March 26, 2009
How an insurance agent can help you find work
By TONY LEBEL
Amid the economic slowdown, many builders are eager to get back to work but are they ready?
For some contractors, preparing to bid on jobs may mean kick-starting an organization that has been in a recession-induced hibernation. They may need to bring on new and sometimes inexperienced workers who will be in need of orientation and safety training.
For others, it may mean moving into an unfamiliar bidding arena. If non-residential construction projects are not available, they may want to look at the infrastructure projects that are the focus of many public agencies these days. Shifting from private-sector work to public-sector construction may expose them to a new approach to bidding on contracts. Public agencies often place strict requirements on participants, and they sometimes will look at contractors’ safety records, past performances and levels of insurance coverage, as much as who has the best price.
Whatever their status, it is critical that contractors prepare now to address potential safety and liability issues that could emerge once they are back on the job. They will want to find a way to satisfy public contract requirements and limit losses at a time when watching every penny makes a difference to economic survival.
One often overlooked resource for taking the right steps to achieve these goals is an independent insurance agent. A local, independent insurance agent can be a construction firm’s trusted advisor, a source for comprehensive information about coverage options and risk-control solutions from a number of different insurance carriers.
Some contractors may look at insurance as a necessary cost center rather than a helpful asset. However, independent agents and insurance carriers who have broad experience in the construction industry and work with contractors that deal with public contracts are well positioned to assist contractors in at least four ways:
1. Underwriting knowledge
Contractors face a number of unique exposures that must be fully understood to be appropriately underwritten. For example, many policies routinely exclude damages from subsidence but if a key function of a contractor’s business is moving earth, it is critical that subsidence coverage be in place. In the case of public contracts, local governments are often rigorous about transferring risk through additional insureds; their requirements can be extremely complex. An experienced underwriter, whose sole focus is construction, can help customize coverage to meet municipal demands and potentially limit unexpected gaps in coverage that could leave them exposed when claims are made.
2. Risk control services
Construction is an old, well-established industry. Nonetheless, best practices regarding safe work processes are evolving all the time. Insurers with strong risk-control services offer their customers risk-control professionals who specialize in construction and keep up on safety issues such as new ways to shore up trenches to avoid collapse and improvements in protection for workers who are working high above the ground. The best risk-control services also provide assistance in setting up new employee orientation and safety training as part of a contractor’s loss-control mission. In addition, because local governments sometimes ask businesses they contract with to have specific safety programs or certified safety processes in place, both the independent agent and the insurance carrier’s risk control advisers can help contractors comply with bid requirements.
3. Handling claims
Many insurance carriers employ representatives who work on claims for property damage, personal injuries or automobile accidents. While those representatives may be perfectly competent to handle a construction claim, insurers who offer specialized claims professionals that manage construction issues have a better chance of handling loss reports in an efficient and effective manner. There are many instances where having a knowledgeable claims professional manage a claim will benefit contractors, including the management of a construction defect and a workers’ compensation claim. With a workers’ comp claim, for example, strategies that are common in other industries, such as creating transitional duties to get injured people back to work quickly, may need to be modified to suit a contractor’s needs.
4. Bid qualification
Unlike in the private sector, government requests for bids often require contractors to carry coverage only from highly rated insurers. That means contractors need to be aware of these rating requirements and identify insurers that have strong financial standing. A.M. Best is a leading source for rating an insurer’s financial condition.
Experienced contractors already recognize the necessity of having insurance coverage in place to protect them from potential claims. But they may be less aware of how to tap into their insurance company’s knowledge and experience to make them more competitive when new work becomes available. By looking carefully at an insurer’s capability and willingness to work with them, contractors can make a savvy choice that will give them an edge whenever the construction pipeline opens up and money begins to flow.
Copyright ©2009 Seattle Daily Journal and DJC.COM.
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