Guide to FHWA Funded Wrap-Up Projects
XIII. Claims Handling
- Safety Regulations and Controls - Preventing claims, via stringent safety regulations and controls, is the most effective way to control the cost of risk. When a loss does occur, however, the object is to reduce the amount-in terms of cost or severity-of the loss and the time required to return to a pre-loss state. The key elements of wrap-up claim handling include:
- Inspections - The owner and its insurer's representative should inspect the job site without notice. All contractors must do whatever is reasonable to cooperate with these inspections and should make all reasonable efforts to comply with all recommendations in a timely manner. Contractors also should be advised that the boiler & machinery insurer's inspector has the authority to immediately shut down any insured boiler that poses an immediate danger to persons or property.
- Security - Contractors should take all necessary precautions for the security of their property. Duplicates of valuable records and frequent backups of electronic data should be stored in off-site locations. Special attention should be paid to areas open to the public if there is a potential for theft or vandalism. In the event of losses contractors should promptly do whatever is reasonable to preserve and protect any salvageable property.
- Contractor Accountability - All contractors should be required to provide their workers with all necessary training, forms and information necessary for the proper and timely filing of loss reports and claims. Each contractor also must be required to assign a designated employee to review and monitor all claim activity.
- Workers' Compensation Claims - Workers' Compensation claims are the most frequent type of wrap-up claim. The frequency of these claims makes it essential that all contractors and their employees know what to do and when to do it in relation to workplace injuries.For example:
- All injuries and accidents should be reported to the site supervisor immediately, regardless of the degree of injury.
- The appropriate loss reports should be completed within three days of any injury or accident for which medical treatment is required.
- All contractors must provide sufficient supplies of required loss reporting forms to all project locations.
- All contractors must be required to maintain all project accident reports for at least three years.
- Liability Insurance Claims - When a wrap-up includes general liability coverage, that coverage applies to the project premises and operations. The policy is based upon the legal liability of the insured for negligent acts or omissions that cause bodily injury or property damage to third parties(i.e., members of the public). It responds to both judgments that may be rendered against the insured and also may cover defense costs. As with all contracts of insurance, certain terms, conditions and exclusions affect the way the policy responds to a given set of circumstances.
- Umbrella Liability - If the preceding liability policies have their limits of liability exhausted by a catastrophic claim, an umbrella liability policy provides an additional layer of coverage.
- Contractor's Equipment Insurance - Contractors may insure their equipment, for example, backhoes, graders, forklifts, dump trucks and other large construction machinery. Only equipment that is scheduled on the owner's property policy is covered for loss against physical damage or theft. This type of equipment is not otherwise insured under the wrap-up. Contractors should be advised to contact their own insurance agent or broker to determine if coverage is needed and what limits.
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