Posted by: jmwilsonmga | June 4, 2013

Lessons Learned from Heavy Equipment with Guest Blogger Mary Wiseley, Vela Insurance Services

There are risks, and then there are RISKS. Costly claims of today may cause adverse business profit returns to your bottom line for years to come. In addition to the potential damage to your company’s reputation, claims may ultimately cost you future jobs. Unfortunately, there is also the stark reality of increased insurance costs to you as well.

No matter the size of your company, it’s so important to keep risk management controls in place. Regardless of how good your relationship is with another party, consider your own stake in the job and the costly financial repercussions to you in the event of an accident.

Before each project, consider all your risks before you even get to the job site. Being vigilant in every stage of your project can reduce your risks in the long run.

Start with the basics: the contract. Consult with an attorney and develop standard language to use in your contracts. Review your contract language on a regular basis to keep it up to date and in compliance with all applicable local, state and federal regulations. Paying attention to state regulations is particularly important when working in multiple jurisdictions. If you’re not familiar with regulations in neighboring states, seek out an expert. For each project you take on, remember to adjust that standard contract to reflect each project’s specificities. You may want to develop separate contracts for customers and for subcontractors, as your responsibilities to each will vary.

Even the pesky details of your project or state regulations matter – some states even require specific size type for contract compliance. Describe the job site location, work being performed, equipment being used, property being lifted, and responsibilities of each party in your contract, and keep signed and dated copies in your files. Another benefit to you if you utilize this pro-active operating procedure is the real potential to positively mitigate your involvement in the event of a claim loss. REMEMBER……Your documentation is key to any claims adjuster!

Use your own contract whenever possible, and when it’s not possible, review the language carefully especially the indemnification clause to make sure they are fair and balanced. You don’t want to be at the mercy of a company with greater financial resources or assume the negligent action of others on the job site especially when you’re not directly involved in the negligent action.

Before you bid the job, be sure to do a risk hazards assessment at the job site. Pay close attention to some of the top risks, such as electrical hazards and falls. Install visibility signage, warning alerts and barricades at your job site to ensure the safety of all workers. Consider all these risks before you begin work so that you can manage them throughout the duration of your project.

OSHA regulations are a BIG part of risk management when working with heavy equipment. Make sure you understand the newest regulations for cranes and derricks that became effective in 2010. These standards define the requirements for hoisting loads and power-operated equipment that can hoist, lower, and horizontally move suspended materials. OSHA now has strict requirements about who can operate your equipment as well. Make sure your operators are licensed or certified to run the equipment. All operators must be certified by an OSHA-recognized program by the end of 2014. Your safety program should not only include the strict adherence to the current OSHA’s safety guidelines, but also the monitoring of your employees in their compliance to your safety operational guidelines.  Non-compliance with the OSHA safety guidelines in the event of a claim will negatively impact your insurance coverage and costs in the future.

Explore your insurance options thoroughly when working with heavy equipment. Your general liability policy may be the right choice for riggers coverage but your excess insurance provider may have a different opinion. Adding riggers coverage to your inland marine policy can be a good way to manage the cost of your general liability coverage and provide an easier method for increasing coverage limits on a project-by-project basis.

Lastly, consider how claims can affect your insurance costs. Review your insurance company’s generated loss runs regularly. Find out the status of any unresolved claims and work with your insurer to resolve any issues. Selecting an insurer that has “in-house construction” claims experience can be most beneficial and cost-effective to you as well. When your insurer manages the claim “in-house” there is more incentive to pro-actively resolve issues and settle disputes as opposed to claims being subcontracted to a Third Party who continue to be paid per open file case as long as the claim remains unresolved.

Part of the risk underwriting process that affects your insurance costs is your 5 year historical loss experience. An open claim can be detrimental to your company’s ability to obtain cost-effective coverage.

Make sure your pro-active risk management focus includes:

  1. Pre-job safety/risk review;
  2. Contract Review and State Compliance;
  3. Adherence to current OSHA guidelines; and
  4. Pro-active Claims Adjustment.

Mary WiseleyAbout the Guest Blogger : Mary Wiseley, Vela Insurance Services

Mary M Wiseley joined Vela in 2009 and currently serves as Assistant Vice President at Vela’s San Diego Branch Office. With 25 years’ experience, Mary’s expertise is in specialty contractors, including crane and rigging. When not traveling for Vela, she enjoys golfing, swimming, and hiking with her miniature poodle.

Vela, a Berkley Company, is a leading commercial lines property and casualty insurance provider. Specializing in Commercial Casualty and Miscellaneous Professional Liability insurance, Vela is headquartered in Chicago with underwriting offices in Chicago, IL; San Diego, Solvang, and Walnut Creek, CA; Denver, CO; Glastonbury, CT; Jacksonville, FL; Atlanta, GA; St. Paul, MN; Medford, OR; Radnor, PA and claims offices in Walnut Creek, CA; Atlanta, GA; Chicago, IL; and Omaha, NE. Vela began operations in 1996 as an underwriting manager, writing excess and surplus lines casualty business with a primary focus on contractor and product liability coverages. We continue to write a variety of classes nationwide, exclusively through our network of appointed excess and surplus lines brokers.

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