A bell tower clock face undergoing maintenance at Purdue University crashed to the ground last week, nearly hitting two workers on a cherry picker lift. Incredibly, no one was injured in the incident, which was captured on a video that went viral over the weekend.
The contractor hired to perform the maintenance, Verdin Company, is reportedly the oldest family-owned business in the state of Ohio, and a company with a strong reputation. The incident illustrates the need for general and third-party contractors like Verdin to have a Commercial General Liability (CGL) policy that covers property damage and bodily injuries associated with a claim. In the Purdue incident, a CGL policy would have covered any bodily injuries. It also would likely cover any damage to the tower, but not the clock face that fell an estimated 150 feet, said Jack Swerdlin, Commercial Broker, Burns & Wilcox Brokerage, Atlanta, Georgia.
“Once a contractor gets onto the job site and in this case the clock is strapped into the contractor’s frame, it is now in care, custody and control of the contractor,” Swerdlin said. But the clock face itself would not be covered by the CGL policy as a result of a care, custody and control exclusion in the policy, he added.
Additional insurance options provide coverage for care, custody and control, Swerdlin said; clients need to work with an insurance broker or agent to uncover options.
Construction, crane accidents common
Construction jobs are among the most dangerous in the U.S., given the potential for catastrophic accidents. The U.S. Bureau of Labor Statistics (BLS) estimated there are 18 fatal injuries per 100,000 construction workers in the U.S., and an estimated 134 fatalities each year. BLS statistics from 2011-15 show there were 220 crane-related construction deaths in the U.S. or an average of 44 per year. The majority of those deaths happened when a falling object struck a worker.
The New York Post reported in September that construction-related deaths surged 17 percent through the first seven months of 2018 in New York City compared to the same timeframe in 2017, with 469 construction workers injured in 457 on-the-job accidents. Two construction workers were tragically killed in late August in Orlando when a scaffold they were on collapsed.
Crane-related accidents can also result in catastrophic injuries or deaths. One construction worker was killed and another severely injured in October outside of Chicago when a load of steel beams fell from a crane at a construction site. Two construction bosses onsite for a Manhattan project this summer were indicted for recklessly using a crane without the necessary permits or training. That incident seriously injured two construction workers.
Loss of use can be significant
Swerdlin called the Purdue incident an “anomaly” because the liability to Verdin is somewhat limited because of the nature of the project. There were no “loss of use” issues with the Purdue incident, since the clock face is not a revenue-generating item for the university, Swerdlin said. Rather, it is cosmetic in nature, which is not often the case for projects of this size, he said.
For example, if a contractor is hoisting an MRI unit for a hospital or radiology practice and the unit falls from a crane, a client may be devoid of revenue that would have been generated by the MRI unit for weeks or months, and a contractor like Verdin would have a much higher liability in event of a lawsuit.
Some insurance policies will cover this loss of use, which could save the contractor hundreds of thousands of dollars, and even preserve the viability of the business. “A business that relied upon an MRI unit or some other piece of machinery that generates revenue may be out of business until a claim gets settled,” Swerdlin said. “In that case a contractor may be faced with a significant lawsuit.”
The cost of the dropped or damaged item could also be more significant than the clock face at Purdue. Swerdlin said contractors should consider Equipment Floaters or Inland Marine policies in addition to a CGL policy to cover the cost of any real property item that is damaged while in the care, custody or control of the insured. An MRI machine, for example, may cost millions of dollars. “Off-the-shelf” CGL policies are “unlikely” to cover loss of use, Swerdlin said.
“Without an Inland Marine policy and finding an option to cover loss of use for the client, a contractor could be looking at a significant gap in coverage,” Swerdlin said.
Excess Liability coverage may also be available to contractors to cover $5 million to $50 million of additional claims above CGL or Inland Marine policies, Swerdlin said. However, Excess Liability does not operate as a homeowner’s Umbrella policy would.
“Generally, if something is covered by a CGL policy it would be covered by Excess Liability, unless specifically excluded,” Swerdlin said. “And if it’s excluded in the CGL, the policy will follow form and exclude as well.”
In the end, clients responsible for making smart contractor decisions
Purdue University would likely have been named in a lawsuit if a bodily injury had occurred in the clock tower incident, even if the contractor were to have been at fault, Swerdlin said. Organizations hiring a general contractor need to research the marketplace to ensure that chosen contractor’s CGL includes transfer of risk, hold harmless or other language to protect its interests.
“As the organization, you want to ensure that you are using a reputable contractor with years of experience and that they’re using carriers with strong financial strength evidenced by ratings released by A.M. Best Rating,” Swerdlin said. A.M. Best Company reports on the financial stability of insurers and the insurance industry in general.
“In my line of business I’ve seen and heard enough horror stories to say that you can never have enough insurance coverage.” – Swerdlin
“In essence an organization should do its research and make insurance requirements of its potential contractors,” Swerdlin said. “But remember that even if the proper boxes are checked during the research phase, accidents, such as the one at Purdue, can happen.”
It’s difficult to determine exactly how much coverage any contractor should have in place without speaking with an experienced broker or agent, Swerdlin said. Utilizing heavy equipment like a crane comes with extra risks, so he recommends considering Excess Liability coverage to guard against costly accidents.
“In my line of business I’ve seen and heard enough horror stories to say that you can never have enough insurance coverage,” Swerdlin said. “You buy insurance to be able to sleep at night.”
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This information was provided by Burns & Wilcox, North America’s leading wholesale insurance broker and underwriting manager. Burns & Wilcox works exclusively with retail insurance brokers and agents to assist clients like you with their specialty insurance needs. Ask your insurance broker or agent to review your General Commercial Liability, Inland Marine, Excess Liability coverage, or any other related policies, to ensure you have proper protection.