Finding an insurer that will provide coverage is easy. Finding a true insurance partner that delivers value beyond the policy's explicit coverage is not. So in the construction industry, where risks are high and the time span of liability is long, there is more than just cost to consider. Here are five of the most important factors a contractor should be sure to look for in an insurance provider.
1. Risk Control Services
Most insurers say they offer risk control services, but generic recommendations made by someone unfamiliar with jobsite safety add little value to operations. Instead, look for a carrier that employs risk control specialists who work exclusively with contractors. This specialization will provide risk advice relevant to exposures your construction company is likely to face.
For example, contractors often have projects where fall protection or trenching safety is a concern. Other projects may involve traffic in the work zone or specialized heavy equipment, such as cranes. Risk control professionals who work only with contractors are able to deliver recommendations on specific situations. This can save the company time and money by focusing on what matters most.
2. Workers Comp Management
Even with strong safety measures in place, accidents will happen and a worker may be injured on the job. Construction companies have a particularly strong interest in their workers' claims. Not only are workers compensation claims a top driver of higher insurance costs over time because of the experience modification factor, but many contractors are prohibited from bidding on certain jobs if their "mod" is too high.
On the surface, all workers comp policies may seem similar. However, risk managers should look for an insurer that can keep workers comp costs in check while continuing to deliver appropriate care to injured workers.
In order to manage workers comp claim costs well, risk control services should include a thorough initial investigation to discourage fraud and a resolution strategy aimed at getting an injured employee back on the job as quickly as possible.
Another key to controlling costs is choosing an insurer with an approach to medical management that supports appropriate treatment while managing expenses. An insurer should have extensive provider networks, nurse case managers, medical bill review, utilization review and a pharmaceutical management system.
3. Solutions to Common Challenges
With the downturn in construction causing many contractors to look for ways to cut costs, maintaining high-level safety programs has become a huge challenge. An insurer that specializes in the construction industry can provide easy-to-use tools at no additional cost that can help builders in their daily operations. They may also provide templates for safety protocols, emergency response planning and other processes useful to builders.
For example, one study has shown that two-thirds of workers comp claims come from employees in their first year on the job. A research-validated questionnaire can help determine whether an applicant is likely to take chances, ignore safety rules or be dependable about showing up for work.
Other examples include safety orientation training for new hires, jobsite safety awareness for superintendents, OSHA training and worksite protocols to prevent accidents. The key is to consider your specific training needs and whether or not the insurance company can meet those needs.
4. Emergencies or Claims
When businesses are facing an emergency situation or a claim has been filed against them, they should have confidence that their insurer will be standing beside them, ready to defend. That requires an insurer with enough construction industry and jurisdictional expertise to evaluate unique exposures and partner with the customer to develop and execute a resolution strategy.
When an emergency occurs, such as an onsite accident, the customer should be able to call their agent or insurer and get a local insurance team to the scene quickly to gather evidence -- in essence, "freeze the facts" -- before the scene is altered or memories start to fade. This can help later in sorting out truth from fiction and defending liability. It may also allow the insurer to build a strong factual foundation that discourages frivolous claims or encourages early, appropriate settlements for valid claims.
The availability of a local insurance team is also usually an indicator that the insurer is knowledgeable about jurisdictional and legal requirements in the worksite area. Laws and regulations may differ from state to state, so expertise about the local requirements the contractor may face is an important consideration.
Carriers that do not have many contractor clients may lack the necessary expertise required by a claim scenario. This is particularly important in complex construction defect cases, which typically involve many parties. A carrier with forensic engineers that have construction experience has a greater ability to determine the true cause of failure. This can be important in defending against a claim where liability may hinge on whether the materials used were defective, the design was inadequate or the construction process itself was faulty. Similarly, in the event that a claim goes to litigation, a builder can benefit when the insurer has a legal team well versed in all aspects of the construction industry.
5. Customer Service
A company needs to know that its insurer can deliver effective customer service. This should extend beyond the open communication, ease of doing business and timely responsiveness that any customer should demand. For contractors, it should include dedicated resources that specialize in the construction industry.
For example, underwriters who only deal with construction company accounts develop expertise that results in a better understanding of customer needs and a more flexible approach to putting together effective coverage. Similarly, claims professionals whose daily work is focused on the construction industry are able to resolve claims fairly but also remain sensitive to the relationships that a contractor has with customers and owners. Risk control professionals whose background includes career time within the industry are much more likely to deliver relevant advice and assistance.
Other signs that an insurer is a good choice from a customer service perspective are their longevity in the market and their commitment to staying on top of emerging issues. An insurer who only enters the construction insurance market when premiums are high does not build the same level of expertise as an insurer who sticks with the industry regardless of market conditions. Insurers who invest in learning about industry trends and innovations -- such as green building, imported products and new technologies -- are more likely to be able to meet evolving customer needs.