Contractor General Liability Insurance And Workers´ Compensation Insurance Savings Up To 38%!

Ignorance may be bliss, but that doesn’t mean it’s going to get you or your staff out of a ticket.  Police officers have heard every excuse in the books, so much so that they can probably finish your sentence before you’ve even managed to utter the “I” in the “I didn’t know.”

Insurance.com’s recently released “Ticketmasters” survey which gives a rundown of the top excuses used by drivers pulled over for a traffic violation. Count ‘em down here and let us give you a few tips on how your company’s driving record can affect your commercial auto insurance rates.

Top 11 Excuses

11 – I’m just helping out; I wasn’t even supposed to be driving. 2.2%
(Ex. Your friend has had a few too many drinks and can’t drive.)

10 – I’m just doing what my GPS told me. 2.2%

9 – I’m on my way to an emergency. 4%

8 – I wasn’t doing anything dangerous. 4.2%

7 – I had to use the bathroom. 4.6%

6 – I missed my turn/exit. 4.8%

5 – I’m having an emergency situation in my car. 5.4%
(Ex. Spilled hot drink in lap, bee in the car.)

4 – Everyone else was doing it. 6.4%

3 – I didn’t know it was broken. 12.4%

2 – I’m lost and unfamiliar with the roads. 15.6%

1 – I couldn’t see the sign telling me not to do it. 20.4%

Keeping your record clean

Ever heard of a Motor Vehicle Report (MVR)? It’s an official document that you or your employer may request from the DMV that provides information about your driving record. It includes basics like name, gender, and date of birth, as well as any special license endorsements, restrictions, and traffic ticket information.

Insurance carriers use this information to evaluate your driving history so they can set your insurance rates at the appropriate amount. MVRs are also commonly used in screening prospective job applicants who will be driving company vehicles as an essential duty of their position. Too many tickets on an employee MVR can mean higher rates and it can even derail your prospective employment opportunities if the carrier doesn’t want to insure them.

If you are interested in receiving suggested driver disqualification criteria, please contact us.

So remember: Drive safe and keep the excuses to a minimum!

Sources: Insurance Journal Most-Used Excuses for Getting Out of Traffic Tickets: Survey, DMV.org

Professional Remodelers get more referrals by using these 3 tips; communication, clean worksites, and preventing accidents. Your professionalism can go a long way and can lead to more referral as well as great testimonials from happy customers. 

Safety Tip #1 – Communication
Make sure to inform your customer on your hiring practices. Let them know you run criminal background checks as part of your pre-employment screening process. Not only is it good to run criminal background checks for your company’s employment records, but this can bring some piece of mind to customers who are not thrilled about having strangers in their home.

Also let subcontractors and customers know what to expect during the remodel. Discussing where the work site ends and where family living space begins. Pointing out dangers to both parties is also a good way to remind your employees and your customers of the hazards associated with remodeling a home. Having open lines of communication establishes an expectation for both parties and can be a way to prime the pump for future referrals. 

Safety Tip #2 – Clean Worksite
Keep your worksite clean. Make sure that at the end of each day all tools are stored correctly, cords are off the floor, and scraps and trash are picked up and thrown away. This shows the customer that you respect their living space. It also can protect your customer from jobsite hazards or injuries associated with your presence in their home. Keeping the job site clean will earn large bonus points with your customer and can be a major factor in their willingness to refer you to others.

Safety Tip #3 – Prevent Accidents
Falls on the jobsite are one of the most common construction insurance claims. Keep your employees and your customers safe by always using OSHA compliant ramps or stairs. Make sure entrances and exits are sturdy and safe to use during the renovation.

Install temporary rails on any unprotected openings. This includes open-sided stairs, landings, large windows, and second story decks or lookouts. To help keep your customer or customers’ family away from dangers on the remodel jobsite use orange safety fencing, guardrails, and warning signs throughout the construction.

Taking the time and effort to prevent injuries during a remodel shows customers that you are looking out for their best interest. If an outside inspector drops by it can also win you a professional recommendation from a trusted expert in your industry.

Get More Referrals
The number one way to get more remodeling referrals is to ask for them. After a job is complete do a simple survey asking customers how they rate your service, and workmanship. At the end of the survey ask them if they would refer you to a friend, followed by a place to put a referrals name and contact information.

Other simple ways to keep your remodeling customers happy is to not smoke on the jobsite or near entrances to the home. Stay off of cell phones in or directly outside of the home. Wiping your shoes before entering a customer’s home or even putting down protective floor covers while the remodel is in process.

Your customers will appreciate you hiring professionals to work in their home, keeping the jobsite clean and keeping them safe during their remodel. Remember that being safe on the jobsite translates into safer happier customers and more referrals.

Source: South Carolina Builder Journal, 2013, Remodelers Need Risk Managers, Too

In the recent decision of Harleysville Mutual Insurance Co. v. South Carolina, (opinion 27189, November 21, 2012), the South Carolina Supreme Court left intact a state law that redefines an “occurrence” under a builder’s General Liability policy. The court ruled that the new definition of “occurrence” for the purposes of General Liability insurance is constitutional; however, the retroactive application of the statute is not.

The new statute, South Carolina code 38-61-70, effective May 17, 2011 was an attempt to protect builders by overruling Crossman Communities of North Carolina, Inc. v. Harleysville Mutual Insurance Company (Crossman I). In Crossman I, the court ruled that faulty workmanship did not fall under the definition of an “occurrence” because “the damage to the insured’s property was no more than the natural and probable consequence of faulty workmanship.” Also, for faulty workmanship to give rise to potential coverage, the faulty workmanship must result in an “occurrence” as defined as unintended, unforeseen fortuitous or injurious event. The builder community was up in arms over the Crossman decision and lobbied heavily for the new statute which provided that an “occurrence” also meant “property damage or bodily injury resulting from faulty workmanship, exclusive of the faulty workmanship itself.”

Interestingly enough, on August 22, 2011, the Supreme Court issued a new opinion, which overruled Crossman and found in favor of coverage based on an “occurrence”. In the new opinion, Crossman Communities of North Carolina, Inc. v. Harleysville Mutual Insurance Company (Crossman II), the court reaffirmed his decision in Newman and clarified that negligence or defective construction resulting in damage to otherwise nondefective components may constitute property damage, but defective construction itself would not.

So, what does Harleysville Mutual Insurance Co. v. South Carolina mean for builders? Because the court ruled that the statute can’t be retroactively applied, it will have no effect on policies issued prior to May 17, 2011 which is the date of the Crossman I decision which impacts the interpretation of an “occurrence” for policies issued prior to that date. However, on a going forward basis, the powerful builder lobby proved that it is possible to correct a faulty court opinion.

A  joint program developed by the Home Builders Association of South Carolina and the South Carolina Workers’ Compensation Commission has resulted in an automated system that will notify a general contractor upon midterm lapse of its subcontractor’s Workers’ Compensation policy. This new system solves the problem that occurs when a subcontractor’s Workers’ Compensation policy lapses midterm due to nonpayment of premium and when the general contractor is not aware of such lapse. Constantly monitoring the coverage status of the subcontractor’s Worker’s Compensation policy has always been an administrative nightmare for general contractors.

Pursuant to SC Code of Laws 42-1-400; 42-1-410, a general contractor is considered liable for Worker’s Compensation injuries/costs incurred by an uninsured subcontractor.

The program works as follows: 

·     The general contractor visits the South Carolina Workers’ Compensation Commission website at www.wcc.SC.gov and selects the verification of coverage link from the homepage.

·     Follow the instructions to enter the security code for access to NCCI’s search. Click submit.

·     Search for the name of the subcontractor for which you would like to activate the
monitoring service.

·     After viewing the search results, verify that the name of the subcontractor is correct.

·     Enter your email address to register for electronic email notification in the event of policy
midterm cancellation.

·     You will receive a confirmation message when your entries accepted.

·     You will receive an email that confirms your registration for the subcontractor in question.

·     In the event of midterm policy cancellation, you’ll be notified immediately by email. The
database of canceled policies is updated daily.

·     The website offers a reporting function that allows a registered user to receive a report of
all subcontractors for which notification has been activated. 

This is a fantastic service that should be of great benefit to general contractors, insurance carriers, insurance auditors, and insurance agents. 

The fact is that many smaller subcontractors frequently enter cancellation status due to nonpayment of monthly premiums. This places general contractors at risk in addition to being an administrative burden to track. This new system will likely force subcontractors to pay more attention to their monthly payments to make sure that their Workers’ Compensation policy does not cancel. The bottom line is “what is inspected is respected”.

Click: here to view full report and step by step instructions on how to use the new service.

As a General Contractor you understand the construction site and the dangers that can be found when building a home. Unfortunately, you and your team of supervisors and subcontractors are not the only people who spend time at your jobsite. Inspectors, homebuyers, real estate agents, and even the nosy neighbors will swing by to take a look at your project during different times of completion. But did you know every time a visitor enters your jobsite they are putting your business at risk?

Construction sites are strewn with danger. We have all heard the stories of nail guns planting a nail in a fellow coworker or roofers falling from the roof they are building. These kinds of accidents are normally covered with Workers Compensation, but what about the visitors to a jobsite? What if a visitor is injured or even killed while on your construction site? The General Contractor can be sued and even lose their business and homes. That is why it is more important than ever to have the right contractors’ liability insurance.

The correct contractors’ General Liability insurance will cover all visitors to your jobsite whether they were invited or just happened to swing by on an evening walk. Regardless of your insurer here are some tips to keep your jobsite safe no matter who stops by to visit.

Contractors’ Guide To Keep Jobsite Visitors Safe;

• Have regular safety inspections done by your supervisors daily.
• Pre-set appointments to show homebuyers and real estate agents around the jobsite yourself.
• Make entry ways into the home safe and easy to walk through.
• Keep tools and construction materials orderly on the ground and out of walkways.
• Sweep up nails and other dangerous debris prior to showing the construction site.
• Make sure there is sufficient light and that power cords are taped down or put away while visitors are in the construction site.
• Clearly mark all hazards with signs and/or safety tape for the benefit of everyone on the jobsite.

Now just because you have contractors’ General Liability insurance does not mean you are in the clear. It is important to mention that general contractors are only covered up to the limit of liability. What does that mean? It means if a neighborhood kid falls from the second floor of a home you are building you are still liable for the child’s injury, regardless of the fact that the child trespassed. The insurance company will only pay for the damages up to the point of your limit on your General Liability insurance. This means you will be paying the rest of the bill out of pocket. Make sure your limits are adequate to cover your exposure. Don’t scrimp on coverage here; it could cost you your business and your home. Lawyers look for every possible dollar to reimburse their clients for their injury.   

Source: With Jobsite Visitors, Expect The Unexpected, South Carolina Builder Journal, 2012.

A common contractual requirement for a contractor is to remove the cross-liability exclusion under a General Liability policy. This exclusion deals with whether or not one insured can sue another insured.

Under older versions of ISO policy forms, such a request made perfect sense. However, under the more modern ISO policy forms, there is no endorsement to provide cross liability coverage. The reason is because there is no longer a cross liability exclusion under the policy as such coverage has been automatically included since 1986.

Here is the applicable policy provision:

7.  Separation of insureds

 Except with respect to the limits of insurance, and any rights or duties specifically assigned in this coverage part to the first named insured, this insurance applies:

A. As if each Named Insured is the only Named Insured; and

B. Separately to each Insured against whom a claim is made or suit is brought.

Of course, such a request to remove an exclusion that does not exist is ridiculous. The likely reason for most of these requests is because the attorney who drafted the contract is referring to some old boilerplate contractual provisions from decades ago.

Source: Can One CGL Insured Sue Another One?; Bill Wilson; Big I Virtual University; November, 2012

A report by Marsh states that the U.S. construction industry should expect rate increases of up to 15% in the commercial General Liability market, due to years of soft market conditions. “This comes against the backdrop of medical cost inflation and changes to some state statutes that have extended coverage beyond the insurer’s originally intended scope,” said Leader of Marsh’s U.S. Construction Practice, Michael Anderson.

Marsh’s August 2012 U.S. Construction Practice also reports that insurance carriers continue to raise rates between 8 and 10 percent on Umbrella and Excess Liability policies.

As underwriters are making the liability market more challenging for the construction firms by continuing to increase rates and restrict coverages; construction firms with poor loss histories are experiencing an even greater rate increase and some are even unable to renew their policies.

Rates have increased for Workers’ Compensation as well in many states as underwriters struggle with continually increasing medical costs. Future changes in NCCI experience modification calculations could possibly have a negative impact for some in the construction industry in the upcoming year.

According to John Sadler (Sadler & Company, Inc.): “We are not yet seeing these Contractor General Liability increases for our book of builder & remodeler business.”

Source: My New Markets

A minority of states, including South Carolina, require any employee seeking Workers’ Compensation benefits for mental distress to prove work conditions causing stress, mental injury, or mental illness to be extraordinary and unusual compared to normal working conditions.

Due to this ruling, a S.C. deputy sheriff has been denied Workers’ Compensation benefits for the mental distress that he endured after shooting a suspect while on the job.

Sheriff Bentley suffered from anxiety and depression after the shooting and based on the recommendations from his psychiatrist and psychologist, was unable to return to work. Bentley filed for Workers’ Compensation benefits in March of 2010, but was denied based on a known possibility of a shooting event in his job field; therefore, the incident did not arise out of an abnormal working condition.

Source:  Insurance Journal, July 12 2012

The three main reasons injured employees hire an attorney when filing Workers’ Compensation claims is lack of workplace trust, fear of the claim being denied, and the severity of the injury that occurred.

Workers’ Compensation Research Institute reviewed 7,000 claims and performed phone interviews with the claimants that were two to three years post-injury to better explain why workers preferred attorney representation.

Based on the results of these phone interviews, the involvement of attorneys varies immensely from state to state. The top five states with the highest number of injured workers who hired attorneys were Maryland at 50%, Tennessee showing slightly greater than 30%, California results showed a little less than 30% and Massachusetts and Florida were at 25% and 23%. 

The results also showed that at 8 percent, Texas workers were the least likely to want attorney representation.

Employees are more likely to hire an attorney if:

• They feel threatened
• They fear termination
• If they feel the supervisor does not believe that their claim is valid
• If workers feel their claim could be denied
• They have a serious injury

Other factors that can increase the probability of attorney representation are:

• Workers who chose to be interviewed in Spanish
• Workers with one year or less on the job
• Older workers compared to younger workers
• High school graduates compared to workers who graduated from college

To avoid unnecessary attorney involvement, employers and claim organizations need to offer supervisor training, educational materials for employees, clear communications in a timely manner with injured employees, and to eliminate system issues that would delay payments and perceived denials.

Source: Insurance Journal; Denise Johnson; June 4, 2012

The Environmental Protection Agency’s Renovation, Repair and Painting Rule has increased the demand for Contractors Pollution Liability coverage. This RRP Rule addresses lead safe practices on homes, schools, and childcare facilities that were built, or worked on prior to 1978. The federal law, since 2010, requires renovation companies to be certified and trained in lead-safe work practices.

Governmental risk managers and general contractors are now requiring that their subcontractors carry Commercial Pollution Liability, which is also increasing the demand.

However, many of the small construction firms are still not buying. Due to the economy, these small companies are more concerned with keeping their business open and obtaining required insurance policies for each specified job site.

Constantly changing environmental regulations leave contractors at risk due to General Liability policies excluding claims from pollution incidents. Contractors Pollution Liability policy is needed for full protection.

See prior blogs on EPA’s RRP Rule: Remodelers Lead Paint Claims And Contractors Pollution Liability Policy (CPL); Are Lead Paint Lawsuits Against Remodelers Covered By General Liability?;

Source: mynewmarkets.com; Amy O’Conner; June 13, 2012