July 15th, 2020
Contractors face an incredible amount of risk every day. Operating heavy machinery, dealing with high-voltage wires, working from heights, handling hazardous materials such as asbestos…it is no wonder so many accidents happen.
The list of contractor risks is limitless when you look at the various trades that you might take part in.
But there are some common risk factors in construction that we commonly see throughout the industry. Here are some of the biggest contractor risks, as well as how to cover yourself during a potential event.
According to OSHA, "Out of 4,779 worker fatalities in private industry in calendar year 2018, 1,008 or 21.1% were in construction – that is, one in five worker deaths last year were in construction."
Construction is one of the most hazardous industries to work in. It’s not just that employees can injure themselves easily; when they do, regulatory agencies like OSHA can fine you and shut down your business.
Additionally, having a bad track record of employee injuries can increase your workers compensation experience modifier and cause you to lose bids that you would have otherwise won.
According to OSHA, here are the top 10 citations issued:
Fall protection, construction (29 CFR 1926.501)
Hazard communication standard, general industry (29 CFR 1910.1200)
Scaffolding, general requirements, construction (29 CFR 1926.451)
Respiratory protection, general industry (29 CFR 1910.134)
Control of hazardous energy (lockout/tagout), general industry (29 CFR 1910.147)
Ladders, construction (29 CFR 1926.1053)
Powered industrial trucks, general industry (29 CFR 1910.178)
Fall protection – training requirements (29 CFR 1926.503)
Machinery and machine guarding, general requirements (29 CFR 1910.212)
Eye and face protection (29 CFR 1926.102)
Workers Compensation Insurance covers medical bills and lost wages for employees that are injured while performing work on behalf of your company. Although this coverage doesn't lower the risk of injury, you can often work with your insurer to develop adequate safety plans and protection.
One of the largest risks contractors face is when work doesn't perform as intended. This often leads to damage of property or injury. Even if you double- and triple-check your work, accidents can happen, and you don't necessarily have to be at fault to get sued for this.
For example, say you are a plumbing contractor hired to complete a job on a bathroom remodel; six months after you finish, a pipe break floods the house. You will most likely be responsible for all the ensuing damage, especially if that damage occurred due to a mistake in your work, your subcontractor's work, or even your recommendations on materials or piping size.
Completed Operations & Contractors E&O Coverage will help safeguard your business against these types of lawsuits. The completed operations coverage will cover any bodily injury and property damage that arises from the work you performed, and the E&O policy will cover other financial damages. The combination of these two policies will provide an excellent layer of protection for your company.
The cost of having an accident in a work truck continues to rise. Accidents that used to cost $500,000 now cost more than $1,000,000. This risk is now considered one of the most catastrophic events that could happen to your business.
To make matters worse, many contractors are using their personal truck, insured under a personal auto policy, for work. In addition to the coverage issues this presents, personal auto policies are not equipped with the necessary limits or policy terms to protect you from a corporate lawsuit.
Commercial Auto & Liability Umbrella Insurance with a $1,000,000 primary limit will protect your business from a considerable amount of accidents that could otherwise bankrupt your company. In addition to your primary auto liability limits, we suggest purchasing a liability umbrella to increase your limits of liability. The larger your company is, the more assets it has, and the larger the vehicles you drive, the higher limits you should purchase.
Contractors regularly leave equipment in their homes, the job site, or in their vehicle. Sometimes, if the equipment is large enough, you do not have the option to store it in a protected location overnight.
This leaves your equipment not only exposed to natural events such as storm damage and flooding, but also theft and vandalism.
To make matters worse, many contractors lease their equipment, which means they’ll get a bill for the damage afterward.
Contractors Equipment Insurance provides coverage for anything from hand tools to bulldozers. In addition to equipment that you own, this policy can also be amended to include equipment leased from others.
Unlike traditional commercial property insurance, these tools do not have to be at a "covered location" to have coverage. You will have coverage as you go from job site to job site as contractors often do.
Although these are some of the biggest risks that contractors face, this is not a comprehensive list by any means. We suggest talking to one of our insurance experts to find out what your needs are and determine what insurance you should purchase for your company. And if you are looking for ways to better protect your construction business, check out our guide to contractor insurance!
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