July 25 proved to be a harrowing day for pedestrians in Boston, Massachusetts. That morning a metal railing fell from the roof of a building in Boston’s North End, striking and seriously injuring a woman walking nearby. Hours later, a crane on a construction site at the TD Garden arena dropped several steel beams weighing 700 pounds each 50 feet onto a truck bed—the impact was heard and felt for blocks.
The Boston incidents recall the June 9 accident that occurred in Dallas, when sudden high winds sent a crane on the roof of a building tumbling onto the Elan City Lights apartment building next door. The crane sliced through all five floors of the residence and several levels of the parking garage. One resident perished in the accident, five others were injured and the rest were displaced following emergency evacuation of the building.
Incidents like those in Boston and Dallas are dramatic, however, they are not uncommon. Construction accidents can lead to a wide range of losses, from property damage to loss of income to injury to employees or third parties.
“(The Dallas accident represents) a catastrophic loss,” said D Carson, Associate Managing Director, Burns & Wilcox, Dallas/Fort Worth, Texas. “(It involves loss of life), bodily injury, third-party property damages, and several hundred people were affected. Commercial General Liability policies traditionally won’t offer large enough limits to cover such a catastrophic event. The parties involved will likely need Excess Liability Insurance to help cover the potential legal expenses and damages.”
While most crane accidents do not involve bodily injury or loss of life, Jack Swerdlin, Commercial Broker, Burns & Wilcox Brokerage, Atlanta, Georgia, explained that crane-related incidents almost always result in property claims totaling several hundred thousand dollars. “Generally speaking, if you have a claim involving a crane, it is a serious claim,” he said.
“I once handled a claim where a crane was moving some items between two buildings and the operator misjudged the distance and damaged a long, metal awning on one of the buildings,” Swerdlin said. “The CGL Insurance policy covered the damage to the building and the awning, and even though, fortunately, no one was injured, it was still a $200,000 claim.”
Crane-related construction accidents and safety
Yearly construction expenditures in the United States top $10 trillion. The industry employs more than 10 million workers and is expected to grow by 5 percent this year. Canada’s construction industry makes up 7 percent of its GDP and employs 1.3 million people. Although it is a booming industry, construction work is inherently dangerous. According to the Bureau of Labor Statistics (BLS), in 2017 there were more fatal work accidents in the U.S. construction industry than any other industry. When fatalities are measured as a percentage of workforce, the construction industry ranks fourth among the 14 industries surveyed.
Crane accidents can and do occur on construction sites anywhere; on July 21 a crane collapsed during a severe thunderstorm and damaged residences in New Brunswick, New Jersey. In a crane accident in Seattle, Washington on April 27, three people were injured and four people tragically died—two of them were crane operators, two were drivers of vehicles crushed by the falling crane.
However, Texas has the highest rate of fatal crane-related occupational injuries in the U.S. According to the BLS, from 2011 to 2017, there were 50 such accidents in Texas—more than Florida, New York and California combined.
Some of this could be linked to Texas’ booming economy, said Carson. When the demand for labor exceeds the supply, he explained, smaller and less experienced general contractors are more likely to take on more projects. While many do fulfill the terms of their contracts, he said, some take on projects requiring experience their workers do not have, like certified expertise in crane operation.
“The proper operation of a crane is a very niche specialty,” Carson emphasized. “You cannot bring any other type of tradesperson in and have them try to operate a crane safely.”
Swerdlin affirmed that the number one thing that businesses can do to prevent crane-related accidents is to ensure that those who rig and operate cranes on their projects are properly certified and experienced for the site conditions and equipment used. The U.S. Occupational Safety and Health Administration (OSHA) has detailed standards regulating the training, certification and evaluation of crane operators.
“To cover all of the expenses associated with an event like (the crane accident in Dallas) you would need a large tower of Excess Liability limits that extend beyond the traditional…limits.” – D Carson, Burns & Wilcox
In 2018 OSHA made changes to its regulations regarding required certifications, aimed at expanding the number of qualified crane operators to meet the construction industry demand. States, municipalities and individual property owners often have their own set of requirements, which may exceed those set by OSHA.
“The greatest asset to any company is its people,” Swerdlin added. “The more you invest in your people, the better your end product will be.” Business owners must know their operation well, he stressed, and when it comes to crane operators they should hire not just properly credentialed operators, but also “tenured people who know how to work and maneuver (cranes safely around a job site).”
Swerdlin advocates frequent “tool box talks,” which he describes as “everyone on a job site getting together (and communicating about) what everyone is doing that day. The more information that people have about the job and what is (happening) on a day-to-day basis, the easier it is to (avoid potentially hazardous situations).”
He also encourages business owners to take basic precautions, such as placing secure barriers along the perimeter of a roof under construction. “When bridge workers are working over the highway, you will see a netting system underneath the scaffolding that they are standing on,” Swerdlin said. “That is to prevent hammers (and other items from) falling on a car driving 80 miles an hour.”
Multifaceted protection strategies for complex liabilities
On July 26, Boston’s Inspectional Services Department issued permit violations and stop-work orders for seven sites city-wide that were supervised by the same contractor that oversaw the rooftop site where a railing fell and injured a pedestrian. The Department also issued a stop-work order for the site of the TD Garden accident and indicated that violations were forthcoming for the contractor overseeing that site.
Carson said that he has seen some claims involving crane accidents reach $50 million. “To cover all of the expenses associated with an event like (the crane accident in Dallas) you would need a large tower of Excess Liability limits that extend beyond the traditional $5 million or $10 million limits requested by most contracts.”
For nearly two months after the Dallas accident, the crane remained lodged in the apartment complex while OSHA investigated. The agency announced on July 25 that the crane could be removed. The more than 300 residents displaced by the accident have not been allowed to access their apartments for more than five minutes at a time to retrieve their belongings and have been unable to access their vehicles in the parking garage. Residents whose vehicles were crushed in the accident cannot file insurance claims because adjusters cannot complete assessments. Some residents have filed lawsuits against the apartment complex management and the crane company.
“You want to make sure that you are adequately insured. Especially if you are working in a large metropolis. You want to have enough capacity to cover any sort of incident. (You could very likely) end up defending (lawsuits) you never even thought were possible.” – Jack Swerdlin, Burns & Wilcox Brokerage
“What makes (a situation like) the Dallas crane collapse (so complex) is there are so many different parties involved,” said Carson. “You have multiple property owners, the construction company, the subcontractor responsible for maintaining and operating the crane, and likely a different company that leased the crane to the project”. (Eventually it will have to be determined) what percentage of liability is associated with each (company and) who is going to pay for what.”
News reports confirm that many parties—including businesses on the same block, which was closed to traffic for several weeks—have launched investigations or filed lawsuits following the Dallas accident.
Carson explained that in addition to CGL Insurance policies, many other coverages would potentially be needed to manage the costs in the event of a construction accident, crane-related or otherwise. Damages to third-party property and bodily injury could be covered under a CGL Insurance policy held by the general contractor or the construction company.
Because multiple parties commonly file lawsuits in the wake of construction accidents to allege negligence on the part of a general contractor, equipment provider, property owner or other entity, an Excess Liability Insurance policy is essential to help offset legal defense costs alone.
Swerdlin recommends that contractors purchase Equipment Floaters, Inland Marine policies or specially amended CGL Insurance or Inland Marine policies that provide them with coverage for any third party’s items that could be damaged while in the care, custody or control of the policyholder. Additionally, policies can be amended to provide “loss of use” coverage to help pay damages incurred when an expensive piece of equipment, such as an MRI machine, is damaged in a crane-related incident. Such amendments, he says, provide extra protections for items that are typically excluded in an average CGL Insurance or Inland Marine policy.
Finally, Swerdlin says, property owners should also consider the language in their agreements with contractors that they hire. “Make sure the hold harmless clause is solid, that there is a waiver of subrogation, and that there is additional insured status for all subcontractors, including Primary CGL and Excess Liability Insurance. That helps to insulate the project owner (from liability in the event of an accident).”
Specialists can help
Swerdlin emphasizes the importance of expert advice in determining the types and level of insurance that are appropriate for each project. “You want to make sure that you are adequately insured. Especially if you are working in a large metropolis,” he said. “You want to have enough capacity to cover any sort of incident. (You could very likely) end up defending (lawsuits) you never even thought were possible.”
“What makes (a situation like) the Dallas crane collapse (so complex) is there are so many different parties involved.” – Carson
While business owners may know their particular operation and project well, predicting potential liabilities and protecting assets appropriately on construction sites are highly specialized areas of expertise. For this reason, Swerdlin says, business owners are best served by reaching out to their insurance broker or agent for guidance.
“If I had one piece of advice, it would be that it is okay to ask for help,” Swerdlin said. “It is okay to not know all the answers—there are people that specialize in the Commercial General Liability Insurance field that can help.”
As with any coverage need, an insurance broker or agent must be consulted.
This information was provided by Burns & Wilcox, North America’s leading wholesale insurance broker and underwriting manager.