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Construction Insurance Bulletin
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Security, Insurance and Construction
Security and insurance are two services that are forever intertwined. The more secure your job site, the less you're going to have to pay for insurance. This applies to almost every field: With a safer car, you pay less for auto insurance. With better cybersecurity for your office network, you pay less for business insurance. If you take care of your body, your health insurance is cheaper, and so on.
The less of a risk you are taking on a day-to-day basis, the less money you're going to be paying for insurance, and even better:
The less likely you are to ever need to cash in on your policy in the first place.
It's good to know that someone has your back in case you get into an auto accident, for instance, but isn't it better to not get into an auto accident in the first place?
Keeping security staff on the grounds can help in a number of ways:
Security staff can be tasked with handling emergency protocol, from directing ambulances to offering first-aid (basic first-aid training being a licensing requirement for security officers in many states)
Discouraging theft and vandalism:
The secret about security guards is that most of them aren't actually allowed to engage physically with suspected criminals except in a life or death situation. But, the presence of the uniform goes a long way towards discouraging would-be criminals from targeting your job site over an unguarded location.
A friendly face:
A security officer works as both a guard and a receptionist, helping visitors around the site and taking notes as needed.
Because of the services that a security officer provides, you can expect lower insurance costs, and fewer instances where you will need to call on your insurer in the first place.
When arranging a budget with a client, it may be a good idea to talk about budgeting for security staff. Obviously not every building project demands round-the-clock security, and even on jobs where security can be a big help, you might only need them around on nights and weekends.
In any event, simply not leaving a building site unattended overnight can go a long way towards lowering your insurance costs and making sure that someone is there to handle it should there be a problem that arises when nobody on your team is around to manage it.
HMS Insurance Associates, Inc.
What's Expected of High-End Builders?
Anyone who knows how to swing a hammer can probably erect a shed. If you have a little bit of experience in building, then you can probably take a wall out of a home to extend the living room, or put one up to split the master bedroom into two. If you work in construction as a professional, you're expected to know just about everything, and if you don't know it, then you know somebody who does. So what is that a high-end builder does that an everyday construction foreman doesn't?
Well, it's really about the market and the approach to designing and building something. A skilled construction crew can build a home just as well as a high-end construction team can do it, but a high-end construction crew is catering to a wealthier market, and typically building custom structures that are designed not only to be lived in, but to appreciate in value by leaps and bounds. You don't hire a high-end crew to put together an apartment building or build an additional room onto your house, you hire them to build a dream home.
Here's what to consider if you're thinking of pivoting into high-end construction:
There's a lot of money in it.
Like we said, you're catering to a wealthier demographic. You're likely to take fewer jobs, but you'll typically earn quite a bit more on each contract. This is true whether your team is the one building the house, or you're just doing the wiring and light fixtures. On the other hand...
It's a smaller market.
If you're looking to build mansions and Summer getaway homes, you're going to be making more money, but probably doing far fewer jobs. Unless you live somewhere like Beverly Hills, you're also looking at a much longer drive to get to the jobsite every morning, as you're going to be moving all around your territory to work with your clients.
You need to collaborate with your client from the start, and throughout, on the design of the house. Some professionals can't stand this part.
It's mostly marketing.
If you can build a cabin, you can probably build a mansion. You need to convince your potential clients that your team is specially suited to building homes that are lavish and aesthetically pleasing. A selective portfolio goes a long way towards building this trust.
High-end construction isn't for everyone. Some markets just don't create enough demand to support a new high-end construction companies, some professionals are more comfortable with the work they're already doing. Specializing is a great way to keep your foothold in your field, but you need to make sure there's a market for your specialty.
HMS Insurance Associates, Inc.
What Exactly Is An Act Of God?
In legal terms, an act of God isn't, in fact, a religious experience. Well, that's not to say that an act of God couldn't be a religious experience, it's just that that's not inherent in the legal definition of the term. An act of God essentially comes down to the unforeseen and the unpreventable. You can reduce the likelihood of accidents on the job site by making sure that you don't allow any drinking, fighting or general carelessness on site, you can reduce the likelihood of accidents on the road through proper auto maintenance, but you can't prevent a flood or an earthquake no matter how many safety courses you attend.
Acts of God will exempt a party from strict liability and from negligence in common law. Many building contracts have a provision allowing for acts of God to excuse unexpected delays in a project's completion. However, damages and delays owing to a natural disaster may be disputed as acts of God in some circumstance.
The key word is "unforeseeable." If someone falls off of a scaffolding and spends the next four weeks in a cast because of an earthquake, then that will usually be chalked up to an act of God. If they saw a storm coming in, decided to keep working, and then got struck by lightning, then the "act of God" claim may be contested.
"Act of God" is sort of a liability free-pass card, exempting you from responsibility for things that you couldn't possibly have predicted. There are a few steps that you can take to ensure that there is no gray area, no room for doubt when you need to lean on this legal term:
Keep tabs on the weather.
Don't assume, for instance, that a storm "isn't going to be as bad as they say." It might not be so bad, but do you want to bet your career on it?
Keep all of your safety equipment in tip top shape.
You don't want to give people any wiggle room to say that that safety harness would have snapped eventually with or without the earthquake.
This goes for your vehicles, as well.
It's hard to claim a small flood as an "act of God" when your truck was the only one slipping and sliding across the road.
An act of God can be a sort of Get Out Of Jail Free card when it comes to liability, but you can't play it every time.
HMS Insurance Associates, Inc.
How Does Maritime Construction Insurance Differ?
Maritime construction is a niche field within the construction industry. Most of the people who work in this area of construction will specialize in it, and they'll carry the requisite special qualifications, training and licensing to prove it. Jobs like underwater welding are very different from welding in the dry environment of a workshop or an above-ground job-site. As such, the insurance demands for maritime construction is very different as well.
Many insurance policies actually feature an exclusion on this note. If you take your equipment out on the open water and something should happen to it, your basic policy is probably not going to cover the loss.
Whether you're getting to the jobsite on a speedboat or a rubber raft, watercraft liability will be a requisite if you're doing any maritime construction. Any damage in which your vessel might be implicated, you'll want liability for it.
"Floater" sort of takes on a double meaning here: Any installation you're building in order to work on a project, you'll need some coverage for it. On land this could mean a scaffolding, on the sea it might mean temporary constructs that allow your team access to the exterior of the project without having to swim to get there.
Choppy weather is to be expected on the sea, but it can turn bad in ways that can cost you weeks worth of work. Storms, the shifting of the tides and simple bad sailing conditions can set your schedule back quite a bit. Insurance to protect you from adverse weather conditions is doubly important on sea as on land.
Knock for Knock
A common insurance agreement in offshore construction is the "Knock for Knock" arrangement. What this means is that all parties involved will cover their own ends, even if it could be proven that another party was at fault. You see Knock for Knock used in all sorts of construction projects, but it is especially popular in marine construction. Many deals are made with this agreement on smaller projects simply because there are so many additional angles to cover on the sea, and this simplifies the process a bit.
Maritime construction insurance is one of the reasons that this is a specialty field. This, along with the special training, equipment and materials required. If you ever want to explore that niche, the investment of time, money and energy to get started may prove to be well worth it, of course. It's easier to dominate a niche than it is to dominate an entire industry.
HMS Insurance Associates, Inc.
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