Digging deeper

Going underground? When utility and
other underground construction
companies embark upon trenching, tunneling or other projects below the surface, the associated exposures can make
for a dirty job.

Injury risks, hidden pollution issues,
equipment damage, railroad protective liability and negligent entrustment are all
areas that require a collaborative effort
between an underground contractor and
its insurance agent.

“An agent has to act as your trusted adviser,” says Carl Grunwald, vice president of
construction accounts, Gateway Insurance. “It’s a partnership; a good agent is
going to experience any loss or gain with
you, as a partner.”

Smart Business talked to Grunwald
about underground construction safety
risks and exposures and how a proactive
approach by an insurance provider can
help companies get safely underground.

How are companies dropping the ball around
trenching safety?

The biggest area for concern is that a lot
of underground contractors aren’t implementing formal trenching safety procedures. They’ve got to provide their workers
with some sort of shoring or collapse protection, unless the hole in the ground is five
feet or less or in solid rock. If a hole is 20
feet deep or less, they need to dig a slope,
basically creating about a 45-degree angle
for the people to crawl out of if a collapse
happens. In the most extreme conditions, a
trench shield or other type of OSHA-approved device should be used. In every
circumstance, it makes good business
sense to have some sort of trenching safety program.

From the agent’s side, it should be able to
provide diligence in OSHA training, competent-person certification, and education
and expertise in equipment. It should not
only be able to provide insurance but be
able to send out a full array of job-site safety inspectors and controls and even help
certify devices as OSHA-approved.

How does job-site pollution create exposure,
and how is it mitigated?

The moment you arrive at a site, you have
vicarious liability. A pollution claim could
be caused by a spill from a company vehicle or piece of equipment or from an existing situation. For example, a contractor
could go into a job to put in water lines and
discover an old asbestos plant used to sit
on that vacant piece of property. So there
are multiple phases.

Most policies have an absolute exclusion
for pollution. The only way to mitigate pollution liability for an earthmover, underground contractor or site-preparation contractor is to buy coverage for multiple
facets. First, third-party coverage for bodily injury and property damage is required.
Second, contractors need coverage to protect themselves from any cleanup costs.
Third, and in the most extreme cases, they
need protection for moving any contaminated soil to an EPA-approved site. A good
agent won’t let you go into earthmoving or
underground utility projects without the
appropriate coverage, and it’s very affordable. If it’s included by endorsement, you
might not even see the cost.

What endorsements protect valuable underground equipment?

A backhoe, a directional drill, a jack and
bore, a front-end loader — most inland
marine policies have an exclusion for damage or loss to this equipment while being
used underground. If the agent is a good
agent and understands what you’re doing,
he won’t just sell you an inland marine coverage form; he’ll sell you an inland marine
coverage form that deletes the exclusion
for damage or loss of your equipment
while being used underground. Again, the
cost is zero — free — but that comes from
a good agent knowing the language, reading the policy and providing the appropriate protection.

What defines negligent entrustment, and
how can this risk be avoided?

There are generally five points used to
determine negligent entrustment. First, did
you entrust the vehicle to a person who is
incompetent, inexperienced or reckless in
his or her past? Second, did you have
knowledge of that person’s condition?
Third, by giving that person the use of your
vehicle, you become liable because you
entrusted him or her. Fourth, did that
entrustment create a risk to somebody else
whom you had a duty to defend? And finally, is the accident or incident that occurred
on the backside of all of this the cause, or
the proximate cause, of the harm to the
injured person or the damaged property? If
you meet all these elements, there is negligent entrustment.

Companies should be looking for an
agent who provides education, consultation and partnership in identifying who is
an acceptable driver, what is acceptable
training and what policies should be adopted to mitigate exposure to negligent

CARL GRUNWALD is vice president of construction accounts
with Gateway Insurance in Fort Lauderdale, Fla. Reach him at
(954) 735-5500 or [email protected].

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