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When Disaster Strikes, Will You Be Prepared?

SAFE PRACTICES IN THE CRANE INDUSTRY
BY JAKE MORIN
TRADE CONTRACTORS & BUILDING SERVICES PROGRAM EXECUTIVE
PROSIGHT SPECIALTY INSURANCE

With the economy on the upswing, construction is booming. Since the construction industry bottomed out in 2009, construction projects have tripled and according to the Commerce Department, construction spending as of January 2016 has reached its highest level in eight years. It’s certainly a prosperous time to be in the industry, but with high-profile accidents like the New York City crane incident earlier this year, many are questioning its safety practices.

By nature, construction is a dangerous profession, especially when building vertically in a congested, high-traffic metropolitan area. The New York crane accident is a quintessential example of the ever-present danger. That’s why it’s vital to understand the importance of equipment specs, routine maintenance and operator certification, and to have an extremely buttoned up risk management plan.

COVERING YOUR BASES
OSHA is currently in the process of drafting best practices for crane operators. It is anticipated that OSHA will publish these guidelines in October 2016. At some point thereafter operators and contractors will be required to adhere to them. It’s crucial for everyone involved in the crane operating business to achieve operator certification and participate in education.

When the recession first hit in 2008, construction projects around the country came to a halt, especially big city projects involving cranes and other heavy equipment. This led many crane operators to move to other lines of work. Now that the industry is picking up again, these same operators are being called on to reenter the cabin so to speak. With many operators stepping back into the industry after being away for years, it is crucial for operators to be fully certified and well-informed of the industry’s latest safety standards.

Adhering to equipment specs is another detail to pay close attention to, when determining whether the surrounding environment is safe for crane operation. Equipment maintenance also plays an important role in keeping the job site safe. Typically cranes must be certified on an annual basis. The exception is for cranes that are 15 years or older, which require inspections at least two times a year. Additionally, cranes need to undergo daily routine onsite maintenance, where everything from cages to hydraulic fluids is checked to help ensure that cranes are safe for operation.

WHEN ALL ELSE FAILS
Crane operation is a necessary evil. For big cities to thrive and grow, cranes are an essential tool for success. That is why high-value risk management plans are important.

One way to ensure proper coverage is by asking the right questions. When it comes to general liability (GL), many insurance providers utilize an older GL form developed in 2001. So, it’s important for contractors to align themselves with a provider that is up-to-date with today’s ever-changing market. Coverage may be grossly inadequate if opting for a GL plan exclusively. For example, a contractor might be covered for property damage, but may not be for a myriad of other plans like workers’ comp, auto, inland marine and crime.

Rigger’s liability — which covers property on the hook — is another offering, one that is unique, and that many providers don’t have. Given the number of crane accidents resulting from a heavy load being dropped, one might assume property on the hook is included in a GL plan, when in reality, it’s not.

Loss of use is another form of coverage that contractors should consider. Here is a scenario to illustrate the risk. A contractor uses a crane to replace an HVAC in a building filled with employees. The HVAC is dropped in the course of installation leaving employees without sufficient ventilation in a climate with extreme temperatures. If the environment is no longer suitable to work in, they could be required by law to send the building employees home. The contractor could then be liable for the resulting loss of use for that building. In this case loss of use coverage could protect the contractor from potentially high monetary damages.

Another important consideration is the location of a project. It isn’t uncommon for a GL plan to include extensive coverage in every city except one. Contractors in New York are often caught off guard when they contact their insurance provider after something goes wrong on a jobsite, only to find that their coverage excludes all operations in New York. Location coverage or exclusions is a detail not to be overlooked.

The details noted here are things that every contractor, operator and crane rental company needs to consider when developing a risk management plan. Due diligence in operator certification, routine equipment maintenance and comprehensive equipment specification and limitation knowledge are essential. That said, it’s important that contractors work with an insurance company that understands the business and can work with them on a comprehensive, all-lines risk management plan.