Finding the perfect fit
Tailor your insurance to suit your specific needs
From electricians to excavators, design-builders to demolition experts, the construction business is inherently diverse. The niche in which your company operates may face the same core issues as the industry as a whole, but it no doubt has its own distinctive challenges as well. Likewise, your business may be similar to those of your competitors, but it more than likely operates differently and has different things in need of protection.
As a result, its important to tailor your insurance coverage to meet not only the hid requirements of your next project, but also the specific needs of you, any other owners and your company's assets. When buying or reviewing your insurance, which should generally consist of general liability, property and vehicle coverage, you need to find the perfect fit.
Endorsements and Exclusions
Many of your- projects will require unique endorsements to your policies - instances where an expansion of your coverage is needed, such as adding a new project site or new drivers for your vehicles. These endorsements aren't unusual; they'll come up during the normal course of business. So you should maintain constant communication with your agent to ensure you'll he properly covered.
Also review your policy's exclusions. You don't want to learn too late that something you'd thought was covered isn't. Should a claim arise, the cost of covering typically excluded items will pay off many times over. For example, your standard policies won't likely cover you in the event of a mishap involving hazardous materials. So if you regularly deal with those substances, consider obtaining additional coverage.
Vehicle Coverage
This area deserves a special mention because of the vast differences from company to company. When setting up or reviewing your vehicle coverage, consider how your employees use your vehicles and be sure your insurance covers all potential situations. Ask yourself questions such as:
- Do your salespeople have cars that they drive home and keep over weekends?
- Do you operate cranes or other large equipment on your job sites?
- Are your vehicles protected by sound, documented security measures?
In addition to maintaining proper coverage, screen the driving records of employees who use your vehicles. Sometimes you can save yourself from big headaches by keeping poor drivers from getting behind the wheels of your vehicles.
Policy Adjustments
Last year's spate of hurricanes - particularly Katrina - cruelly reminded many contractors of the importance of disaster recovery planning and the often unavoidable reality of policy adjustments.
For instance, many construction companies operating in Florida or near the Gulf Coast saw marked increases in the wind coverage portion of their builder's risk insurance. This occurred because Hurricane Katrina wiped out many job sites covered by these policies. In fact, many insurers are specifically excluding wind damage from their basic plans, meaning that a specific policy adjustment is needed for such coverage.
Even if you don't work in a region typically afflicted by natural disasters, familiarizing yourself with your builder's risk policy is essential. Generally, most construction businesses will have this coverage for their projects.
But many contractors don't bother to check the job documents to see who's responsible for the deductible. And in light of today's rising insurance costs, you absolutely need to known whether you're on the hook for that deductible so you don't get stuck with an unanticipated cost.
If your company has a significant amount of assets, or if an additional layer of protection would help you sleep at night, another adjustment to consider is an umbrella policy. These protect your company against losses greater than your other coverage. Typically, umbrella policies are separate from your standard package and often provided by a different carrier.
Specific Threats
Like snowflakes, sunsets and fingerprints, no two construction companies are alike. And so it follows that your insurance program shouldn't resemble anyone else's either. Make sure you have the right policies and that you're protected against the many specific threats to your construction company's well-being.
BEYOND INSURANCE: CREATING A DISASTER RECOVERY PLAN
In the wake of last year's Hurricane Katrina disaster, many contractors took a good, hard look at their disaster recovery plans (or, in some cases, their lack thereof). Sometimes also referred to as a business continuity plan, this expansive strategy should be integrated into your long-term business objectives. Critical components include:
Technology. Establish backup procedures that ensure consistent, safe maintenance of your data. Store copies of all critical information at a secure, off-site location, so you'll have access to it should your offices be significantly damaged.
Cash management. In light of the continuing growth of electronic banking, be sure to maintain some level of personal relationship with your bank. Doing so will ease your ability to continue doing business if a disaster inhibits your ability to manage your money electronically.
Alternate facilities. Following a catastrophe, your employees may need a place to work. If possible, arrange in advance to have temporary facilities ready while your location is rebuilt. At the very least, know where to look for short-term workspace should the need arise.
Communications. Maintain current contact information for your employees as well as key vendors and customers. In addition, continually emphasize the importance of disaster planning with your staff, running practice drills regularly.
Although considering natural catastrophes is important, don't make the mistake of focusing on only these events. More common "disasters" for construction companies include power outages, thefts of company assets or, more recently, cybercrimes such as corporate identity theft. |
