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Category Archives: Construction Insurance

How Well Does That Blanket Cover Your Client?

Blanket additional insured endorsements are useful tools for preventing administrative oversights and reducing paperwork, but they also carry risks for both the named and additional insureds. Discover methods contractors and subcontractors can use to minimize the risks of breaching their contracts when using blanket AI endorsements.

One of the age-old problems in obtaining additional insured status under a contractor’s or subcontractor’s insurance policy is making sure the appropriate actions have been taken to effect the required coverage. Certificates of insurance are commonly used to verify that the certificate holder has been added as an additional insured, but because they are not part of the policy, information contained on certificates may not be binding on the insurer. This article examines the use of blanket endorsements to effect additional insured status as a means of overcoming at least some of the imperfections of the process.

Additional insured status is a common and effective tool for protecting one party from certain risks arising out of another party’s activities. For example, municipalities typically require additional insured status from anyone holding a public event on city property, such as concerts, parades, and carnivals. The rationale behind this requirement is that the activities expose the city to certain risks that would not otherwise exist, so the person or organization that creates the risk should assume responsibility for any losses incurred as a result of the activities. In the case of a public concert, for example, if someone is injured when the crowd gets unruly, both the city and the concert sponsor will likely be sued. As an additional insured under the sponsor’s policy, the city can tender the claim under that policy instead of having to file the claim under its own insurance. The risk has been effectively transferred to the concert sponsor (assuming the available policy limits are sufficient to cover the claim.)

On a construction project, the owner typically requires additional insured status under the general contractor’s liability insurance policies; general contractors may do likewise with subcontractors. As in the example above, the rationale is that the construction activities create certain risks that would not otherwise exist and increase the magnitude of certain other risks. For example, a construction project in a retail district carries the risk that a pedestrian will be injured from flying debris, collapsed scaffolding, or a tool dropped from several stories up. These risks are directly related to the contractor’s operations on the site. Further, goes the rationale, the contractor (or subcontractor) performing the work is generally in the best position to prevent or control losses arising out of the work, and should therefore bear the corresponding financial risk.

However, requiring additional insured status does not necessarily guarantee that you will get it. The named insured (contractor or subcontractor) must notify the insurance company of the request, and absent a provision to the contrary, the person or entity requesting additional insured status must be listed, or “scheduled”, by name on an endorsement that is attached to the policy.

Because this requirement is so common in construction contracts, some contractors may handle hundreds of requests for additional insured status in a given year. Further, because the contracting process is often drawn out, and the insurance requirements given little more than a cursory review, this method of providing additional insured status carries inherent risks of error and oversight. Whether the result of failing to forward the request for additional insured status to the broker or insurer, failing to ensure additional insured status under a new or renewal policy, or some other oversight, a contractor (or subcontractor) can easily find itself in breach of a contract, among other unpleasant outcomes. Likewise, the would-be additional insured may find itself embroiled in a coverage dispute with the insurer and a contract dispute with the named insured contractor; meanwhile, it may be forced to tender the claim to its own insurer (or, if self-insured, fund its own defense). All of these possible outcomes frustrate the intent of the contracting parties.

Blanket additional insured endorsements were introduced as a means of avoiding administrative errors and oversights in providing additional insured status. These endorsements typically contain language indicating that additional insured status is automatically provided when the named insured agrees to provide such status. To avoid overly broad grants of coverage, these endorsements typically limit their application to certain types of written contracts, such as construction contracts or equipment rental agreements.

The obvious benefits of blanket, or automatic, additional insured endorsements are that they protect against failure to add a party as an additional insured in accordance with the contractual agreement, and reduce the administrative burden of making each request individually. However, from the additional insured’s perspective, there are also some potential drawbacks to obtaining additional insured status in this manner. First, in the past, blanket additional insured endorsements had to be manuscripted as no standard endorsements were available. Because they are not standardized, manuscript endorsements can differ from one policy to the next. Consequently, they offer less predictability in terms of scope of coverage, as well as how a court might interpret the language of the endorsement.

Because blanket additional insured endorsements typically require a contractual obligation on the part of the named insured to provide such status, those who obtain additional insured status through such an endorsement must retain proof of the contractual requirement to effect coverage. Even when the additional insured’s coverage does not apply to completed operations, claims arising out of occurrences that took place during the course of construction may not surface until years later. Some additional insureds assume that a certificate of insurance showing additional insured status at the time of the occurrence will be sufficient to trigger the insurer’s duty to defend and indemnify. That is not necessarily true. The additional insured will also need evidence that there was in fact a contract requiring such coverage. While a certificate of insurance indicating that the certificate holder has been added as an additional insured is evidence of a contractual requirement, a better approach may be to require the certificate to refer to the contract requirement. For example, the following language could be required on the certificate:

“In compliance with the contract requirements, certificate holder is an additional insured under the policy.”

If possible, the contracts themselves should be retained. (This should not impose a significant additional burden in most instances, as construction contracts are typically retained for access to indemnity and other provisions that may come into play well after the project is completed.)

Finally, blanket additional insured endorsements restrict insurers ability to provide notice of cancellation to additional insureds. Most insurance policies require such notice to be provided only to the named insured. Additional insureds often try to obtain a guarantee of notice of cancellation by modifying the certificate language, but this is an unreliable approach.


Blanket additional insured endorsements are useful tools for preventing administrative oversights and reducing paperwork, but they also carry some risks for both the named insured and the additional insured. Fortunately, these risks can be managed fairly effectively.

Owners and contractors requiring additional insured status should make certain the additional insured requirement is part of a written and properly executed contract, and retain copies of these contracts (as well as the certificates of insurance) for an appropriate period of time—at least 3-5 years if completed-operations coverage was required and included in the additional insured’s coverage. Further, they should stipulate in the contract insurance requirements a minimum scope of coverage to be provided to them as an additional insured.

Contractors and subcontractors using blanket additional insured endorsements to provide contractually required coverage can minimize the risks of breaching their contracts by sticking with language that has been tested, and making sure the endorsement extends the contractually required scope of coverage.

Source: irmi.com

Builders Risk Protective Safeguard Endorsements and Warranties

Builders risk policies may contain protective safeguard and/or warranty endorsements that require insureds to implement specific measures to protect property during construction. Such requirements must be complied with by the insured as a condition of coverage. What do these requirements look like, and what are the implications to stakeholders?

Builders risk insurance underwriters may impose policy restrictions regarding the implementation of specific measures to protect property being constructed or renovated. These restrictions are typically memorialized by a policy condition or warranty1 (hereafter collectively referred to as a “condition”) set forth in an endorsement to a builders risk policy. The purpose of these endorsements (“protective safeguards”) is to impose an obligation on the insured to ensure it will fully comply with specific safeguard(s). Otherwise, coverage will be negated.

Protective safeguards endorsements are nonstandard, and substantial differences exist between insurers and policies. These endorsements are titled in a variety of ways. Some examples include the following.

  • Protective Measures and Safeguards Endorsement
  • Protective Safeguards Endorsement
  • Security and Protective Device Provision
  • Protective Safeguards Warranty Endorsement
  • Protective Safeguards and Services Endorsement

Why Do Underwriters Utilize Protective Safeguard Endorsements?

These endorsements are used for different reasons. Some insurers provide a premium discount for actions that reduce risk. Underwriters want to ensure that such safeguards are implemented and maintained by issuing an endorsement. Other underwriters contend that certain construction projects may not be insurable without imposing mandatory safeguards. Still others simply want to reduce their exposure to loss, and they view these endorsements as a tool to accomplish that.

These endorsements tend to be utilized more on smaller construction projects compared to larger ones. It is uncommon for builders risk policies that insure larger projects to incorporate such endorsements. This is because the loss prevention programs of large project owners, construction managers, and general contractors are more evolved and in tune with the demands of underwriters.

What Causes of Loss Do These Endorsements Apply to?

Each of these endorsements has introductory language that specifies how the endorsement restricts coverage. Some endorsements limit the applicability to one or more specific causes of loss (perils). Other endorsements apply to all perils.

Here is an example of language that applies to specified perils.

Protective Measures and Safeguards Endorsement

You agree to maintain the protective measure(s) or safeguard(s) shown below for the term of the policy. If you do not maintain the protective measure(s) or safeguard(s), we will not cover “loss” caused by or resulting from fire, theft, or vandalism during the period that the stated protective measure(s) or safeguard(s) are not in effect or in working condition.

If you fail to provide or maintain the stated protective measure(s) or safeguard(s), coverage for “loss” caused by or resulting from fire, theft, or vandalism is automatically suspended. This suspension will last until the measure(s) or safeguard(s) are back in operation. (Emphasis added.)

Here is an example of language that applies to all losses.

Protective Safeguards Warranty Endorsement

In consideration of the issuance of this policy, the insured hereby warrants that the Protective Safeguards described in the schedule below for which an X is shown in the corresponding box will be maintained at the job sites designated in the Declarations.

Failure to maintain the Protective Safeguards required would void insurance coverage for any loss which occurs at the jobsites at any time while such required Protective Safeguards are not maintained.

The undersigned authorized representative of the Insured hereby agrees, on behalf of the Insured, to maintain the Protective Safeguards specified above and further acknowledges and agrees that failure to maintain those Protective Safeguards will operate to void coverage for any loss which occurs at the job sites at any time while Protective Safeguards are not maintained there. (Emphasis added.)

The latter policy language is much more restrictive than the former because the warranty applies to any loss that occurs while a protective safeguard is not maintained—coverage is void during such period.

Types of Safeguards

Each of the endorsements set forth the applicable required protective measures/safeguards. These are segregated into the categories identified below. Within each category are actual safeguard wordings taken from builders risk policies and endorsements. Note that some of these requirements are very clear; others are ambiguous at best.


  • You agree to maintain perimeter fencing at minimum of 8 feet surrounding entire jobsite and locked gate(s).
  • The entire Insured Project site will be surrounded with a chain link fence not less than 6 feet in height, suitably anchored in the ground a reasonable distance from insured property. Gates though the chain link fence will be securely locked during nonworking hours.
  • The active construction site is fenced.
  • You will maintain a fence around the entire perimeter of the insured premises. This fence may be constructed of chain link, wood or other suitable material, and must be locked at all times during which normal operations usual to the conduct of your business are not being performed.
  • Enclose the jobsite with a fence at least 6 feet in height.
  • Complete perimeter 6-foot chain link fencing with gates closed and locked during all “nonworking hours.”
  • Fenced jobsite means a fence, not less than 6 feet in height, that completely surrounds the jobsite, with no openings unless gated. All gates to such fence shall be closed and locked, to secure against entry to the jobsite, during all nonworking hours.
  • Perimeter fencing which completely surrounds each job site shown with gates closed and locked during all nonworking hours.
  • A fence with adequate strength and locking gates with a height of at least 6 feet must surround the construction site.


  • You agree to maintain lighting on site.
  • The entire insured project site will be illuminated from sunset to sunrise, each day.
  • The active construction site is lighted from sundown to sunrise once power is available at the site.
  • You will maintain lighting around the entrances to the premises, including gates to fences.
  • Shall illuminate the jobsites sufficiently to reveal the presence of trespassers.
  • Exterior illumination (other than public street lights) providing illumination to all sides of the “project site.”
  • Exterior lighting means the premises shall be provided with lighting that shall illuminate the entire perimeter of the premises, and will be operational during all nondaylight hours.
  • Around the entrances of the building or structure, including fence gates.
  • The construction site must be illuminated by adequate lighting a night.

Detection Systems

  • Operable Burglar Alarm System. You agree to maintain a burglar system connected to central station or monitored by a public or private alarm company.
  • Operable Burglar Alarm System. You agree to maintain a burglar system connected to central station or monitored by a public or private alarm company.
  • Automatic Burglar Alarm. Protecting the entire building or structure, which signals to an outside central station or police station.
  • Automatic Burglary Alarm. Protecting the entire building or structure, which has a loud sounding gong or siren on the outside of the building or structure.
  • Operable Smoke or Fire Detection System. You agree to maintain a smoke or fire alarm system connected to a central station or monitored by a public or private alarm company.
  • Automatic Fire Alarm. Automatic Fire Alarm, protecting the entire building or structure, that is connected to a central station or reporting to a public or private fire alarm station.


  • Automatic Fire Extinguishing System. You agree to maintain the automatic fire extinguishing system.
  • Operational Sprinkler Sprinkler/Standpipe System. When and as required by local fire department/building codes and/or contract documents.
  • Automatic Fire Extinguishing System. Automatic sprinkler system, including supervisory services.
  • Flow Alarm. The insured shall install and employ a water flow alarm on all automatic sprinkler system(s) from the time the system(s) are first filled. The insured shall exercise due diligence in maintaining the water flow alarm in good working order and the Insured shall immediately notify the underwriter in writing when the automatic sprinkler system(s) are impaired.

Fire Hydrants

  • Prior to start of construction, fire hydrants will be installed within the insured project site’s boundaries or within 100 feet thereof and will be connected to a public water supply, tested and fully operational.
  • There will be an operating fire hydrant operating under adequate water pressure within 100 feet of the premises, within __ days after policy inception.
  • Fire hydrants means hydrants installed such that no part of the insured project is more than 500 feet from the nearest hydrant. Installed hydrants must be connected to a public water supply, tested and fully operational.

Video Surveillance

  • Video/surveillance equipment with recording system.
  • Video surveillance monitoring that is around the perimeter and interior of the building or structure and supervised by an independent security service at all times during which normal operations usual to the conduct of your business are not being performed.
  • Internet-based video surveillance and recording be provided by an established supplier.

Security Services

  • Guard Person. You agree to maintain, at your expense, a watchperson at the indicated premise(s) at night and during non-working hours.
  • Guard Person. You will maintain a private watchperson, under your exclusive employ. The watchperson will be on duty on the premises at all times during which normal operations usual to the conduct of your business are not being performed. This watchperson will have a radio, cellular telephone or other communications device allowing instantaneous notification of law enforcement and fire protection authorities.
  • Guard Person. You will maintain a private watchperson, under your exclusive employ within the number of days after policy inception indicated below. The watchperson will be on duty on the premises at all times during which normal operations usual to the conduct of your business are not being performed. This watchperson will have a radio, cellular telephone or other communications device allowing instantaneous notification of law enforcement and fire protection authorities.
  • Guard Person. Employ a watchman to guard the job sites when insured or a contractor representative hired by the insured does not otherwise occupy the sites.
  • Guard Person. The named insured will employ a person, whose sole duty will be the security of any insured project site, who will be on the premises of the insured project site during all nonworking hours. This guard will be equipped with a telephone for immediate use.
  • Guard Person. Watchman or guard on clock stations whose regular patrol route covers all areas of the “project site” at least hourly during “nonworking hours.” The watchman or guard shall have a telephone on premises for his use.
  • Security Service. The named insured will employ a security service with one or more guards on the premises of the insured project site, with a recording system or watch clock, making no less frequently than hourly rounds covering the entire insured Project site during all nonworking hours. The guard or guards will record or have a watch clock record the time of each inspection round. The guard or guards will be equipped with a telephone for immediate use.
  • Security Service. Engage a guard service which shall maintain a representative on the job sites when the job sites are not occupied by the insured, one of the insured’s representatives or a contractor representative hired by the insured.
  • Security Service. Security service means a watchman, or watchmen, making no less than hourly rounds of the entire jobsite during nonworking hours, and maintaining appropriate log(s) of such hourly rounds. Security service shall be required once the erection of walls has commenced at any structure at the insured construction site.
  • Security Service. Private security guard service for each job site with regular patrols of the job site during all nonworking hours.


  • Cutting and Welding. All combustible materials will be moved at least 25 feet away from, the cutting and welding area(s) or will be covered or shielded by noncombustible material.
  • Cutting and Welding. All floor, wall, window and other openings including gaps, cracks, or spaces in the building or structure, within 25 feet of the cutting or welding area(s) will be covered by noncombustible material.
  • Cutting and Welding. Dedicated standby firefighting equipment will be provided at the cutting or welding area.
  • Cutting and Welding. A designated employee, trained in the use of the stand-by firefighting equipment, will be assigned the sole responsibility of fire watch and will remain on duty at the cutting or welding area during cutting and welding operations and at least 60 minutes after such operations are ceased. No hot work permits shall be issued and not hot work activities should be permitted within 2 hours of the end of the workday or the end of a shift.
  • Welding, Brazing, Soldering, and Thermal Cutting. A fire watch person with a UL listed portable fire extinguisher having a rating not less than 2-A/10-B, and trained in its use, will be present at all welding, brazing, soldering and thermal cutting operations and at least for 30 minutes following their completion; such operations shall cease 30 minutes prior to the end of the shift; 20 feet of clearance will be maintained between such operations and any combustible materials that are not permanently installed; adequate temporary protection shall be provided for any permanently installed combustible materials within 20 feet horizontally and for any combustible materials at any vertical distance below such operations.


  • Storage. Fully enclosed locking metal containers whose locks are protected against cutting, or a fully enclosed locked room with double cylinder dead bolt locks will be used for storage of electrical wiring, lighting fixtures, plumbing fixtures, switch panels, and other pilfer able items.
  • Brush Clearance. Brush clearance means all covered property at the project location shall have brush, and any other vegetation, completely cleared, to a minimum of 500 feet, from such covered property.
  • Locks. All points of ingress and egress to and from the building or structure will be gates and locked when normal operations usual to the conduct of the insured’s operations are not being performed. If a gate is unlocked, the insured will ensure guarded access to check credentials.

Which Parties Do These Protective Safeguards Impact?

These endorsements apply to either “named insureds” or “insureds,” depending how the builders risk policy is structured. Since the majority of builders risk policies include the project owner, general contractor, and subcontractors as insureds, one should assume the requirements apply to all insureds.

From a practical standpoint, these endorsements can cause significant problems for stakeholders. Based on my experience with projects and builders risk insurance, the stakeholders are rarely aware that a protective safeguards endorsement is part of the policy.

Unlike builders risk policies issued in Canada and Europe, policies issued in the United States rarely have a “separation of insureds” or a “severability of interest” clause. Such clauses clarify that coverage will remain intact for insureds that do not contribute to a breach of a policy condition or warranty. If there is no such clause in a builders risk policy, it is likely that none of the insureds will be covered if there is a breach of the condition by one of the insured parties.2

What Can Go Wrong?

Stakeholders are commonly unaware that a protective safeguards endorsement is part of the policy. How does this happen? Many reasons exist.

  • The insurance agent or broker that placed the policy is unaware that the proposal and policy contain such an endorsement.
  • There was no mention of the endorsement in the proposal, but the policy is issued with an endorsement.
  • The insurance agent or broker is aware of the endorsement but does not point this out to the policy sponsor (typically the first named insured).
  • The policy sponsor is unaware of the endorsement because it does not read the policy.
  • The policy sponsor is aware of the endorsement but does not inform the other insureds.
  • The builders risk policy is not distributed to other insureds by the policy sponsor.

What Are the Consequences?

If there is a builders risk loss and it is determined that the insured did not adhere to the requirements of a protective safeguard endorsement, it is probable that the builders risk insurer will deny coverage. This often leads to litigation. Insurers are generally successful in denying coverage when unambiguous protective measures are required in a builders risk policy but not adhered to by the insured.

An example is Liberty Ins. Underwriters, Inc. v. Weitz Co., 158 P.3d 209 (Ariz. Ct. App. 2007). Liberty issued a builders risk policy to Weitz, the contractor for four dormitories being built at Arizona State University. The policy contained three warranties that required the contractor to (1) maintain adequate fire extinguishers on the job site, (2) conduct a fire watch during all welding operations or other hot process, and (3) inspect the premises for fire hazards. Each of the warranty endorsements specified that failure to comply with the warranty rendered coverage null and void. After a fire destroyed one of the dormitories under construction, Liberty filed a declaratory judgement action seeking to exclude the loss due to the contractor’s failure to adhere to the warranty endorsements. Liberty prevailed.

In those cases where insureds prevailed, courts found that (1) the protective safeguard endorsements were ambiguous, (2) the insurer knew before the loss that the insured was not complying with the protective safeguards but failed to do anything about it, or (3) the failure to adhere to the required safeguard was not the cause of the loss.

Best Practices

The following actions can help prevent problems and litigation following a loss.

  • If a builders risk underwriter imposes protective safeguard(s) in its proposal, the agent or broker should review the safeguard(s) to better understand what is being required.
  • The agent or broker should attempt to eliminate the safeguard(s) if possible, or at least ensure the safeguards are reasonable for the project.
  • To the extent that the agent or broker is unsuccessful in eliminating the protective safeguard requirements, he or she should educate the sponsor of the builders risk policy by making it aware of the safeguards.
  • The policy sponsor should inform the stakeholders about the safeguard(s).
  • The general contractor should make the subcontractors aware of the safeguard(s) and require its workforce and subcontractors to adhere to the safeguard requirements.
  • The policy sponsor should read the builders risk policy and make it available to all insureds.


Some builders risk policies contain conditions relating to mandatory protective safeguards. These safeguards must be adhered to preserve coverage. But the first step is to make sure that the stakeholders are aware of the safeguards. Agents and brokers can and should serve an important role in this regard.

Source: www.irmi.com


1 Within the context of builders risk insurance, policies may contain warranties, such as a promissory warranty, that certain acts shall be done. Builders risk policies may also contain conditions (e.g., mandatory loss prevention measures) that, while not labeled specifically as a warranty, must be maintained after the risk attaches. For a full discussion of warranties and conditions, see Couch on Insurance, 3d, chapter 81, West Group Clark Boardman Callaghan Pub. 12/96.

2 See my IRMI Expert Commentary article titled “Builders Risk: Separation of Insureds Clause” (May 2015).

Professional Liability Insurance for Design-build Firms

Design-build is a project-delivery method that provides an owner with one point of contact for both the design and construction elements of a project. This process has gained popularity in recent years largely due to its simplicity, affordability and speed.

While the design-build method has many benefits, it can expose firms to risks they wouldn’t otherwise experience during the traditional design-bid-build method. As such, it’s essential that design build firms understand all of the risk associated with the design-build process.

Unique Design-build Exposures

Unlike the more traditional design-bid-build project-delivery method, there isn’t a clear distinction between the firms performing the construction work and the architects and engineers offering their professional services. This means design builders are accountable for the accuracy of the plans, the execution of construction and the safety of the job site.

As such, design-builders can be held liable for workplace accidents, specification errors, material failures, construction errors and delays. Essentially, by taking on the design elements of a project, firms inherit more professional liability. These liabilities can result in severe financial losses.

When it comes to managing all of the new risks the design-build process brings, general liability policies are simply not enough. Under most commercial general liability policies, professional liability exposures are excluded from coverage.

In particular, claims related to the act of preparing blueprints, reports, surveys, field orders, change orders, specifications and other professional services could all be excluded from coverage. Professional liability policies are designed specifically to fill in gaps caused by general liability limitations.

For design-builders, the most effective way to protect against exposures is to secure unique insurance tailored to the sector. Specifically, professional liability policies can the proper coverage for design-build firms.

These policies provide coverage for claims stemming from an actual or alleged act when performing a professional service. Working in conjunction with other policies, professional liability insurance is a critical component to a design-builder’s risk management program. What’s more, working with a qualified insurance broker, these policies can be tailored to meet the unique needs of design-build firms.

More Information

Design-build construction is an increasingly popular approach with many benefits. However, using this method increases professional liability exposures and creates a variety of risk management challenges. When taking on design-build projects, firms have a lot to consider, including performance guarantees, licensing requirements and appropriate coverage. Contact your insurance broker today to learn about your firm’s identification options, review your exposures and bolster your risk management options.

© Zywave, Inc. All rights reserved

5 Major Construction Trends

In order to stay competitive and set your construction firm up for success, the following are five major construction trends to follow this year:

  1. Technology advancements—The construction industry is notoriously slow at adopting new technologies. However, firms may soon have no choice but to pivot their business practices, as 3D printing, cloud applications and drone usage will likely boom.
  2. Modular and prefabrication construction—In 2017, modular and prefabrication construction grew in popularity due to its cost effectiveness and efficiency. This trend will likely continue, especially when you consider that material prices aren’t expected to fall.
  3. An increased focus on safety—The construction industry is consistently ranked as one of the most dangerous. Following higher levels of scrutiny, expect a continued focus on crafting better safety procedures and utilizing more safety technology.
  4. Continued labour shortages—Labour shortages in the construction industry are nothing new and will likely continue to plague firms across the country. With a small pool of qualified candidates, firms may struggle to find enough skilled craft workers to meet growing demands.
  5. Sustainability—Over the last few years, firms may have noticed a greater emphasis on green products and construction practices. Sustainability will be important throughout 2018, and companies that fail to consider their environmental impact may lose out on new projects.

Organizations can’t always predict what factors will have the greatest impact on future business. However, with the above trends in mind, companies can avoid major risks and ensure they remain competitive.

© Zywave, Inc. All rights reserved

The Importance of Disaster Preparedness in Construction

Natural disasters and other emergencies can strike without warning, potentially leading to major losses for construction firms that aren’t prepared. In fact, in the absence of a recovery plan, contractors and construction firms risk exposing their business to liability and serious reputational damages.

Although you can’t prevent disasters, you can prepare for them. The following are four important steps all construction firms should take before disaster strikes:

  1. Clearly define the terms used in your contracts. While hurricanes and wildfires will likely excuse you from fulfilling a contract, vague definitions—such as severe rain—may cause confusion. Define such events ahead of time to relieve uncertainty.
  2. Prepare an emergency plan that assigns actions to designated individuals.
  3. Provide disaster preparedness training to employees. Include evacuation processes and proper use of emergency equipment.
  4. Protect project records. Contracts, permits and other physical files can be easily destroyed in the event of a disaster. Cloud-based storage can protect valuable data and ensure you have access to it from any location.

It may also be a good idea to develop an emergency response plan. This plan should account for hazard identification, communication methodology, plan administration and emergency response procedures. In addition, review your insurance policies before beginning big projects.

© Zywave, Inc. All rights reserved



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