Proactively Tailoring Your Insurance Plan to Intercept Future Risk

Construction projects run on a strict timetable. When there are disruptions, from factors such as staffing issues, resource allocation, supply chain delays or downtime from damaged equipment, economic havoc can erupt. Being prepared for any type of interruption can ensure contractors, laborers and owners can recover quickly with minimal impact to the financial well-being of the business. Being nimble to identify the loss, correct the issue and return to full capacity are key to mitigating damages.

Insurance policies are custom designed to fit the individual needs of each operation. Working with your agent to secure a mutual agreement on coverage that works best for your group is an evolving partnership and should be reviewed at least annually. Variables like equipment and building depreciation, fuel fluctuations and potential shifts in the timing and transportation of goods to market all impact the type and amount of insurance coverage you can secure to protect yourself.

Look up your agent’s contact information. Review your insurance policy and current coverage. Talk to others in the industry and compare notes. Put yourself in a position to be proactive rather than reactive. The question is not if a loss will occur, but when it will occur. Being well informed about your operation’s coverage will help you navigate the road to recovery.

Some companies are fully insured. Some are self-insured. Some have a blended coverage where they cover the small stuff to avoid a high premium, or the loss is less than the deductible. In any scenario, policyholders may not have a one-stop shop of insurance information, however, everyone is following the same steps — no matter if it is handled in-house or with an insurance company.

When electing to report damages to an insurance carrier, insurers will determine if the damage is “covered property” and if the loss was caused by a “covered cause of loss.” As a part of the determination, the insurer may have you speak with an adjuster, assign your case to the Special Investigation Unit (SIU) or send out an independent appraiser. Either way, a determination to the who, what, when, where and why of the loss will be made. As the insured, you may also be contractually required to see that certain steps are taken in the event of loss or damage to “covered property.”

Be prepared to:

• Notify the police if a law has been broken. If theft, vandalism, trespassing or any possibility of an intentional act which violates the law occurs, contact local law enforcement and make a report.
• Give the insurance carrier prompt notice of the loss or damage and a description of how, when and where the loss occurred so they can provide immediate guidance throughout the claim process.
• Take all reasonable steps to protect your property from further loss. When possible, secure images to document damage or secure the damaged property for future examination.

When expenses are incurred for emergency or temporary repairs, retain all records for consideration in the settlement of your loss.

Determining the cause and origin of the loss validates if the damage is a covered cause of loss as described in the policy while also determining if there is a right to recover damages from a responsible third party, or subrogation of damages. It is vital that the damaged property is retained, preserved and the chain of custody is maintained to explore potential liability and recovery of damages, including applicable deductibles. If a third party is found to be liable for damages, the insurance company will seek recovery of the damages paid out, including any deductible incurred by the policyholder.

The question of “Who is at fault?” isn’t always the first thing to figure out. Whether the damage is to your equipment, or your organization caused damage to somebody’s property and/or equipment — what is most important is being able to accurately determine the value of what was lost and the amount of time it is going to take to recover that loss.

Being well informed on the value of property, goods, services and equipment utilized in your operation can offer alternatives when determining your insurance needs and the premium associated with those coverages.

Insurance policies may include specific limits of insurance for covered property, a variety of covered causes of loss, specified dollar amounts for named property, a menu of coverage options tailored to secure desired coverage and a premium within a specific budget.

Self-insuring property through higher deductibles, coinsurance with the carrier or excluding certain property from your policy are all viable options to help manage insurance costs.

To reach an optimal financial decision for your daily operation, review these options with your insurance agent to both gain an understanding of the financial impact to your bottom-line premium investment and your out-of-pocket expenses when a loss occurs.

Contractors will continue to face challenges with the varying cost of fuel, availability of approved and qualified labor, shifts in local and national buyers, tariffs, pandemics, weather and catastrophic events. These factors will impact the overall profitability of any business.

Proactively identifying ways to mitigate these types of losses can save thousands of dollars in loss avoidance. Reviewing your insurance coverage annually with your agent to determine a plan specific to your operation will keep you informed on how to proceed should your operation experience a loss.

A blend of well-planned insurance coverage, self-insurance through higher deductibles and coinsurance may offer lower rates while still providing peace of mind and covering your needs.