As the devastation left by Hurricane Ian is still mounting, the impact on residents, local and state municipalities and businesses is top of mind. For the construction industry, this is a harsh reminder of the importance of managing exposure and handling the aftermath of catastrophic events. In Part 1 of this series, we laid out the steps to pre-event planning. Now, it’s time to face the reality that comes with responding to an emergency and ensuring the best possible insurance outcomes after disaster strikes.
Communicate with civil authorities and first responders
As discussed as part of pre-event planning, developing a coordinated crisis plan is the critical first step to preparing for the unexpected. To that end, when a storm or weather event is predicted, it’s important to monitor all reports to assess the likelihood of a weather event affecting jobsites. When appropriate, begin implementing your crisis plan so that all materials and equipment are secured or removed from the project site before any evacuation may be required.
Make employee and site safety paramount
Make sure your workers have sufficient time to secure and evacuate a jobsite safely. Be aware that working during inclement weather conditions can increase the risk of slips, falls and jobsite accidents. Ensure that all power tools are rated for outdoor use and have workers check electrical cords/equipment daily to remove faulty equipment. Use GFCIs on the site to protect your workers from electrical shock and avoid leaving any cords in standing water. Make sure workers wear appropriate eyewear, helmets, footwear and that they avoid covering high-visibility safety clothing with jackets or other outerwear. Maintain adequate lighting for employees to see work areas and egress routes.
Ensure proper storage or timely removal of materials and equipment.
Protect laydown areas against over-saturation, and move materials inside or offsite where feasible. Appoint designated personnel to prepare cover for fuel storage, waste containment, and spoils.
Secure structure from elements
Identify and cover openings, such as exposed or vulnerable sections of the roof, windows, elevator shafts and partially completed exteriors that may be damaged by high wind or excessive rainfall.
KEY CONSIDERATIONS FOLLOWING A MAJOR LOSS EVENT
Give a Heads Up
If time allows, work with your insurance broker to provide timely notification of a pending loss.
Check with insurance advisors on best ways to conduct job site physical damage assessments Return to your job site as authorities permit. If practical and safe, conduct a walkthrough to identify damage and begin initiating loss mitigation measures and corrective actions, including notifying specialty contractors as needed. In some cases where large areas may be inaccessible for extended periods, drones or even satellite imagery may be used for preliminary exterior, leakage, perimeter and surrounding property damage assessments.
Establish a team to develop and manage builder’s risk claims
A coordinated team can include your insurance broker, claim advisor/consultant, attorney, accountant, human resources. In addition, your managers and supervisors should be called upon to oversee specific aspects of the jobsite that sustained damage or may be subject to related delays. Finally, appoint a claims leader to make sure all aspects of the claim are managed, monitored and communicated to all internal and external parties on the claims team.
Develop an initial loss estimate
As quickly as practical, work with the team to prepare a preliminary estimate of loss for planning, reserve and advance purposes. Work with your insurance or claim advisor to make sure the estimate is as complete and accurate as possible. This will help avoid disputes with insurers and related delays in achieving insurance recovery.
Prepare comprehensive reports of claimed losses
These should include schedules summarizing hard and soft cost losses; a detailed analysis of loss elements, including delay; supporting documentation, such as invoices, financial documents and photographs of damages.
Recognize the limitations of historical data in calculating extra expense and delay costs
Be aware that straight-line trending or averages may not tell the whole story. Loss documentation should be supplemented with narrative, updates or other information to arrive at actual projections.
Finally, until a settlement is achieved be sure the claims leader closely monitors and manages the claim adjustment activities, including a claim audit by the insurer.
Indeed, it is a fact that severe weather events and related catastrophes are continuing to occur with greater frequency. By practicing sound risk management and getting on top of their insurance claims, contractors will be in a better position to minimize the financial impact of these events and expedite their recoveries.
