The Road to Recovery: Commissioner Lara's Plan to Rescue Property Insurance in California

Author, Jeremy Hoolihan, Account Executive, Rancho Mesa Insurance Services, Inc.

California Governor Gavin Newsom recently declared property insurance a State of Emergency in CA based on a mass exodus of property insurance companies. This has allowed CA Insurance Commissioner Ricardo Lara to strike a deal with insurance companies to encourage new coverage in the State. The changes are slated to go into effect by the end of 2024. However, the hope is that insurers will begin to write homeowner’s policies sooner.

The agreement between Lara and the insurance industry will have insurers return to high-risk zones in the State, in exchange for relief in current regulations. This would allow insurers to get higher rate increases through the state regulator much faster.

Key regulatory elements of Lara’s plan, per his press conference on September 21, 2023, include:

1. Executive action by the Commissioner to transition homeowners and businesses from the FAIR Plan back into the normal insurance market with commitments from insurance companies to cover all parts of California by writing no less than 85% of their statewide market share in high wildfire risk communities. For example, if a company writes 20 out of 100 homes statewide, it must write 17 out of 100 homes in a distressed area.

2. Allowing FAIR Plan policyholders who comply with new safer wildfire regulations the first priority to transition to the normal market.

3. Expediting the Department’s introduction of new rules for the review of climate catastrophe models that recognize the benefits of wildfire safety and mitigation actions at the state, local, and parcel levels.

4. Directing the FAIR Plan to further expand commercial coverage to $20 million per building to close insurance gaps for homeowner’s associations and condo developments to help meet the State’s housing goals and to provide required coverage to other large businesses in the state.

5. Holding public meetings to explore incorporating California-only reinsurance costs into rate filings.

6. Improving rate filing procedures and timelines by enforcing the requirement for insurance companies to submit a complete rate filing, hiring additional Department staff to review rate applications and inform regulatory changes, and enacting intervener reform to increase transparency and public participation in the process.

7. Increasing data reporting by the FAIR Plan to the Department, Legislature, and Governor to monitor progress toward reducing its policyholders.

8. Ordering changes to the FAIR Plan to prevent it from going bankrupt in the case of an extraordinary catastrophic event, including building its reserves and financial safeguards.

Lara’s plan is hopefully going to deter more insurance companies from leaving California by loosening certain elements of insurance regulations. Under the existing system, insurers need to apply with the Department of Insurance to raise their rates and provide supporting documentation to justify the rate hike. The process would allow consumer advocates to intervene along the way, acting as watchdogs in the process.

With property owners desperately searching for affordable comprehensive coverage, Lara’s plan cannot come sooner. While this will take time to implement, it is an important step in restoring the property marketplace in California. If you have any questions relating to this article please feel free to reach out to me at jhoolihan@ranchomesa.com or 619-937-0174.

OSHA Officially Rules for Expanded Recordkeeping Requirements for High-Hazard Industries

Author, Megan Lockhart, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

Recently, the Occupational Safety and Health Administration (OSHA) made its final ruling to expand recordkeeping requirements for high-hazard industries, such as construction. The new requirements will take effect January 1, 2024 and will expand on what injury and illness information is needed to be electronically submitted to OSHA.

The requirements state that businesses with 100 or more employees in certain high-hazard industries must now electronically submit information from their Form 300-Log of Work-Related Injuries and Illnesses, as well as Form 301-Injury and Illness Incident Report to OSHA annually. This is in addition to Form 300A-Summary of Work-Related Injuries and Illnesses, which is already required.

Additionally, establishments are required to include their legal company name when making these submissions to OSHA from their injury and illness records.

Companies in high-hazard industries are already required to keep records of their work-related injuries and illnesses; however, this data is now to be submitted to OSHA, and the information gathered will be published on the OSHA website.

“OSHA will use these data to intervene through strategic outreach and enforcement to reduce worker injuries and illnesses in high-hazard industries,” Doug Parker, Assistant Secretary for Occupational Safety and Health, said in OSHA’s press release. “The safety and health community will benefit from the insights this information will provide at the industry level, while workers and employers will be able to make more informed decisions about their workplace's safety and health."

California businesses currently submit their recordkeeping information directly to Federal OSHA. Although the Cal/OSHA board has yet to release information regarding these new requirements, they must choose to uphold the standards set by Fed/OSHA or create stricter requirements. We will keep clients informed as further guidelines are announced.

Implementing Technology and Other Safety Tactics to Protect Your Fleet

Author, Greg Garcia, Account Executive, Rancho Mesa Insurance Services, Inc.

One of the most important practices for any landscape professional is fleet safety. Whether you have 10 trucks or 100, the exposure and risk remain the same. Explore a prior podcast episode, Episode #251, in which I delve into compelling statistics that shed light on the increasing frequency and severity of auto accidents each year.

Here are a few ways landscape professionals can improve their fleet safety:

1. GPS/Telematics Systems

A written fleet safety program is a must have for every organization, but how can you take that a step further? Some landscape professionals are turning to technology and installing GPS tracking systems in all of their trucks. These systems have the capabilities of tracking speeding, hard breaking, sharp turning, proper seat belt usage and other metrics. Not to mention, if a truck were ever stolen, they have the capabilities to track down and locate the stolen vehicle. 

I was at the National Association of Landscape Professionals’ (NALP) ELEVATE conference a few weeks back in Dallas and spoke with a landscaper who uses GPS on their trucks. I asked how they use the data that is collected. Their response was that each month they sit down and look at the data. They identify any glaring issues and work to get them resolved. For example, if a certain driver has been tracked speeding multiple times, they will sit that driver down and explain the importance of not speeding. They may even have them do a specific driver training course to help that individual become a better driver. Having GPS is a great start to improving fleet safety, but actually using the data collected and being proactive with that data is what the elite landscape company do.

2. Regular routine maintenance checks on vehicles

GPS tracks a vehicle while it’s driven, but what can be done before the vehicle even hits the road to help prevent accidents?  Routinely checking vehicles and performing maintenance on them can really have a impact on fleet safety. For example, regularly checking tire pressure, making sure oil changes are up to date, inspecting the brakes and monitoring tire wear are a few things that every landscape company should do to keep their vehicles running in tip top condition. 

3. Company Roll Out Procedure

Implementing a mandatory company roll-out check can have a significant impact. I have actually seen a few of these performed in person and it’s impressive. As the trucks leave the yard to head out for the day’s work, the driver signals both blinkers, flashes the headlights, cleans the windshield and mirrors, and performs a small brake check, all the while, an inspector is outside making sure all signals are working before the truck heads out. 

Finally, if a trailer is being used, check to make sure the trailer is properly hitched and the equipment in the trailer is tied down or stored securely. Taking time and performing these checks will certainly help prevent auto accidents in the future.

If you would like more information on putting together or updating your Fleet Safety program, reach out to me at ggarcia@ranchomesa.com or (619) 438-6905.

Fire Prevention Month: Revisiting Fire Preparedness

Author, Megan Lockhart, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

October is Fire Prevention Month. The National Fire Protection Association (NFPA) dedicated this month to spreading awareness for fire safety and prevention. The construction industry is particularly vulnerable to fire danger, making this a good time to re-evaluate your company’s fire hazards and training protocol. 

Local fire departments responded to an average of 4,300 fires in structures under construction per year from 2016 to 2020, and 4,750 construction fires occurred in 2020 alone. A few of the most common causes of fires on the jobsite include hot work such as welding and soldering, temporary heaters and electrical lighting, flammable liquids and gasses, and smoking.

In addition to the fire hazards in the construction industry, the month of October poses high risk for wildfires across the state of California, especially Southern California. 

“Most fires happen between the months of April and October, as weather becomes warmer and drier,” an article published by CalMatters said. “In Southern California in particular, the hot and dry Santa Ana winds increase wildfire risk in October and November.”

As fire risk increases throughout this month, it's a good idea for clients to evaluate their fire safety programs and eliminate possible hazards. Rancho Mesa offers training resources in the SafetyOne™ app with several online courses for fire prevention.

Additional dates for our Wildfire Prevention and Wildfire Smoke Regulations webinar have been added to the calendar this month if clients are interested in registering.

Are Bonded Projects Really Better Performers than Non-Bonded Projects?

Author, Anne Wright, Surety Relationship Executive, Rancho Mesa Insurance Services, Inc.

The goal of the surety, in any relationship, is to ensure that the bonded job is completed successfully, is profitable for their client, and is without claims.

In their attempt to understand the risk versus reward of a given bonded project, the surety can add some value by reviewing certain aspects of a particular request. 

To that end, the surety considers each request for a bond on its own merits. If the bond is for a routine project (based on the contractor’s history and track record), then it will likely be a pretty routine process for issuing the bond based on the contractor’s past performance, history, etc. However, something out of the wheelhouse for a given contractor might find the surety contemplating certain details about the request. They may ask more about the type of project and past experience on similar jobs and resources needed. The surety may want to know if this project has an adequate schedule, the profit and related costs of the job, information about the owner requesting the bond, bond forms, and the contract. In reviewing the contract, the surety is not just looking at the general form of the contract, but also various provisions like payment and retention terms, liquidated damages, schedules, etc. And, you might find your surety agent asks what you like about the job or what challenges you see in the job if it is outside of your normal scope and size. Every now and then, a client comments that they appreciate these discussions – and the extra set of eyes to make sure key factors in the job, bid, or contract were not missed.

Many sureties can also provide some input relating to contract review, especially if a client is working for a new project owner, or a general contractor who has a reputation for being tough. 

And, if your work is for a private owner, the surety will typically want to confirm that there are construction funds earmarked to make sure the contractor gets paid. That information should be available in generalities in the preliminary notice information, but having the surety asking to confirm specifically that their contractor’s money is available to pay for their line items (and any contingency) can be a real benefit.

Also, keep in mind that the contractor (the business owner) typically has their personal indemnity on the line if things go wrong and the surety has to respond to a claim – one might presume that the contractor is paying extra attention to a bonded job where there is more on the line.       

So, at the end of the day, the services provided by underwriting the bond request can add that extra value in making sure there is no loss. The extra attention may also result in a more successful project.   And, the job should be a good performer.

Don’t just take my word for it. Overall, the industry agrees that unbonded projects have a higher likelihood to default, or have more significant problems. The case can certainly be made that with the partnership and value of the surety team supporting a contractor in their efforts to have a successful job, more attention is paid to those critical components to ensure that this is the case.

An article by Vicki Speed, “A Study in Surety Effectiveness, Reassessing Exposures,” published in the July 10/17, 2023 issue of ENR Magazine confirmed the value of surety bonding. According to a survey of owners and developers cited in the article, “bonded projects are more likely to be completed on time or ahead of schedule.” 

Remember, the surety is not here to tell you how to run your business or your projects. Only to support your success. It should be seen as a valued partnership that is beneficial to the owners who require the bonds.

For more information about bonding jobs, contact me at (619)486-6570 or awright@ranchomesa.com.

Random Acts of Violence: Are They OSHA Recordable?

Author, Megan Lockhart, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

Are random acts of violence OSHA recordable? This is a question many companies, particularly those that are required to report to OSHA annually, may ask. Whether the incident involves construction workers building in a high-crime area, or employees encountering hostile customers, determining if violent injuries are work-related is not always a black and white decision.

A letter submitted to OSHA this year requested interpretation for a scenario that fell into this recordkeeping gray-area. An employee was driving a company vehicle on a public road on his way to a client. When he approached an accident on the road, the individual who caused the accident shot the employee and stole the vehicle. OSHA determined that the employee’s injuries were work-related and was thus recordable because he was acting in the interest of the employer.

This scenario is pivotal to further defining a work-related incident. However, OSHA also acknowledged some cases that would be exceptions to these standards.

“Some cases involving violent acts might be included within one of the exceptions listed in section 1904.5(b)(2),” the OSHA board wrote. “For example, if an employee arrives at work early to use a company conference room for a civic club meeting and is injured by some violent act, the case would not be work-related…”

Incidents in workplaces such as construction sites that are among the public could also be OSHA recordable. In the past, clients have expressed concerns for the safety of their workers dealing with hostile individuals possibly entering the jobsite and putting their employees at risk.

It's best to assume a violent incident involving an employee is recordable, rather than omitting it from reporting and risk financial penalties.

Rancho Mesa offers several newly-added online training courses in the SafetyOne™ platform related to handling and preventing workplace violence. For any questions regarding accessing these trainings for your employees, contact your client technology coordinator.

Understanding the Importance of Subcontractor Warranty Endorsement in General Liability Policies

Author, Lauren Stumpf, Marketing & Media Communications Specialist, Rancho Mesa Insurance Services, Inc.

In a recent podcast episode, Daniel Frazee, Executive Vice President at Rancho Mesa, sat down with fellow Agency Principal Sam Clayton to explore a crucial topic in the realm of general liability insurance policies, the subcontractor warranty endorsement. This endorsement outlines essential requirements that contractors should pay close attention to when working with subcontractors.

The subcontractor warranty endorsement in a commercial general liability policy establishes the minimum conditions that the contractor must have in place with the subcontractors they hire. Sam highlights three key requirements including the necessity for a written contract with an indemnity agreement in favor of the contractor, being named as additional insured for both ongoing and completed operations through endorsement, and ensuring that subcontractors maintain insurance coverage with limits equal to or exceeding the contractor's commercial liability policy (typically $2 million in aggregate and $1 million per occurrence).

Failure to meet these requirements can have significant consequences. Different insurance carriers may react differently, but common outcomes include higher deductibles, potentially reaching $25,000, compared to the usual $2,500 or $5,000 deductible, and, in some instances, a complete denial of coverage.

Given these potential repercussions, Sam advises contractors to carefully read and understand the subcontractor warranty endorsement in their general liability policy. Additionally, they should take proactive steps to protect themselves such as legal reviews of subcontract agreements, insurance consultations with brokers to determine adequate coverage, and implementing robust documentation and monitoring systems for certificates of insurance.

The subcontractor warranty endorsement is a vital component of general liability insurance policies for contractors. Understanding its requirements and taking the necessary steps to comply with them can help contractors avoid potentially costly consequences in the event of a claim caused by one of their subcontractors. To learn more, please listen to Episode 345 below, or on your favorite listening platform.

Digitalization in the Construction Industry: A How-To Guide

Author, Megan Lockhart, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

The construction industry stands as one of the biggest contributors to the U.S. economy. With the rapid advancements in technology, however, it still stands out as one of the least digitized industries in the world. While traditionally, construction companies have been loyal to paper methods, digitalization in construction brings many benefits such as increased efficiency, improved safety, and enhanced communication.

Although it might seem intimidating, making the jump from paper to pixels can help propel your company to the next level, especially in safety. Rancho Mesa offers the SafetyOne™ app to help transition companies into the digital age. Taking the first steps in this process with intention will make a huge impact in the long run, and we've outlined some key factors to get you started.

Collect the Paper

Once you have decided to ditch the paper and move to a digital format, one of the first steps is to get those papers organized. Collect all the forms, spreadsheets, and checklists you manually fill out. These include equipment inspections, training documentation, toolbox talk sign-in sheets, etc. Once you’ve gathered everything you use on a regular basis, you will be able to easily see what can be digitized.

Set Priorities and Goals

Making the switch to digital can appear intimidating especially when the goals exceed the realistic time frame. Prioritize what should be digitalized first and delegate who is responsible for completing each task. If you are using SafetyOne, the priority might be to add the names of your projects to the system and decide who will need access to the admin website and mobile app.

Start with the Easy

When you begin digitalizing your safety program, start with small switches that are easy for your employees to adopt. We recommend SafetyOne’s toolbox talks as a starting point because it only requires a few simple steps to implement.

The SafetyOne platform has a library of toolbox talks that can be accessed on the jobsite via the mobile app with ease. Once the supervisor has conducted the toolbox talk, each employee can document their attendance by signing their name on the supervisor’s mobile device. The employee doesn’t need to be added as a user nor have the app on their personal device. The documentation will automatically be filed in the system and can be reviewed back at the office.

Create Digital Versions of Paper Forms

Once you have collected the information and forms your company uses, you can begin the process of creating digital versions of them. Start with the most important forms and go from there. In SafetyOne, you can create your own forms or choose from a library of mobile forms and observations that can be filled out on the jobsite via a mobile phone or tablet.

Digitalizing your forms has several benefits. While similar to the process you have already been doing, it increases efficiency and saves time. You will no longer need to worry about misplacing the document, or bringing the physical form back to the office and filing it manually. Once a mobile form is submitted on the SafetyOne app, it will automatically be filed in the platform. Plus, digital forms can be easily accessed, edited, and shared, improving collaboration. 

As technology continues to evolve, it is important for construction employers to utilize digital tools in order to stay competitive in the industry. With the potential to save time and minimize risks, and improve employee safety, the construction industry is gradually embracing digitalization. Rancho Mesa is here to offer the tools and guidance to make this transition successful.

For more information about how SafetyOne can help your company, contact your client technology coordinator or visit the SafetyOne page on ranchomesa.com.

Surviving the Blaze: Developing Asset Relocation Plans in Wildfire-Prone Regions

Author, Rory Anderson, Account Executive, Rancho Mesa Insurance Services, Inc.

As a tree care company operating in wildfire-prone areas, the safety of your crew, equipment, and vehicles is paramount. Wildfires can be unpredictable and devastating, posing a significant threat to your valuable assets. To mitigate risk of potential losses, it is important to have an effective asset relocation plan in place. This plan ensures that in the event of a wildfire, your vehicles and equipment have a safe place, reducing the risk of damage or total loss. This safe relocation address should be in an urban area, surrounded by buildings – not rural vegetation. It can be a mall parking lot or any urban lot. Let’s explore the reasons why having an asset relocation plan is crucial for tree care companies.

Reduce Insurance Costs

Insurance is a critical aspect of risk management for tree care companies. While insurance can help cover losses from wildfires, having a well-executed asset relocation plan can potentially lead to reduced insurance premiums. Insurance carriers may view your proactive approach to asset protection as a lower risk, leading to more favorable terms and lower premiums. This can result in cost savings for your business.

Protect Your Investments

Tree care contractors often invest in specialized equipment and vehicles, which are essential for their operations. A wildfire can damage these valuable assets, leading to significant financial losses. An asset relocation plan allows you to move your equipment and vehicles to a safer location to protect your investment.

Ensure Business Continuity

The aftermath of a wildfire can be chaotic. Having an asset relocation plan in place ensures that your equipment and vehicles are moved to a secure location well before a wildfire strikes, keeping your assets safe. This allows your business to continue operating after the disaster with minimal disruptions. Maintaining continuity is essential for your income and reputation.

An asset relocation plan is an important component of your risk management program as a tree care company, especially if you’re located in a rural area. If your business is located in California, Cal Fire has a valuable online resource called Fire Hazard Severity Zones Maps. This resource shows the areas in your county that are considered high fire hazard severity zones. It is recommended that you make your relocation address somewhere where the fire hazard severity is considered low or moderate.

Should you have further questions on this topic, reach out to me directly at randerson@ranchomesa.com or call me on my direct line at (310) 753-6804.

Steering Towards Safety: Strategies for Lowering Commercial Auto Insurance Premiums

Author, Casey Craig, Account Executive, Rancho Mesa Insurance Services, Inc.

We are going into uncertain times as some commercial auto carriers are electing to no longer write new business in California. This is leading to other carriers, that are still willing, to be overwhelmed with requests for insurance quotes. Carriers are limited in the increases they can take from one policy period to the next and have had increasingly bad losses which have made it impossible to be profitable. This will lead to carriers inevitably charging more over time as the losses have become staggering. Let’s take a look at what you can do as an insured to help your company look like a better risk for these carriers and mitigate premium increases.

Increase Limits

Increase limits for employees that drive their personal vehicles. California’s minimum limits for auto insurance have not been raised in over 50 years. With vehicle costs and medical bills exponentially increasing over that time, it is easy to see how most drivers in California are underinsured if any serious accident occurs.

The Protect California Drivers Act will go into effect January 2025 which will increase the minimum personal auto insurance limits from $15,000/$30,000/$5,000 to $30,000/$60,000/$15,000. This will help Californians, but also consider increasing the limits your company requires for your employees. It will help insulate your company further and lead to more carriers potentially being willing to insure your company’s drivers.

Install GPS

Install GPS and have someone at the office track drivers. Insureds tend to use GPS as a reactive tool, if a vehicle goes missing they can track it and potentially recover. Or, if a driver gets a ticket, they look back to see if the driver was speeding or has an issue of speeding. If used properly, this can help your company find unsafe patterns before they lead to an accident. You can track speeding, hard turns, and excessive breaking. Being able to identify poor drivers before an accident happens can lead to substantial savings on your insurance premiums.

Implement Driver Training

Proactive and reactive driving trainings can go a long way. Rancho Mesa’s SafetyOne™ website offers online driver training. Driver training history is stored and available for review at any time. So, companies can prove to carriers they take driver safety training seriously.

Seeing where the industry is moving, it would be smart to ensure you are staying ahead of trends. Meeting with your insurance broker to make sure you have the proper fleet safety program in place is vital.

If you have any further insurance questions or would like to discuss your fleet safety program, please contact Casey Craig at (619) 438-6900 or ccraig@ranchomesa.com.

Is Your Organization at Risk? Assessing the Need for an AI Policy

Author, Megan Lockhart, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

Since the release of ChatGPT in November 2022, it seems every technology platform is incorporating Artificial Intelligence (AI) into their products. However, concerns are quickly rising about the effects AI technology will have on every industry. As more companies begin to incorporate AI into their products and operations, now is the time to evaluate the necessity of an AI policy for your organization.

Although AI offers many benefits to businesses such as enhancing productivity, assisting in brainstorming and creativity, it can also pose new risks. Human services organizations like healthcare facilities and nonprofits may be particularly vulnerable to these risks. 

“It’s important not to blindly jump into AI technology without a proper plan in place,” Nick Leighton, business owner, best-selling author and motivational speaker, writes in Forbes Magazine. “You could be setting yourself up for costly mistakes and risks. Creating an AI policy doesn’t have to be overly complex. It’s best to start with simple guidelines that you can expand and adapt as your usage of the technology expands.”

One cause for concern when using AI platforms such as ChatGPT is that responses will not always generate accurate information. It is possible the sources used are incomplete, biased or flat-out errors. To avoid employees distributing false information to clients, content should always be proofread by a human being.

"Non-profit and human service organizations depend on the public's trust,” said Sam Brown, Vice President of the Human Services Group with Rancho Mesa Insurance. “Whether a development director uses AI to learn from donor data and personalize their experience or a program director uses AI to improve client outcomes, a thoughtful AI policy will ensure human oversight and minimize risk when implementing new technology."

Organizations also risk plagiarism when utilizing AI. While AI can help inspire ideas and creativity, if a company uses AI-generated ideas or guidance, it’s important to ensure content is original to avoid unknowingly distributing the work or insights of others to clients or the public. So, it is vital to know the AI platform’s responsibility for claims of copyright violations for its AI-generated works.

Arguably the most dangerous risk organizations face when utilizing AI as a tool for efficiency is the threat to security. Many AI platforms are designed to retain the information they are given, and use it to adapt. For example, asking ChatGPT to organize an excel spreadsheet of confidential client information could be absorbed into the system’s database for learning and pose a security risk. Organizations must fully understand how their data is used once it is input into an AI platform.  Is it stored and used for future learning, or is it deleted immediately? These are questions that must be asked before implementing AI into any organization.

Back to the Books: Fall Months Call for Driver Preparedness

Author, Megan Lockhart, Media Communications and Client Services Coordinator, Rancho Mesa Insurance Services, Inc.

As schools begin filtering back into session, more vehicles flood the roads in the mornings and afternoons. The “rush hour” traffic is back in full swing. From construction workers on their way to the jobsite to parents rushing their kids to school, more vehicles on the road means more risk for accidents, and an uptick in insurance claims.

According to the National Highway Traffic Safety Administration data, in 2021 the rate of fatal crashes for large trucks was highest in the months August through October, with its peak in September. Construction-industry vehicles typically fall into the category of large trucks, defined by a total weight of 10,000 pounds or more.

To avoid becoming a statistic, it’s a good time for employees to freshen up on driver training. The SafetyOne™ platform offers a library of online driver training topics to ensure your drivers are safe on the road.

• Driver Safety: The Basics

• Driving Safety

• Driving Defensively

• Distracted Driving

• Commercial Driver’s License (CDL) Defensive Driver Training

To learn more about risk management resources or the training offered in SafetyOne, contact your client technology coordinator.

Unraveling Residential Exclusions: Navigating General Liability in Construction

Author, Lauren Stumpf, Marketing & Media Communications Specialist, Rancho Mesa Insurance Services, Inc.

In Episode 339 of Rancho Mesa’s StudioOne™ podcast, Vice President of the Construction Group Sam Clayton interviews Executive Vice President Daniel Frazee as they discuss the importance of Residential Exclusions in General Liability (GL) Policies for companies in the construction industry.

Sam and Daniel highlight how these exclusions impact coverage for various types of residential work within the construction industry, such as single-family homes, apartments, and more. Daniel emphasizes the need for construction firms to be specific about the type and location of their residential work, as different carriers have varying interpretations of residential exclusions. He also touches on Wrap/OCIP policies, which can provide broader coverage for subcontractors working on residential projects.

The episode highlights the significance of understanding existing residential exclusions for Rancho Mesa construction clients and suggests considering a policy audit to ensure proper coverage.

Overall, the podcast provides valuable insights into navigating residential exclusions and their implications for construction businesses, urging listeners to proactively manage their insurance coverage.

Episode 339 can be listened to below, or on your favorite listening platform. If you would like more information, please contact Daniel Frazee at dfrazee@ranchomesa.com, or Sam Clayton at sclayton@ranchomesa.com.

Risk Tamed and Rewards Claimed: Requiring Subcontractor Bonds

Author, Matt Gaynor, Director of Surety, Rancho Mesa Insurance Services, Inc.

We often receive questions from our contractor clients regarding if/when they should require a subcontractor to provide the protection of a performance & payment bond for a project. Although the premium charged for the bond will add cost to the project – on many occasions the benefit of the bond will far outweigh the cost. Here are several benefits that might assist in your decision:

1. The subcontractor would have gone through a prequalification process of the surety. The surety will evaluate the subcontractor’s financial strength, experience, and ability to perform the work. This can be extremely valuable if you have never worked with this subcontractor on past projects.

2. Provides protection that the subcontractor will pay their suppliers and lower tier subcontractors. The payment bond transfers the risk of these payments to the subcontractor’s surety.

3. If the subcontractor has a critical role in the overall completion of the project or a special expertise - the bond can protect against additional costs or delays due to a default.

Your bond company may require you to obtain subcontractor bonds when a trade exceeds a certain parameter (for example: $500,000) as a condition of the program they provide. 

We recently supported a contractor client on a project that was two times larger than any project they had completed in the past. The decision to bond back the three largest subcontractors made the bond company comfortable enough with this transfer of risk to support the project. 

We have other clients that have suffered subcontractor losses in the past and now require subcontractor bonds on all their projects.

If you would like more information on the bonding of subcontractors, please contact me at 619-937-0165 or mgaynor@ranchomesa.com.

OSHA Issues Heat Hazard Alert: Preparing for the Heat Wave

Author, Megan Lockhart, Media Communications and Client Services Coordinator, Rancho Mesa Insurance Services, Inc.

California can experience high heat in the late Summer and early Fall months, which increases the risk of heat illness for employees working outside.

OSHA has issued a heat hazard alert, reminding companies of their responsibility to protect employees from heat illness this time of year. The U.S. Department of Labor also announced stricter enforcement for heat-related violations and increasing inspections in the construction and landscape industries.

To help employers prepare for this, we've added more dates to our Heat Illness Prevention webinar to help keep employees safe. Register for one of the webinars in the coming months to learn how to best protect employees and reduce the risk of claims.

Additionally, clients can view SafetyOne™’s Extreme Heat Checklist that covers best practices to follow before and during heat exposure, as well as protocol for heat illness incidents.

Identifying Proper Procedures for the Injury and Illness Prevention Program

Author, Jack Marrs, Associate Account Executive, Rancho Mesa Insurance Services, Inc.

In this second installment of exploring an Injury and Illness Prevention Program (IIPP) we will be taking a closer look at the procedures for identifying and evaluating workplace hazards, investigating occupational injury or illnesses, and correcting unsafe or unhealthy conditions, work practices and procedures.

Identifying and Evaluating Workplace Hazards

Employers need to have proper measures in place to identify potential health and safety risks like unsafe conditions and practices within the workplace. These measures involve conducting regular inspections to identify any areas of the workplace that may be hazardous. Also, conducting interviews with employees is a great way to identify any potential workplace hazards. During this process it is important to document any identified hazards and create a plan of action to fix them.

According to California’s State Fund “Inspections should be conducted by personnel who, through experience or training, are able to identify actual and potential hazards and understand safe work practices. They should be knowledgeable in the Cal/OSHA safety orders that apply to your workplace to better help you identify potential hazards.”

Investigating Occupational Injuries or Illnesses

Referring now to the investigation that should take place after an accident or near miss has occurred. The investigation should be done by a trained employee who is able to identify the cause of the accident and understands what solutions need to be put in place to prevent a similar incident from happening in the future. When doing an investigation, it is crucial to fill out an investigation report containing the details about what happened. This information is used to not only identify root causes but much of the data that is collected will need to be documented on the OSHA logs.  CAL/OSHA lists five important steps for proper recordkeeping:

1. Each employer (unless exempt by size or industry) must record each fatality, injury, or illness that is work-related, is a new case, or meets one or more of the general recording criteria specified by OSHA.

2. Record each injury or illness on the OSHA Form 300, according to its instructions.

3. Prepare an Injury and Illness Incident Report known as Form 301, or its equivalent.

4. Annually review and certify the OSHA Form 300 and post the Summary of Work-Related Injuries and Illnesses known as the Form 300A no later than February 1 and keep it posted where employees can see it until April 30.

5. Maintain the last five years of these records in your files.

Lastly, building an inventory of investigation reports can lead to a stronger ability to identify developing trends and root causes that could lead to additional incidents, if not corrected.

Correcting Unsafe or Unhealthy Conditions, Work Practices and Procedures

Once your safety team becomes aware of a hazard, it is imperative to take immediate action. If the hazard is not easily fixable, employees should vacate the work area until a solution is implemented. Once the solution is in place, only trained staff members should enter the hazardous area to address the issue. This approach ensures effective hazard management while minimizing the risks associated with its correction.

By implementing an effective Injury and Illness Prevention Program, workplaces will begin to fulfill their regulatory obligation of maintaining a safe workplace, but also create a culture of safety and accountability.

Our next installment will cover the last 3 critical components of the IIPP: providing employee training and instruction, procedures to allow employee access to the program, and recordkeeping and documentation.

Please contact me with any questions about managing your risk at (619) 486-6569 or via email at jmarrs@ranchomesa.com.

The Critical Role of Pollution Liability Insurance for Mechanical Contractors

Author, Kevin Howard, Account Executive, Rancho Mesa Insurance Services, Inc.

Mechanical HVAC contractors are essential to making sure that buildings around the globe have controlled temperatures and are energy efficient. Nationwide, the demand for mechanical HVAC contractors often keeps these businesses with full backlogs. These companies use various materials that create the potential for a pollution liability claim. Refrigerants, gases, flammable liquids, and lubricants are examples of these types of pollutants. If leaked or exposed, walls, ceilings, and floors can develop damage or mold that is not covered by standard commercial general liability policies.

Pollution liability insurance is a separate and specific form of insurance meant to protect businesses from pollution-related claims. Pollution risks may arise from activities such as the improper disposal of hazardous materials, fuel spills, or accidental leaks from HVAC systems. Such incidents can lead to damage to the environment, neighboring properties, and public health, which could potentially result in costly legal disputes and cleanup expenses.

Below we will cover two common pollution claim examples in an effort to raise awareness and drive home the need for commercial pollution liability insurance specifically for HVAC mechanical contractors.

Claim Example 1: Contamination of Ground Water due to HVAC System Leak

In this example, XYZ Mechanical installed an HVAC system in a commercial building. The building is adjacent to a residential development. Post install, there was a leak in the refrigerant line which seeped into the dirt below the building which went undetected for weeks. The refrigerant seeped into the groundwater supply causing contamination.

Hazard - This claim example would have a significant impact on wildlife, could cause harm to residents and would need a specific extraction/clean up that would be costly to a business owner.

Protection - A pollution liability insurance policy would react to this type of claim and could offer coverage for the cleanup, any third-party injuries, and the cost for legal proceedings.

Claim Example 2: Fuel-Contaminated Environment
ABC Mechanical is hired to install an energy efficient HVAC ground unit for an apartment complex. There was an underground unmarked fuel storage tank that was accidentally drilled into and caused a leak.

Hazard - This claim example would need immediate attention for the potential risk of fuel leaking into the ground and a plan for cleanup. The leak could make its way into the groundwater contaminating wells and potentially causing contamination of water. There would also be some health hazards for residents that could become a concern.

Protection - A pollution liability policy would come to aid with emergency response, cleanup cost, third- party bodily injury and legal defense costs.

Pollution liability is very often an overlooked coverage for many HVAC mechanical contractors. In 1986, however, the total pollution exclusion (TPE) became a standard exclusion in commercial general liability policies and has since created the need to purchase commercial pollution liability policies due to the variety of exposures to risk. The cost is relatively minor and the benefit very high if and when coverage is triggered. If you have questions regarding commercial pollution liability, please contact me at khoward@ranchomesa.com or (619) 438-6874.

Cal/OSHA to Enact ETS for Silica Exposure in Artificial Stone Industry

Author, Megan Lockhart, Media Communications and Client Services Coordinator, Rancho Mesa Insurance Services, Inc.

On July 20, 2023, the Cal/OSHA board approved a petition that requested an emergency temporary standard for respirable crystalline silica, a byproduct of manufacturing and cutting artificial stone material.  

The petition was submitted to Cal/OSHA by the Western Occupational and Environmental Medical Association (WOEMA). It argued that the recent increase in advanced silicosis cases documented in California hospitals made heightened silica regulations necessary.

The permissible exposure limit (PEL) at which current silica safety requirements apply, is 50 micrograms per cubic meter of air over the course of an 8-hour shift. Employees whose interactions with respirable crystalline silica surpass this limit are required to implement control measures and wear personal professional equipment (PPE) in order to reduce exposure.

WOEMA advised that workplaces using engineered stone with a silica content greater than 50% should put in place the following ETS standards.

• Regulated areas to limit employee access to spaces where artificial stone is fabricated.

• Restrictions on fabrication without the use of water to suppress dust.

• The use of airline respirators or power air-purifying respirators (PAPRs) for all work involving fabrication of artificial stone.

• Annual reporting letters from employers to the Cal/OSHA Occupational Carcinogen Control Unit on the use of silica.

• Strengthened penalty structure so that violations of the ETS result in citations classified as serious.

• Updated information on CT exams and other diagnostic studies, prepared by Cal/OSHA.

• Requirements that physicians or other licensed health care professionals report moderate to severe silicosis diagnosis to Cal/OSHA.

The Cal/OSHA staff’s evaluation concluded that most of the petition’s requested requirements were already part of the current standard for silica in construction environments. It therefore advised the board to deny adopting an ETS and instead, update the current permanent standards where needed.

However, in a contested decision, the board ultimately went against their staff’s recommendation, and approved the request to enact an ETS.

Cal/OSHA is expected to draw up the new emergency temporary standards within the next couple months. Silica exposure occurs in industries that manufacture stone countertops, brick, concrete blocks, or ceramic products. This motion may affect construction clients who frequently work with these materials.

Further information regarding the current safety regulations for respirable crystalline silica can be found in Cal/OSHA’s Code of Regulations.

Taking the Mystery out of Bonding for Public Works Projects

Author, Andy Roberts, Account Executive, Rancho Mesa Insurance Services, Inc.

Obtaining bonding for public works projects can be a complex process but understanding what bonds are, why they are required, and what information the bond company needs can take a lot of the mystery out of the process and make it seem a lot less daunting.

Bonds are a financial instrument which provide a guarantee, provided by the bond company, to the project owner (Obligee) that the contractor (Principal) will fulfill their obligations per the terms and conditions of the contract that has been awarded to them. We most often see bonds on public works projects as they are required by law but we also see general contractors and lenders require bonds in some instances. Specifically looking at public works projects, there are laws in place requiring bonds on these projects because they are funded by tax payer dollars, making it important to mitigate the financial risks associated with these projects and protect those funds.  With this basic understanding of what bonds are and why they are required, how then do contractors go about getting bonded?

Depending on the size of the project that requires a contractor to get a bond, there are a few different options. Many surety companies offer bond programs solely based on the credit of the owners, and so long as personal credit is good, the surety will offer support. The limit for these types of programs are typically maxed out at $750,000 per project and aggregate depending on the bond company. In order to go above these limits, more financial information must be obtained: contractor questionnaire, three years of company financials (balance sheet & income statements), personal financial statements from all owners, and bank statements verifying the cash amounts listed on company and personal financial statements. After reviewing all of the provided information, the bond company and surety broker can determine the contractor’s eligibility for the appropriate size bond program.

Having the ability to secure bonds can provide additional revenue sources to help a contractor grow their business. This makes it important for contractors to seek out an experienced bond agent that can not only guide them through the process but also educate them so that the process is not overwhelming.

If you have any questions or would like to start putting your own bonding program in place, I can be reached at aroberts@ranchomesa.com or 619-937-0166.

Seasonal Demands Lead to Increased Risk for Landscapers

Author, Megan Lockhart, Media Communications and Client Services Coordinator, Rancho Mesa Insurance Services, Inc.

With summer in full swing and the autumn months close ahead, landscapers are at their busiest time of the year. During this time, landscape companies often increase their employee numbers with temporary hires to meet the seasonal demands. Due to this, employers are encouraged to be more cautious of the increased risk of injuries to their workers, particularly those who are young and less-experienced.

Landscaping and grounds keeping is undoubtedly a dangerous field of work. Potential hazards include chemicals, dangerous equipment, wildlife encounters, extreme heat, and electricity. According to the U.S. Bureau of Labor Statistics, 1,072 work-related deaths were reported in the industry from 2011 to 2021, and 142 employees suffered fatal workplace injuries in 2021 alone.

Risk of injury to young people is particularly important this time of year. A study published by the CDC in 2021 analyzed 18,037 workers’ compensation claims in the landscaping services industry from 2001 to 2017. Of these claims, 50% of serious injuries were employees aged 34 and younger. The average age for landscape workers in the United States was 38.1 in 2011, indicating younger workers may be at greater risk to injury than older workers.

Considering younger employees are often hired to work temporary summer jobs and typically have less experience in the industry, employers should ensure young workers are properly trained and are in compliance with the federal child labor law that restricts employees under the age of 17 from being exposed to hazardous occupations.

Newly-hired employees also experience particularly high numbers of work-related injuries in the landscape industry, especially at smaller companies.

“The percentages of all serious injuries occurring during the first 90 days of job tenure ranged from 22% to 30%, with the smallest companies having the highest percentage of these short-tenure claims,” the CDC states in their landscape industry study. “The frequency of injuries to young and early-career workers suggests that better training and supervision of new workers could be crucial to worker safety.” 

Increased demand leads to increased risk with less-experienced, young, and temporary hires. As heat continues to soar in late summer and early fall, it is best to make sure your workers all have proper safety training that includes heat illness prevention, in order to prevent workers’ compensation claims.

“Landscaping can be dangerous when workers lack experience and appropriate training in a language they understand,” Assistant Secretary for Occupational Safety and Health Doug Parker said, in an article published by the U.S. Department of Labor. “Too often, our inspectors find workers harmed in ways that their employers could have prevented by following federal and industry safety standards. We urge employers to implement strategies that involve their workers and protect everyone.”

The Federal OSHA website offers Health and Safety Programs applicable to the landscape industry, including an Injury and Illness Prevention Program for High Hazard Employees.

Rancho Mesa’s SafetyOne™ Mobile and Desktop application also contains a library of toolbox talks and online training applicable to landscape workers that can benefit companies during this time of the year. Clients can contact their client technology coordinator for more information.