TAKE COVERAGEA poor safety record can mean no insurance and cost you the ability to do business.
Your ability to get and afford workers' compensation or general liability insurance is dramatically affected by your safety record. In an industry that is already gun-shy about insuring builders (due largely to the prevalence of costly lawsuits), this can be the straw that breaks your company's back.
Tom Williams, an underwriter with the Florida Homebuilders Insurance Agency in Tallahassee, Fla., says that both the availability and costs of insurance can be significantly affected by a record of violations and/or jobsite injuries.
“In most case, we would be looking at the current year, plus the last three years,” notes Williams. “We look at the loss history and how well it has been managed. We're especially interested in the frequency of claims. That's usually a good indicator of whether a company is a good risk.” One thing Williams makes clear: Insurers don't care about the extenuating circumstances that caused you to have safety problems on your jobsite. Ultimately, they're studying the numbers.
“The overall trend in this region has been an increase in the number of [injury] claims, and the value of those claims has gone up,” Williams says. “We've had workers' comp reform put in place in Florida a couple of years ago, but it's too soon to tell what the impact of that will be.
“We look carefully at employee selection and training. We might look at the company's Web site—sometimes we get a five-year loss history.”
Like any underwriter, of course, Williams is especially wary of red flag events like a death on the builder's watch.
“If there's a couple larger losses, we will want to know why that is happening,” Williams says. “In order for us to underwrite that company in the future, we would need to see corrective action taken on those losses.