During the course of any insurance claim there can be misconceptions about what may or may not be covered by a specific policy. Claims for our policyholders can be more comprehensive than replacing or repairing equipment and taking care of injured workers. And when they are more involved, other out-of-pocket costs may come into play. At Builders Mutual, we’re with our customers every step of the way. Our adjusters are industry experts, and they’re focused on helping to protect your employees and the interests of your company.
Here, Lori Edwards, AIC, CBIA, CRIS, Director of Claims Operations and Commercial Claims at Builders Mutual, discusses the indirect costs—monetary and otherwise—associated with different types of business claims.
Generally speaking, your covered Workers’ Compensation claim will make payments for medical bills, time lost, and, if needed, expenses like transportation for the injured employee. While the injured employee is out, the project must move forward, and you may need to absorb some additional costs to get the job done. Depending upon the trade involved, some potential expenses may include:
- Job-site cleanup
- Time lost for equipment repair
- Costs for another person to handle the duties of the injured worker
For example, if an injured worker were to fall from scaffolding while painting the inside of a home, the policy would prioritize the recovery of the employee. In this case, additional costs could occur if he or she damaged the scaffolding and spilled paint on the home’s carpet or furniture. The company would be responsible for repairing the scaffolding, cleaning up the paint spill, and hiring someone to work in the place of that injured employee (if that person could not continue the job).
With Workers’ Compensation coverage, the number of claims your company has and the severity of the claim(s) may impact your experience modification rate. This rate is directly related to your insurance premium and may also influence your company’s ability to secure projects.
General Liability, Builders Risk, and other lines
Insurance lines outside of Workers’ Compensation have similar expenses beyond the premiums paid. For example, Builders Risk and Property claims may require coinsurance payments, while many claims have deductibles that vary in amount depending on policy limits. There are also items—including mold cleanup or defective work—that are excluded from coverage. If faulty work is an issue, time and money may be lost to redo the work correctly and may delay other jobs.
With Builders Risk, project delays due to a claim can add other outside costs including construction loan interest, taxes, and fees. Builders Risk policies are usually taken out for a certain time period. If the project continues to be delayed, the policy may need to be renewed.
The policyholder usually plays a big role in the insurance company’s claim investigation, and this will take some time and research on your part. Securing documents, participating in interviews, and potentially attending depositions and court proceedings may take you away from your business. Your policy may pay a per diem to attend court, depositions, or mediations, however the out-of-pocket cost could exceed that amount.
Potential fine-related costs
Workers’ Compensation and other lines of insurance claims can incur the added expense of fines and penalties. Certain Workers’ Compensation claims are required to be reported to OSHA, which may result in safety violation fines. General Liability claims may also result in fines and penalties for workplace injuries to persons other than employees. With property claims, there may be fines or penalties for civil violations of building codes and local ordinances.
Prevention is the best protection
The best way to mitigate the direct and indirect costs of a claim is to prevent the claim in the first place. To that end, here are four key things every construction company should be doing:
- Be consistent and persistent in emphasizing safety training for all employees.
- Train new employees to do their jobs right. Insurance doesn’t cover faulty work, and you’ll lose money and time having to do the same work twice.
- Talk with your agent to understand the insurance coverages that are appropriate and necessary for your company. Discuss ways you can proactively manage your experience modification rate.
- Take advantage of the Builders Mutual Risk Management team to help with safety education, accident prevention, and claim impact mitigation.
To learn more about available safety resources and to ensure you have the right coverage for your business when an accident does occur, contact your agent or Builders Mutual today.Print