Managing Risk in the Construction Industry - Morefield Speicher Bachman, LC

Managing Risk in the Construction Industry

May 30, 2018

Managing Risk in the Construction Industry

In a way, the construction industry is a lot like the healthcare industry. Many patients wait until they are seriously ill to see a doctor. Insurance policies may have something to do with that tendency – most health insurance companies are more likely to pay for emergency care than they are to pay for preventative medicine.

But this dynamic is not present in the law. Attorneys are always available to assist clients, whether or not there is litigation on the horizon. In fact, managing risk may be the most cost-effective solution for those in the construction field. That’s true even considering any remedial expenses that your attorney recommends.

 

What to Look Out For

The Occupational Safety and Health Administration is a rather small agency. It has fewer than 3,000 inspectors to monitor the health and safety of 130 million American workers. As a result, some construction companies are tempted to cut corners on safety and run the risk of an inspection.

This strategy often works in the short term. It may be weeks or months before OSHA uncovers a safety violation. But eventually, an inspector will issue a citation. Even worse, someone will get hurt. Either scenario, especially the latter one, could expose your company to massive liability.

A much better approach is to be proactive. If you partner with an attorney that understand the construction industry, as opposed to one that just knows litigation, that is even better. This vigilance is especially valuable in the likely OSHA areas of scrutiny. Some of these problem areas include:

Falls: These injuries almost perennially rank atop of OSHA’s “Fatal Four” list. Some construction companies believe that merely providing safety equipment is sufficient. But you must also provide training on how to use the equipment. Furthermore, many construction workers are LEP (limited English proficiency) individuals. So, the instruction must be in a language they can understand.

Labeling and Hazard Communication: This is a high-citation area because it is so technical. If a chemical or other substance requires a warning, said warning must contain both script and a pictograph. But not just any picture will do. Making matters even more complicated, OSHA recently changed the rules in terms of both labeling and substance classification.

Respiratory Protection: Breathing problems are a leading cause of workplace injuries. These issues often stem from exposure to a toxic substance, like asbestos or benzene. Toxicity-induced respiratory diseases often take years or decades to develop. Although the claims statute of limitations has long expired by the time an individual shows symptoms, your company may still be liable for damages.

Other OSHA hotspots include safety issues regarding heavy machinery, motor vehicle accidents, and electrical problems.

 

How to Manage Your Construction Company’s Risk

Personal injury claims are usually the most costly claims for construction businesses. A serious injury may cost more than $100,000 in medical bills alone. If the accident involves several people or causes a death, the damages can be much, much higher. Two types of insurance help minimize these risks.

Commercial General Liability: These policies usually cover bodily injury and injuries to property, but they do not cover defective workmanship. For example, if a poorly-constructed brick facade collapses on a bystander, the CGL policy will cover the personal injury but not the reconstruction of the brick facade.

Workers’ Compensation: CGL policies are technically optional, but workers’ compensation insurance is almost always mandatory. These policies cover injuries to workers which occur .within the course of the employee’s scope of employment. The laws vary significantly as to the coverage for occupational diseases and preexisting conditions.

When it comes to your construction business, an ounce of prevention really is worth a pound of cure. For more ways to minimize your risk and maximize your profits, contact Morefield Speicher Bachman, L.C. today. Our main office is conveniently located in Overland Park.

Sources:

https://www.osha.gov/oshstats/commonstats.html

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3217554

 

Construction Law