By properly taking care of your parking lots, lighting, and more, – you can eliminate a majority of any claims that would result from a valet service.


6. Parking Garages

Some multi-family building owners choose to build a parking garage instead of a parking lot. Many consider this solution in order to increase efficiency, but pay attention. Garages offer more hidden areas than a parking lot. This means you'll need to invest in structures and security features to keep residents safe. Lighting is also equally paramount with these parking garage structures.


What an Owner Can Do

You have to maintain your buildings. If you don’t, you’ll find tenants disappearing rapidly. However, if you ignore your parking lots, you’ll find lawsuits starting to add up. Get Show your lots some love and you’ll avoid a number of issues. Plus, you’ll your tenants will appreciate it.

"In 2015, residential projects grew to an all time high of $18 Billion. Skyline Risk Management procured insurance for almost $1 Billion of that total cost."

Quality Property Insurance can cover these claims and also offers peace of mind in the event that an incident occurs. If you have questions about parking lot perils or property insurance contact Skyline Risk Management, Inc., (718) 267-6600 to voice your concerns.

Federal Emergency Management Agency (FEMA) Flood Maps

Federal Emergency Management Agency (FEMA) Flood Maps

Helping customers save money and reduce risk is vital – especially as the climate continually changes.

Over 40% of Americans are living in coastal areas. Meanwhile, sea levels have been rising, and heavy downpours have been more common as of late. Research has found that tidal flooding has increased over 400% in the last ten years. In Miami alone, there has been a 33% growth in flooding as a result of heavy rains.


Unprepared and Underinsured

Over 80% of Americans who live in areas where their homes are considered FEMA-designated flood plains don't even have flood insurance. That leaves a lot of people at great risk. Even Americans outside these designated areas often suffer significant loss from a damaging flood.


Forecasting the Future

As bad as they are now, king tides are the forecast of the future. Many predict that the highest of tides today will turn into the average water levels soon. These high tides reach areas that have never seen flooding before. Just look at Superstorm Sandy. No hurricane-force winds were present, yet the storm rode in on high tides, causing billions in damages and the loss of many lives. Similar occurrences are predicted to happen more often in the future.


"King Tide" Issues

When the sun, moon, and Earth are at their closest point to each other, seawater tends to flood coastal cities, even without excessive rainfall or storms. This occurrence is known as "king tide season." Cities like Miami Beach, Norfolk, Annapolis, Atlantic City, and many others often find flooding common during this season.


Confusing Changes

FEMA flood maps don't account for the sea level rising. Thus, they cannot guarantee reliable data to homeowners about storm surges and their effects on the individual's property. Climate change has caused many to question whether looking into the past will be an effective way to predict storm surges and create flood maps.


Climate Change Considerations

After Hurricane Katina, the U.S. Army Corps of Engineers began requiring climate change loss prevention considerations in every one of its projects. The Corps rebuilt the New Orleans levees with these factors taking precedence. If the U.S. Army requires such considerations, it may be a good idea for insurance agents and brokers to do the same.


Here are a few adaptations can be taken to help coastal homeowners avoid costly damages:

  • Elevating HVAC equipment
  • Elevating electrical systems
  • Raising climate systems
  • Modifying sewer valves
  • Thinking about removable flood doors
  • Learning how floodwater flows around property
  • Lifting the house
  • Installing flood vents to protect foundation

Your Responsibility

Discussing climate change loss prevention with an insurance broker should be mandatory. Every homeowner should discuss risks of flood damage, such as destroyed walls and carpeting, failing infrastructure, mold, and health hazards with a broker. 

"The federal government currently provides flood insurance through the National Flood Insurance Program (NFIP), and private carriers now want to enter this market."

If you have questions about flood insurance contact Skyline Risk Management, Inc., (718) 267-6600 to voice your concerns. 


Construction Risk: Design - Bid - Build. When the Lines get Blurry

Construction Risk: Design - Bid - Build. When the Lines get Blurry

Things are changing all the time. It used to be when a traditional construction project was being formulated; there were three important and well-defined steps that took place: design, bid, and build. Under this method, an engineer or architect provided the design services; a project management company took care of bidding out the project, and the construction contractor built the project. Each party had their own responsibilities and the risks that would accompany them.

These roles and the responsibilities related to them are changing. Because newer projects have become more complex and design responsibilities are becoming more fragmented, the parties to a construction contract haven't the defined line between them that used to exist.

As these lines of responsibility between design firms and contractors become blurred, many contractors are assuming unusual risks that their normal contractor's coverage may not address. Contractors are now assuming risks that need to be mitigated with Professional Liability Insurance.

Construction Management Risks

Contractors today are likely to perform construction management services as an agent of the owner or hold separate contracts with subcontractors. In either situation, the contractor is now taking on the responsibility for supervising the subs, scheduling and cost estimating. These types of activities create a specialized standard of care, and a corresponding professional liability risk is presented. The contractor is no longer acting just as the builder of the project but has crept over to design recommendations and gotten involved with project management. All of which used to be a three part process done by three different firms.

Which Coverage For Which Risks

We know that the general liability policy will provide coverage for losses caused by ordinary construction means and methods as long as there is resulting bodily injury or property damage arising from the occurrence. However, the professional liability policy will provide coverage for damages that result from rendering or failure to render professional services.

Circumstances such as project delays cost overruns or having to reinforce a faulty structure wouldn't be covered under the CGL, but would be covered under a professional liability policy if it was caused by professional negligence.

The Contractor's Solution

Many insurance companies that have specialized in the contracting industry are now making available the Contractors Professional Liability Policy. The policy is an answer for contractors that are involved with project design and project management. Although policies differ depending on the carrier you select, most will provide the following coverages:

  • Broad professional services definition
  • Pollution Liability
  • Blanket additional insured coverage for clients of the Named Insured for pollution claims
  • Coverage for Joint Ventures
  • Prior Firm coverage
  • Supplemental coverage for insured expense reimbursement
  • Coverage for innocent insureds
  • Automatic extended reporting period
  • Claims-made coverage with circumstance reporting provision
  • $25,000 claims mediation credit
  • No lead or asbestos exclusion
  • Excess limits on specific projects
  • Coverage can be primary or excess
  • Subsidiary coverage
  • Worldwide coverage

If your contracting firm finds themselves getting involved with the design, bid, or management of a project, your gate to professional liability risks has been flung wide open, and your standard Contractor's Insurance will fall short on many levels. Speak to the professionals at Skyline Risk Management, Inc. (718) 267-6600 and get the information you need to make an informed decision about your contractor's insurance.

If You Care About Your Intellectual Property - Insure It

If You Care About Your Intellectual Property - Insure It

Consider this, if you are a business owner, it is likely that your most valuable asset is not insured and therefore, at risk. You may be thinking this statement doesn't apply to you because you have a BOP that covers all your stuff and sky-high limits of liability coverage. In fact, you listened to your broker when he recommended an Umbrella and Professional Liability insurance. Nope, not me, you're thinking. But, what about your ideas? What about your intellectual property?

What is Intellectual Property (IP)

As defined by Merriam -Webster Dictionary, Intellectual Property is defined as: property (as an idea, invention, or process) that derives from the work of the mind or intellect; also:  an application, right, or registration relating to this.

Since we know what is considered IP, every business should make their best effort to understand the risk involved and choose the way to mitigate that risk at an affordable cost.

  • Identify - If your business manufactures products, sells products, or provides services unique to your competitor, then your business will have intellectual products at risk. From the restaurant that keeps recipes secret to a barber that provides a unique style of haircut, almost every business has IP at risk.
  • Quantify - Once you have identified the intellectual property that you own, you will need to place a value on it in order to determine how much money, if any, your business would lose if the IP became available to your competitors. In almost every case, a business owner's intellectual property is what makes it unique from other businesses in their class or industry. Once you have established the loss of money if the IP were lost or stolen, you can now set a legitimate value to it.
  • Protect - Now that you understand the value of your IP and how your business could suffer financially without it, it's time to make sure that your business transfers the risk of it being stolen or lost to an insurer. Having a product or work method under patent or trademark offers certain protections of ownership, but patents and copyrights do not provide a remedy if your IP is lost or stolen.

The Insurance That Is Needed

When we discuss the insurance needed to mitigate the risk for intellectual property, we should first look at the normal business owner's coverage and see if there is coverage already available.

  • Commercial General Liability - The CGL does provide some coverage related to intellectual property, however, the coverage is for 3rd party liability and doesn't protect your intellectual property.
  • Commercial Property - Commercial property insurance provides coverage for damage to or loss of tangible property. The policy does not speak to intangible property or intellectual property.
Gibson Les Paul Guitar Patent - Blueprint

Gibson Les Paul Guitar Patent - Blueprint

Intellectual Property Insurance is the Answer

Fortunately, as the market demand has increased for IP insurance, several insurers have put together comprehensive insurance packages to meet the demand. One, in particular, is a product call IP. This product offers a comprehensive package of coverages to protect against IP claims. The product is targeted to small and medium-sized businesses and will provide the vital coverage needed with a litany of features:

  • Comprehensive coverage for all intellectual property, which includes patents, trademarks, copyrights, and trade secrets.
  • Provides for defending infringement allegations and payment of damages and settlement awards. The coverage will also extend to counterclaims, recalls, and other loss mitigation measures.
  • Coverage is provided for directors and company officers.
  • Provides coverage for contractual obligations for licensees and customers
  • Provides for the actual costs incurred when obtaining and maintaining a registered right if that right is invalidated or revoked resulting from an infringement action.
  • Reimburses for lost profits during a twelve month period if the insured is prevented from selling a product or service due to an infringement claim.
  • Coverage for the costs to avert or mitigate possible loss of reputation caused by an infringement action.

In today's litigious environment, the cost if intellectual property litigation can easily become astronomical and in some cases can cause financial devastation to an unprotected business. The risk of becoming involved in an intellectual property action continues to increase, and costs increase with it. Knowing this, it is completely understandable that certain insurers are developing comprehensive policies to allow your business to mitigate this risk.

The first step in searching for intellectual property coverage is to call the professionals at Skyline Risk Management, Inc. at (718) 267-6600 to get the information you need to navigate this very important coverage for your business.

3 Safety Precautions No Fleet Manager Should Overlook

3 Safety Precautions No Fleet Manager Should Overlook

Businesses with large vehicle fleets typically equate a great safety program with reduced claims and lower premiums. Whether your business has a fleet of five or fifty vehicles, a fleet safety program can make a significant difference in claims frequency, premium increases, and most importantly, driver safety.

There is certainly more to fleet safety than vehicle maintenance, motor vehicle reports, and safe driver courses, although, these should always be the basis of a good safety program. Driver habits change over time, and we can certainly look to distractions that have become a sore spot with fleet managers who are responsible for the safety of the employees. Distractions, aggressive driving, drugs and alcohol, and the weather will always make it to the top of the list for any safety manager to talk about and track during the year.

Distractions

It used to be a scantily dressed female was considered a dangerous driver distraction but that has easily been replaced by technology. Today, technology distractions (text, email, cell phones) are responsible for about 25% of vehicle accidents nationally, according to the National Safety Council. Drivers who divert their eyes from the road for only a few seconds while reading or writing a text or email, end up going about 100 yards in just that short period of time. While we hear so much about texting and emailing while driving, drivers should understand that talking on the phone is a distraction that can be just as serious. Fleet managers must lay down the law about using technology while driving and hold employees accountable when they are found to be breaking the rules. If a driver must make or take a call while operating a vehicle, they should be required to park their vehicle before doing so. End of story!

Aggressive Driving

According to a study published by the AAA Foundation for Traffic Safety, aggressive driving lead to more than half of the fatal crashes between 2003 and 2007. Speeding was the most common denominator in the accidents represented. Aggressive driving is usually the result of a driver falling behind schedule due to traffic backups or road construction. It's not unusual for a driver to try and make up time with the road opens up and that typically includes putting the pedal to the metal. Running red lights, failing to obey traffic devices, and failure to yield are all considered instances of reckless driving and should never be tolerated. Fleet managers can use driver safety courses, driver tracking devices, and dash cams are just some of the many devices now available for fleet managers to implement along with well thought out driver safety plan for all employees. The most important part of the safety plan is to hold employees accountable when they're found not following the safety protocols.

Driver Health

Typically overlooked by safety managers, driver health has become a hot topic because most employees who are feeling poorly are reluctant to miss a shift at work to seek a doctor's advice. Add to that, many drivers who feel poorly are also likely to self-medicate which can make matters worse if they're not paying attention the listed side effects. The Federal Motor Carrier Safety Administration has reported that driver use of over-the-counter drugs was a factor in approximately 25,000 large truck crashes over a 33 month period. It's incredible that a local delivery driver thinks it's a good idea to chug a bottle of cough medicine so he can get his routed completed and not lose hourly pay. 

Certainly, every fleet manager is determined to reduce vehicle incidents by paying close attention to safety protocols. Unfortunately, safety protocols are useless if drivers are not held accountable when they fail to use them.

For more information on commercial auto insurance and great ideas for reducing your premium, contact Skyline Risk Management, Inc. at (718) 267-6600, and speak with an insurance professional who will help you navigate a complete set of safety protocols for your fleet.

Best Practices for Buying Builders Risk Insurance

Best Practices for Buying Builders Risk Insurance

Many contractors and real estate investors are somewhat familiar with Builders Risk Insurance but rarely are they familiar with determining their limits of coverage. The coverage was designed to insure against the risk of loss for damage to property under construction or renovation. Although the coverage covers business and residential buildings, it also provides coverage for issues not normally associated with a commercial or residential building.

Before deciding on limits of insurance, the property owner, risk manager, or other responsible party must thoroughly review the construction documents. There is a very important relationship between the insurance policy and the construction documents. The documents will determine certain insurance coverage requirements, including indemnity provisions, who is to be listed as named insured(s), any waivers of subrogation required, and limitations on liability.

Although certificates of insurance are typically provided by the agent or broker, it's recommended that you do not rely on them for coverage accuracy. A certificate will not guarantee that the coverage in place represents the coverage required by the construction documents. Always compare the construction document insurance requirements with the quote, binder, and then the issued policy. If discovered, any coverage discrepancies should be immediately addressed with your agent or broker.

Covered Property

Typically the very first question is what property needs to be insured? For renovations, this is very important since the policy needs to insure both the existing structure along with the new construction. As an example, if a project is designed to convert industrial space to residential or retail space, the existing building is usually gutted, and all new systems and interior space are constructed. The current exterior envelope will be a key component of the project which means this portion as well as the interior construction will need to be insured.

A problem that could exist is that many builders risk policies insure at cash value for the existing structure, not at the replacement cost. This means if a fire causes severe damage to the existing structure, the claim would be settled at the depreciated cost to repair the exterior envelope, which would result in a significant shortfall. This shortfall could certainly be enough to ruin a project that is operating on a very tight budget

For new construction, it's important to insure foundations, underground pipes, costs of site preparation, scaffolding, and temporary structures. Each item, if uninsured, could be very expensive to replace in the event of a covered loss. Depending on the needs of the parties involved, the builders risk policy should also provide coverage for tools and equipment, or materials that won't become part of the structure.

Persons or Entities Insured

Certainly, the named insured(s) are as important as the property being covered. Typically, the construction documents will require that the general contractor and the project owner be covered under the policy. Subcontractors should also be covered which will eliminate the need for waiver endorsements among the contractors and subcontractors. Just as in the case of property being covered, the construction contract should specify who should be listed as named insured and who should be listed as additional insured.

Time Element

Time element coverage is made up of business interruption, expediting expense, extra expense, and coverage for "soft costs." Soft costs, which can be significant, represents the economic risks associated with project delays brought on by a covered peril. This is important because depending on the policy language, normal business interruption coverage may not pay for all economic losses resulting from a delayed project.

Builders Risk Insurance should never be considered "cookie-cutter" coverage. Each project has its specific risks that need to be mitigated, and the best place to start is with the construction contract.  If you have questions about purchasing builders risk insurance contact Skyline Risk Management, Inc. at (718) 267-6600 to discuss your concerns. 

Primary and Noncontributory Construction Contracts

Primary and Noncontributory Construction Contracts

Very often construction contracts and agreements require a subcontractor to have the general contractor listed as an additional insured on the general liability policy as "primary and noncontributory." Although a simple requirement on its face, adding the primary and noncontributory endorsement may cause some difficulties for the subcontractor's ability to start work on the project.

The International Risk Management Institute has recommended that risk managers refrain from inserting the requirement in contracts. Although insurance agents can add this wording in the certificates they issue, they can do so only with the approval of the insurer. Many insurance companies, however, tend to push back on adding this endorsement to their policies and certificates.

What's The Problem With Primary?

With liability insurance claims, if two policies cover the same loss, one policy will typically cover on a primary basis, as the primary policy, and the other will cover on an excess basis if the primary coverage does not cover the claim, or if the limit is not sufficient to pay the entire loss.

As an example, if the primary has a $1 million dollar per claim limit and the claim is for $1,400,000, the amount over the primary limit will be paid by the excess policy.

If for example, the general contractor and the subcontractor have purchased the newer edition of the ISO's CGL form, the sub's policy will automatically act as the primary. The newer form's language makes the insured's policy excess over any other policy that added the insured as an additional insured using an endorsement. Based on this, the "primary" part of the requirement becomes a minor issue.

What's The Problem With Noncontributory?

The noncontributory part of the endorsement is more of a problem. Many contracts leave out the meaning of the term and most insurance policies don't include it at all. The general contractor is likely to believe that its policy will not even pay on an excess basis if the subcontractor's policy limit is not enough to cover the loss. In fact, the general contractor may expect the sub to pay the difference out-of-pocket.

The Standard Additional Insured Endorsement

The standard AI endorsement to the CGL policy will cover the additional insured only with respect to their liability for injury or property damage caused by the subcontractor. The AI endorsement also provides coverage for those working for the subcontractor. The coverage will last only as long as the sub has ongoing operations for the additional insured. The endorsement doesn't have any wording regarding the additional insured's coverage being "noncontributory."

This is where the problem exists. Since it is not a standard insurance industry practice to cover the additional insured on a noncontributory basis, the insurance companies are reluctant to change that. They prefer that the additional insured's coverage contribute toward paying a claim. A general contractor has very little incentive to prevent losses on a project when they know their own insurance may not be needed.

Any contractor who becomes aware of the "noncontributory" endorsement requirement should immediately notify their agent and ask that the insurance company provide the coverage. If the insurer refuses, the subcontractor must notify the general contractor and attempt to negotiate alternative terms so as not to breach the contract and then ask the agent to search for carriers that ordinarily allow the endorsement. If you have questions about primary and non-contributory construction contracts, please contact Skyline Risk Management, Inc. at (718) 267-6600 to discuss your concerns. 

8 Critical Steps to Construction Contractor Safety

8 Critical Steps to Construction Contractor Safety

Safety should be the top priority for all contractors in the construction industry. We all know that hardhats, safety glasses, and steel-toed boots are part of the norm, however what reduces accidents and deaths, and leads to lower premiums, is an efficient and effective safety plan.

The Bureau of Labor Statistics reports that approximately 150,000 construction site injuries occur every year, and almost 19% of all workplace fatalities happen in the construction industry. In construction, detailed precautions can prevent big problems, and creating a safety plan is a great place to start.

1.      Create a Safety Plan

The contractor's first responsibility to it's workers is to maintain a safe work environment. This plan should be comprehensive, memorialized, and issued to every worker at the job site. Your plan should highlight emergency procedures and policies, identify hazards, provide for safety training, and record incidents as they occur. At least one manager should be identified as a “Safety Manager” and have the responsibility of training workers according to the program.

2.      Fall Prevention

The most notorious accident on job sites results from falls, particularly when it comes to the use of ladders. Ladders should be inspected regularly for broken steps, missing bolts, and any damaged parts, and always, without fail, placed on a level area. Workers should be aware of the one-to-four rule, which means the bottom of the ladder should extend about one foot for every four feet the ladder will be extended.

3.      Lift and Carry - Manual labor on construction sites typically involves more precautions when lifting or carrying heavy equipment. Statistics reveal that one in five workers will suffer from a lower back injury during their working lifetime. To help reduce back injuries, have employees bend from the knees while their feet are about shoulder-width apart, and be sure to shift their feet to change direction when carrying objects close to their waist level.

4.      Ergonomic Equipment - To help workers reduce fatigue, avoid injuries and strains, and to increase productivity, construction contractors should consider investing in ergonomic equipment. This would include safety items such as ladder caddies, rubber handled power tools, and seat cushions, which work with the worker's natural movements and reduce the risk of musculus-skeletal disorders than result in back pain.

5.      Heat Stress - Workers should be made aware of the three stages of heat stress, cramps, heat exhaustion, and heat stroke. Workers should be trained to hydrate properly before and during work by drinking 10 ounces of water every 20 minutes. Workers outside in extreme heat should have work tents or umbrellas to reduce the heat from the sun.

6.      Electrical Safety - After falls, electrocutions are the leading cause of construction fatalities. Workers should be instructed to inspect electrical equipment regularly and above all, stay clear of the water when working with electrical equipment. Damaged electrical cords should always be replaced rather than spliced or taped.

7.      Worker Visibility - Workers involved with side of the highway work or directing traffic around a construction site should always be provided with bright orange or yellow clothing or vests. This philosophy is even more important for highway work taking place during nigh time hours.

8.      Natural Hazards - Most workers don't consider an insect bite as a natural hazard until it results in an injury that prevents them from going to work. Insect bites and stings are very common in construction areas and can lead to serious injury if a worker has an allergy to the bite and attempts to continue working.

With many construction jobs, new workers are brought on board that may or may not have much construction experience. These new workers should be thoroughly trained on job-site safety to maintain a safe working environment, and reduce injuries while on the job.

Safety in the workplace will always be the employer's first line of defense when it comes to the cost of workers' compensation insurance. If you have questions about construction contractor safety contact Skyline Risk Management, Inc. at (718) 267-6600 to discuss your concerns.