Construction is an exacting business that demands specialized skills and equipment to build projects of lasting value to their communities. It also entails a variety of significant risks, from safety on site and on the road, to potential litigation years after a project is completed. The heightened risk of work involving cranes, scaffolding, or concrete pumping trucks can make obtaining the right insurance coverage difficult. Residential homebuilding and fire suppression needs also pose coverage challenges.

Specialty programs handle much of the primary coverage for these classes, tailoring the policy to the specific variety of risks involved in the work. When it comes to excess coverage, a limited number of markets are often far more selective about the risks they’ll entertain. That’s why insuring projects that involve heavy equipment requires specialized expertise from brokers who understand the risks, know the insurance marketplace, and have a track record of placing challenging risks.

CRANES

A familiar addition to city skylines, cranes play an essential role in lifting heavy loads on construction projects. Tower cranes are often erected on-site, while mobile cranes may be brought or driven to the job. Larger construction companies may own and operate the cranes, while others lease the cranes and subcontract the erection, rigging, and operation. Crane operating companies are often required to have on-hook coverage for the property being lifted.

Concerns among carriers include the crane erection and tear down. Among other risks, strong winds can topple a crane in storm-prone areas. Gusting winds were able to knock a crane over in Seattle’s South Lake Union neighborhood in April 2019 after workers prematurely removed pins holding 20-foot sections together. A jury subsequently awarded more than $150 million to the families of two people who died and to three people injured in the crane collapse.¹

Other considerations include the crane’s radius and maximum lift weight. For urban infill projects, carriers are particularly wary about tower cranes that extend over other buildings. In 2023, for instance, a 180-foot boom on a crane at a Manhattan project partially collapsed onto a nearby building, injuring a dozen people.²

About a half dozen carriers offer primary coverage through special programs catered toward cranes with broad terms. Excess carriers, however, are selective about the accounts they’ll consider and on the limits they’ll offer. Underwriters will seek information about the experience and training of crane operators and riggers, who set up the crane for lifting, as well as safety measures in place. Because accidents involving cranes can prove costly, any loss is likely to hit at least one of the excess layers. Pricing is significantly higher in the excess market than for the program business, particularly if a risk has been non-renewed.

SCAFFOLDING

New York City’s ubiquitous scaffolding makes the sidewalk sheds that protect pedestrians a common sight. While New York is particularly problematic for insuring scaffolding because of a unique state law, frequent and severe losses associated with scaffolding make it a difficult market nationwide. Falls, slips, and trips are a major cause of injury, accounting for about 40% of fatalities in 2022 in the construction and extraction industries, which suffered the second-most fatalities that year, according to the Bureau of Labor Statistics.³

New York’s Scaffold Law has made bodily injury claims far more expensive there than in other states. The law imposes absolute liability on construction companies, property owners, or contractors for accidents involving falls at construction sites even if a worker was negligent, failed to follow safety guidelines or use safety equipment. Action-over claims also pose a particular concern in New York because they can revert to the employer or any business that indemnifies another, such as subcontractors. A commercial general liability policy may exclude coverage for action over claims.

Risks include scaffolding that is damaged, rickety, or installed incorrectly. Other concerns include signage, ongoing safety, dismantling, and maintenance to ensure damaged or rusty scaffolding is not re-used. General contractors are typically responsible for worker safety, including tying on where appropriate. Workers can still damage scaffolding by using the wooden planks for other purposes. Scaffolding contractors may use metal planks to avoid this situation. Carriers want to see appropriate indemnifications from sub-contractors in contract language as well as details on training, staff, and safety records.

Few excess markets have an appetite for scaffolding, due not only to internal underwriting guidelines, but also reinsurance treaty restrictions stemming from the high frequency and severity of claims. Regardless of how well scaffolding is erected and maintained, the contractor is likely to get involved in litigation in the event of a fall.

CONCRETE PUMPING

Concrete pumping trucks are true heavy weights, carrying a variety of risks that may extend beyond general liability, depending on the work. Because of their weight concrete pumpers need to be placed carefully, sometimes using special pads to avoid tipping. The equipment can also pose electrocution risks as the extendable booms and hoses used to pump concrete can strike electrical lines. If air gets into the hoses, they can whip around, jeopardizing workers as well as electrical lines. Like all construction vehicles, pumping trucks pose risks to other vehicles and workers.

Different carriers may take different views of the exposure, depending on the work. The concrete contractor ordering the product may be installing it, and the pumper may be viewed as a product risk, that is a manufacturer bringing a product to the site. Or, the concrete pumper may be viewed as a service contractor and placed into the products and services category rather than construction.

If concrete pumpers also install the product, for foundations or floors and columns, for example, it can open a carrier to residential homebuilding risks. While carriers may wish to avoid residential risks, few concrete pumpers are strictly commercial. Some carriers won’t consider residential homebuilders but may underwrite a concrete pumper or concrete ready-mix supplier providing the product for a residential project. For new residential construction, Florida insurance markets often seek to exclude coverage for concrete pumpers, even if the installation is being done by the concrete contractor, as the product is still being used in homes.

A handful of specialty programs design coverage specifically for concrete pumpers, and some captives write them. The program coverage can be very difficult to replicate for excess coverage as exclusions for residential work and for projects covered by a wrap-up policy are common.

RESIDENTIAL HOMEBUILDING

Given the potential for costly claims, especially in large developments, many carriers shy away from residential homebuilding. For example, even if only a few units of a 200-home construction project develop problems, all of them may need to be inspected because the same product or same subcontractors were used on all similar homes. Some carriers will consider only a limited number of homes, say 50 or 100, a limited tract size, or exclude residential portions of a master planned community. Coverage will not apply beyond those limits.

While big homebuilders seek to push as much of the risk as possible onto general contractors or subcontractors, many carriers are wary of providing completed operations and blanket additional insured coverage. Most of the time, claims impact the subcontractors that performed the work, but if litigation gains class-action status, it is likely to include the general contractor or owner.

Underwriters want to ensure that subcontractors provide the appropriate additional insured coverage. It can be difficult, however, for contractors to verify that subcontractors have adequate coverage, particularly in states with robust homebuilding industries, such as Texas and Florida. Amid a shortage of skilled workers, subcontractors may hire unskilled labor for work such as roofs or stucco, where mistakes can lead to expensive water damage. Carriers want to see proper vetting of subcontractors and quality control for their work. On tracts, carriers may require third-party quality control, including periodic inspection and documentation of the quality of the work. That way, in the event of a lawsuit, it may be possible to show the fault lay with the product manufacturer. Venue also matters. Florida’s homebuilder market is becoming more litigious, and a Nevada law gives homeowners a lot of leeway to sue builders.

FIRE SUPPRESSION

Fire and water represent two of the costliest risks for construction projects, and malfunctioning sprinklers can play a role in both. When it comes to fire suppression coverage, water damage and failure to respond represent the largest risks. When fire suppression claims arise, they typically involve problems with installation or with a system malfunctioning. Claims for water damage tend to be very large, which is reflected in the limited number of markets willing to write the class. A small number of programs cater to the fire suppression market, packaging the various lines together, including general liability, professional excess, and auto.

In the excess market, carriers are more selective. Some markets exclude building conversions, such as a conversion into condominiums, and claims may be denied if the incident does not fit the policy wording. Design also poses challenges as few excess carriers are willing to provide the professional coverage via endorsement, which means that the professional risk usually requires separate monoline coverage.

BOTTOM LINE

Experience and knowledge really matter in construction. That’s particularly true when it comes to specialized work involving cranes, scaffolding, concrete pumping trucks and fire suppression, as well as exacting projects such as residential home building. Expertise also matters when it comes to finding the right insurance coverage for these classes.

While specialty programs offer tailored primary coverage, a limited number of excess markets have an appetite for these risks and may only be willing to cover certain portions of the overall risk, while excluding others. That makes it challenging to replicate program coverage in the excess market and to make sure that the coverage actually applies to the scope of work being performed. Construction has the potential for long-tail claims and pricing is just one of many considerations. Working with a collaborative team of wholesale brokers who specialize in placing difficult classes of construction and know the insurance marketplace can help make sure that your client’s policy provides the most appropriate coverage for their unique risks. Reach out to your local CRC producer for assistance today.

CONTRIBUTORS

• Jeff Dunn is an SVP & Senior Casualty Broker with CRC Group’s Atlanta, GA office.
• Ryland Fisher is an Associate Casualty Broker with CRC Group’s Atlanta, GA office.
• Josh Levy is an Inside Casualty Broker with CRC Group’s, Redondo Beach, CA office.
• Ryan Nadler and Walker McKenzie are Casualty Brokers with CRC Group’s Atlanta, GA office.

END NOTES

1. Families of people killed, injured in 2019 Seattle crane collapse awarded $150 million, The Seattle Times, March 15, 2022. 
2. 12 injured when NYC crane collapses into building after catching fire near Manhattan’s Hudson yards, New York Post, July 26, 2023. 
3. Census of fatal occupational injuries summary, 2022, Bureau of Labor Statistics. 
4. Construction>> Struck-by, Occupational Safety and Health Administration. https://www.osha.gov/etools/construction/struck-by
5. Crane count tumbles 10%, Construction Dive, October 24, 2024. 
6. Monthly New Residential Construction, August 2024, U.S. Census, September 18, 2024.