Premises liability exposures at the contractor’s office and storage facility are usually limited due to lack of public access. Equipment or materials provided by subcontractors are not stored at the building contractor’s office location. At the job site, the general contractor is ultimately responsible for all injuries or property damage that results from construction operations, including those that are due to the acts or omissions of subcontractors.

Lack of adequate communication between the different subcontractors can cause hazardous working conditions, especially if blasting or similar hazardous operations are taking place. Heavy machinery used for excavation may cut power lines, disrupting service to other homes or businesses in the vicinity. Welding presents potential for burns or setting the property of others on fire if not conducted safely. The contractor’s employees can cause damage to the client’s other property or bodily injury to members of the public or employees of other contractors. Tools, power cords, and scrap all pose trip hazards even when not in use. If there is work at heights, falling tools, or supplies may cause damage and injury if dropped from ladders, scaffolding, or cranes.

Failure to protect equipment, building materials, and property of others left at job sites from theft and vandalism may result in a subrogated loss. Construction sites create attractive nuisance hazards, particularly to children who enjoy climbing and vandals after operations have ceased for the day and on weekends. Safety barriers such as perimeter fencing should be used to control access to the jobsite.

Contractual liability exposures are very high for general contractors. While it is important to control physical hazards, the absolute key to successful performance is likely to be the management of contractual language. Catastrophic financial losses and expensive litigation may arise if the general contractor fails to verify that subcontractors’ certificates of insurance are accurate and the limits are adequate for both liability and workers compensation coverages. In addition, the general contractor and project owner must be included as additional insureds on all subcontractors’ policies. The specific terms of the additional insured status may play a significant role in who pays for a loss.

Completed operations exposures are high due to the injury and property damage that can result from improper interpretation of building plans, use of materials that do not meet the quality standards required by design specifications, inadequate construction techniques, or lax supervision of the acts of subcontractors. Hazards increase in the absence of proper record keeping of work orders and change orders, as well as quality control inspections and signed approval of the finished work by the customer.

Workers compensation exposures vary based on the size and nature of the job. When an executive supervisor is only reviewing and giving oversight, the exposure is clerical with some jobsite inspection. However, if actual construction work is done or supervisors remain at job sites continuously, the exposures increase to those encountered by each type of worker on the project. Control of the jobsite is the responsibility of the general contractor, who may be held responsible for any injuries of subcontractors on the job. Verification that every subcontractor carries adequate workers compensation coverage is important.

Surety bond exposures arise from the clients’ requirement that the general contractor obtain financial guarantees for the completion of projects and payment of labor and supplies. Inability of the contractor to qualify for these bonds due to their prior experience and financial condition may indicate a moral hazard.

Property exposures at the general contractor’s own location are usually limited to that of an office. Ignition sources include electrical wiring, heating, and air conditioning systems. If the general contractor is a paper contractor, there will be no yard storage of building materials or equipment since there are no operations other than paperwork. If the general contractor is involved in framework or masonry, lumber or bricks may be stored on site, increasing the exposure to fire, inclement weather, vandalism, and theft.

Crime exposure is from employee dishonesty. Background checks should be conducted prior to hiring any employee. All orders, billing, and disbursements must be handled as separate duties and annual external audits conducted.

Inland marine exposures may include accounts receivable if the contractor bills customers for services, builders’ risk, contractors’ equipment, goods in transit, installation floater, and valuable papers and records for project plans, clients’, subcontractors’, and suppliers’ information. Builders’ Risk is an important coverage for many building contractors. Besides obtaining coverage for themselves, they may need to coordinate their subcontractors’ coverages and terms so limits are adequate for the overall project.

Subcontractors generally have their own equipment with independent coverage. The general contractor may arrange for the lease of larger equipment, such as cranes, for subcontractors to use, either with or without operators. The contractual agreements between the general contractor and the rental firms determine who is responsible for any damage to the rented equipment. If the general contractor performs tasks at the job site, equipment may be subject to water hazards, overturns, drop, and fall from heights, or being struck by other vehicles. Materials and equipment left at job sites may be subject to theft and vandalism loss unless proper controls are in place. Copies of building plans should be kept at an offsite location for easier restoration.

Commercial auto exposures may be limited to private passenger only if executive supervisors simply travel from site to site. If the general contractor is also handling part of the construction, workers, equipment, and supplies may be transported to and from job sites. Vehicles may have special modifications or built-in equipment such as lifts and hoists. Large materials such as air conditioners may be awkward and require special handling and tie-down procedures. Shifting of loads could result in overturn.

If vehicles are provided to employees, there should be written procedures regarding personal use by employees and their family members. All drivers must have appropriate licenses and acceptable MVRs. Vehicles must be maintained and the records kept in a central location.