Two workers narrowly avoided serious injuries after being thrown from horizontal metal beams at a construction site on the Boston University campus May 14. The accident happened when a steel column fell to the side, causing the adjacent beams to topple “like dominoes” and partially collapse the steel frame of what is slated to become a 13-story data sciences building designed to look like a stack of books. The injured subcontractors, who seemed to be wearing harnesses, reportedly suffered only mild injuries and were released from the hospital the same day as the incident.
The Occupational Safety and Health Administration (OSHA) is investigating whether any workplace violations could have played a role in the accident, which was captured on video by surveillance cameras. Site management firm Suffolk Construction said in a statement to press that safety is its “number one priority” on job sites.
“From the video, it appears the construction company did take safety measures with employees wearing harnesses when working above ground level,” said Justin Dorman, National Product Manager, Workers’ Compensation, Burns & Wilcox, Charleston, South Carolina. “While it is currently unknown what caused the first beam to fall, it is a reminder that accidents can happen at any time and being prepared is of utmost importance.”
Anytime you are working at a height or with heavy machinery, there is a higher probability for a loss to happen.
Workplace accidents are an ever-present risk in the construction industry, reinforcing the importance of Workers’ Compensation Insurance, Commercial General Liability (CGL) Insurance, Builder’s Risk Insurance, Architects & Engineers Professional Liability Insurance, and other policies that can help protect companies and workers.
“Anytime you are working at a height or with heavy machinery, there is a higher probability for a loss to happen,” said Nicholas Freeman, Associate Managing Director, Broker, Casualty, Burns & Wilcox Brokerage, Dallas, Texas. “It all goes back to job safety. You cannot prevent every accident, even if you are doing everything by the book, but it is important to have safety protocols in place.”
Construction among top industries for fatal injuries
On May 18, a worker died at a road construction site in Boardman, Ohio after a tool he was using to cut pipe malfunctioned and kicked back on him.1 OSHA is investigating the accident, authorities said. In October of 2020, three workers were killed, and another was injured in Houston, Texas after a concrete stairwell collapsed in a 15-story building under construction.2
In 2019, the construction industry had the most fatal work injuries of any industry in the U.S., accounting for 21.6% of all private industry worker fatalities.3 In Canada, workplace fatalities in the construction industry have been rising since 2014.4
Workers’ Compensation Insurance protects the most important part of a company: its employees. It will be there to make sure the employees receive the care they need and can return to work when healthy.
Even with stringent safety guidelines in place, “accidents do happen,” Dorman said. When an employee is hurt at work, Workers’ Compensation Insurance can provide them with benefits such as medical care and wage replacement, or death benefits to the worker’s family in the event of a fatal injury.
“Workers’ Compensation Insurance protects the most important part of a company: its employees,” Dorman explained. “It will be there to make sure the employees receive the care they need and can return to work when healthy.”
Depending on the state’s Workers’ Compensation laws, injured workers could also file a lawsuit against the employer alleging unsafe work conditions. These expenses could be covered by a company’s CGL Insurance.
“There is very much an overlap,” Freeman said of CGL and Workers’ Compensation Insurance policies. “A major portion of a construction company’s risk is bodily injury to employees or subcontractors that are working out on the site. A worker may try to prove that had it not been for the owner or general contractor’s negligence or unsafe work site, they would not have gotten hurt.”
CGL Insurance for construction projects is often written as a Wrap policy, which is a broader policy that covers all of the employees on a job site. Both policies can cover expenses related to injuries, construction defects, and property damage, including losses that happen during the construction phase or after it is complete.
“Usually, a CGL Insurance policy covers the specific company and their employees, and if they subcontract out any work to unrelated parties, those parties are supposed to bring their own insurance and name that company as an additional insured,” he said. “A Wrap-Up covers the entire job, including everybody on that job site that is enrolled. Each contractor does not have to show up with their own insurance for that job.”
Project delays, third-party injuries among other costly construction risks
Construction site accidents and construction defects can also have a far-reaching impact, closing down a job site or business operations while investigations or repairs take place. If the injury or construction fault was caused by professional error — an architect’s miscalculations or improperly designed blueprints, for example — the professionals involved could be responsible for significant expenses. These could be covered under Architects and Engineers Professional Liability Insurance, said Tony Abrudeanu, Director, Professional Liability, Burns & Wilcox, Dallas/Ft. Worth, Texas.
“If something collapses or somebody gets hurt, it could push back the project timeline to where workers are running late and now there are additional costs with a prolonged project that does not get completed in time,” Abrudeanu said. “If they are designing and building a commercial building with offices, for example, the owner may not be able to collect rent and they can lose money. This is where that Professional Liability Insurance can kick in.”
Responding to an error may also require the company to contract out other professional services to complete the work, adding to the cost, Abrudeanu said. “To redo or delay a project is very expensive,” he said. “If it comes down to the negligence of the design, you may even have the design professionals contracting out parts of it.”
Third-party injuries on job sites are another major risk in the industry. In Fall River, Massachusetts on May 25, a pedestrian was knocked unconscious, and another was injured when bricks fell from a building that was under construction for roof work.5 Expenses related to this type of incident could be covered by a company’s CGL Insurance.
“That happens very frequently, unfortunately,” Freeman said. “In more congested cities like New York or Chicago, where a job site could be one section of a dense neighborhood, there could be falling debris or cranes collapsing. That is a very real exposure.”
Because of this risk, CGL Insurance for construction projects that take place in areas with less pedestrian traffic, such as in suburban or rural areas, may be priced lower than other projects. “If there is really not going to be anybody out there except for workers, that can impact the carrier’s willingness to accept the project and what the final price is going to be,” Freeman said. “High-rise projects or projects in major cities are likely to face higher costs.”
Given the potential for serious injuries, Excess Liability Insurance is an important consideration for construction companies, as well. In fact, some firms may require it, along with CGL Insurance, before allowing a company on the job site. “The entities hiring them may dictate the limits they are required to carry, otherwise they will not get the job,” he said. “Insurance protects you from a practical standpoint when a loss happens, but it also can meet the requirements to keep you on the job site and get paid.”
Property needs additional insurance coverage during construction
Physical damage to property while it is under construction must also be considered during projects. In April, a condo construction site in Langley, British Columbia caught fire and destroyed two six-story, unfinished towers.6 In September of 2019, an apartment building under construction in Halifax, Nova Scotia was damaged when a crane from a neighboring construction site fell onto it during a storm.7 Builders Risk Insurance, also known as Course of Construction Insurance, covers the actual property being built — whether it is a home addition, commercial building, art installation, or other structure.
“It covers the physical damage and replacement of a property,” said Steve Hrab, Director, Construction, Burns & Wilcox, Toronto, Ontario. “The policy is for an agreed-upon term, from the start of the work until it is complete.”
A Wrap-Up Liability Insurance policy can also be added, which is “basically like a warranty on the project for a specified amount of time after the fact,” he said.
If there is a loss and no insurance coverage, it could greatly affect a homeowner or a property owner, because their investment is gone at that point. Financially, not a lot of individuals can take that hit.
Builder’s Risk Insurance is generally carried by either the property owner or the builder on the project, although miscommunication about who is responsible for the insurance can be a problem. “We run into a lot of issues with finger-pointing over who has the coverage,” Hrab noted. Another misunderstanding is the belief that Homeowners Insurance will cover a home that is under construction, which is usually not the case.
Common losses that Builder’s Risk Insurance could cover include flood, theft, vandalism, earthquakes, and fire. “This insurance is important for peace of mind, first of all, for the property owner or builder, but it is also a requirement in Canada if there is any type of lien or mortgage on the property,” Hrab said. “If there is a loss and no insurance coverage, it could greatly affect a homeowner or a property owner, because their investment is gone at that point. Financially, not a lot of individuals can take that hit.”
In addition to protecting their property with fencing, alarms, fire extinguishers, and other safety measures, property owners and builders should review their Builder’s Risk Insurance options with a broker and discuss appropriate limits. Given the rising cost of lumber, for example, rebuilding costs for wood-framed structures may be much higher than they were previously.8 “I’ve seen a lot of policies that have had to increase limits because budgets have doubled,” Hrab said.
Employee training, other safety resources can help mitigate risk
Most Workers’ Compensation Insurance carriers provide employers with resources for safety training and safety consulting, Dorman noted. Business owners should ask their insurance carrier about these resources, and if they are purchasing insurance for the first time, “ask your agent or broker what additional resources each quote includes,” he suggested.
Some business owners may see Workers’ Compensation Insurance as a “reactive” type of coverage, only speaking with their insurance carrier or broker when an injury occurs, but it is best to take a proactive approach. “Ask what resources are available and what you can do to help prevent injuries,” Dorman said, adding that a full-time safety manager on site is also recommended. “A safety manager can provide construction companies with a very valuable resource who can identify hazards and address them quickly.”
Although it is optional in some states, “You cannot afford not to purchase Workers’ Compensation Insurance,” Dorman emphasized. “While it is required by law in most states, you are not only protecting the company from potentially large financial obligations; most importantly, you are protecting the employees by having an insurance carrier to guide the process from injury to return to work and take on those financial stressors.”
A knowledgeable broker is key when it comes to evaluating a construction company’s risks and the insurance coverage they may need. This should include a thorough explanation of coverage differences, Freeman said.
“Just like homeowners, company owners often think they know what is covered but have not looked at it for a while,” he said. “What looks good on paper may not be as good in practice if it is missing key elements.”
Abrudeanu agreed, encouraging construction company owners to spend time comparing the options with a specialized broker. “Some policies give you quite a bit more that can really be beneficial when a lawsuit occurs,” he said. “You want somebody who understands the coverages and the differences and can advise on why one is better than the other.”
1WKBN Staff. “Worker’s tool causes death at Boardman road’s construction site, firefighters say.” WKBN First News 27, May 18, 2021. 2KHOU 11 Staff. “3 dead after concrete stairwell collapses inside 15-story west Houston building.” KHOU 11, October 5, 2020. 3Jones, Kendall. “Construction Worker Deaths Increase 5% in 2019, Largest Total Since 2007.” Construct Connect, December 17, 2020. 4Johnson-Bolden, Nikki. “Construction Workers Fatalities in Ontario, Canada On the Rise.” Occupational Health & Safety, December 16, 2020. 5WCVB. “2 pedestrians injured when bricks from building's parapet crash to ground in Fall River.” WCVB-TV Boston, May 25, 2021. 6Larsen, Karin. “Langley construction site fire sent flaming debris into the sky, says witness.” CBC, April 20, 2021. 7The Canadian Press. “Halifax building named after the construction crane that fell on it during storm.” Daily Commercial News, March 10, 2021. 8Dezember, Ryan. “Lumber Prices Break New Records, Adding Heat to Home Prices.” The Wall Street Journal, May 3, 2021.