Limitations of Construction Liability Insurance

When hiring a construction crew to renovate homes, it is critical to have the proper insurance coverage. For instance, liability insurance policies do not provide coverage for injuries or property damage caused by altering structures, new building construction, or demolition. If an individual wants coverage for these kinds of risks, they need a construction insurance policy. However, this type of coverage has its own restrictions as well.

One policyholder is learning this the hard way. He purchased a foreclosed home with the intent to perform extensive renovations. During a routine roof replacement, a piece of plywood injured a construction crew member. The crew member sued and the policyholder sought defense from his insurer. The policy included an exclusion for injuries caused by demolition. The insurer argued that because the policy does not provide coverage for injuries caused by demolition, the crew member’s original claim was null.

However, the definition of demolition cast doubt on this argument. The insurer argued that tearing down the roof to the original decking amounted to a demolition job. The court, however, maintained that roof removals do not constitute demolition. The fact that the home was under renovation and that the crew was repairing the roof shows the intent was not to demolish the structure. Furthermore, previous court cases define demolition as a complete tear down or destruction of a building. Because this was a renovation, the demolition injury exclusion did not apply.

The court also explained it fell on the insurer to show the exclusion met three requirements:

  • That the policy detailed the exclusion in distinct and unambiguous language
  • That the exclusion did not require additional interpretation
  • That the exclusion was applicable to the case at hand

The court maintained the insurer did not meet this burden. This particular case illuminates the intricacies of construction insurance policies. To learn more about the different types of construction insurance, contact us.

How to Avoid the 3 Most Common EPLI Risks

Employment Practices Liability Insurance (EPLI) protects employers against claims alleging wrongful employment practices. The three most common reasons employees file EPL suits are due to sexual harassment, discrimination, and wrongful termination. However, like all insurance policies, there are exclusions and limitations for EPLI coverage.

How Does EPLI Coverage Work?

Insurers draft EPLI policies on a claims-made basis. This imposes two significant limitations.

  1. The policy only covers the insured for wrongful employment practices that occur after the policy start date and before the policy expires/renews.
  2. The insured must report the claim to their insurer during the policy period.

These two restrictions can present a major time trap for businesses. For example, many insurance companies consider a right-to-sue notice as the opening of a claim. However, many businesses don’t recognize it as such because the employer doesn’t have to respond to it. It can be well over a year before an employee files a suit after the employer receives a right-to-sue notice. By then, there is a high chance that the employer’s policy renewed and the insurer will deny coverage for failing to report the claim during the policy period. In addition, EPLI policies only cover financial damages. They don’t offer coverage for bodily injury, property damage, etc.

Understanding the 3 Major EPLI Risks

As mentioned above, the three most common sources of EPLI claims are sexual harassment, discrimination, and wrongful termination.

Sexual Harassment

Employers have seen a significant increase in sexual harassment claims in recent years. With the birth of the #MeToo movement, employers need to take more care than ever to prevent sexual harassment in the workplace. This includes maintaining and enforcing a sexual harassment policy. Failure to do so is tantamount to inviting sexual harassment lawsuits. Sexual harassment can take many forms including physical behaviors, verbal comments or jokes, asking for sexual favors in return for promotions, and much more.


Much like sexual harassment, discrimination can occur in a variety of ways. Discrimination lawsuits happen when an employer treats an employee or group of employees differently due to race, religion, color, gender, national origin, age, or other factors. Several laws protect employees from discrimination including:

  • The Equal Pay Act of 1963
  • The Civil Rights Act of 1964
  • The Age Discrimination in Employment Act of 1967
  • The Americans with Disabilities Act of 1990

Employers should familiarize themselves with all of these laws to avoid discrimination lawsuits.

Wrongful Termination

There are several legitimate reasons to dismiss an employee; however, failing to document can lead to wrongful termination lawsuits. Hiring methods can also affect this type of lawsuit. For example, businesses operating in employment-at-will jurisdictions don’t have to provide a reason for terminating an employee. However, termination-for-cause jurisdictions must have a justifiable reason. This can create problems for an employer if he or she failed to document an employee’s conduct.

For example, if an employee filed a complaint, and then the employer fired that employee, it looks very bad on paper. However, if the employer documented the employee’s poor performance, investigated the complaint and determined it was unfounded, and then fired the employee due to insufficient job performance, they will have a much better defense.

Implementing comprehensive policies and procedures are the best methods for avoiding employment practices lawsuits. However, relying on rules and guidelines is not enough protection for businesses. EPLI policies provide peace of mind for when best-laid plans fall through. Contact the experts at The Reilly Group to learn how we can help protect your business.

4 Surprising Challenges that Impede Construction Safety

Many construction dangers are obvious, such as large machines. However, several hidden perils cause injuries on a daily basis. Construction companies need to keep their construction workers safe, which often requires them to do more than enforce the minimum safety standards. The following are lesser-known construction safety challenges that construction companies need to address to limit injuries.

Shifting Weather Patterns

Construction workers prepare for expected weather hazards. For example, if there was a recent snowfall, they will likely clear the snow to expose hidden risks and take more care when navigating fall hazards like scaffolding. However, it’s a sudden change in weather that causes the most slips, trips, and falls. When a construction worker starts the workday with nice weather, he or she will take mental notes of surrounding perils. However, if the weather takes a sudden turn, constructions workers don’t always make the mental adjustment required. Their minds may remain in fair weather mode while their surroundings evolve and the hazards take new shapes and forms.

Skewed Opinion of Hazards

Bulky or noisy threats on construction sites rarely cause accidents for the simple fact that they are easy to see and hear. Construction crews are safest when they are aware of perils on the construction site. However, over time, experienced workers become complacent regarding smaller threats. These workers stop thinking about those risks because they are not obvious, which is when they become most susceptible to them.

Limited Time for Proper Safety Training

High turnover rates are common to the construction industry. Jobs are often short-term contracts and workers are always on the alert for future job opportunities. Unfortunately, this results in insufficient time to hold safety training beyond the bare minimum set by OSHA. The challenge here is construction companies have to do more than the minimum to ensure safety. This requires figuring out how to provide OSHA’s standard training as well as human error prevention training in a small window of time. Businesses that make safety training a priority will reap the most benefits in the forms of a safe and secure site and uninjured workers.

Disengaged Construction Crews

Construction workers have lives outside of their jobs. Family commitments such as attending their children’s sports games, weekend family trips, and more can weigh on worker’s minds. When construction crews focus on getting to after-work events on time, they may rush through their work. While the urge to finish the workday early is understandable, it can cause significant injuries on construction sites.

Construction sites are inherently dangerous, but construction companies don’t have to accept injuries as par for the course. The Reilly Company can help your construction business assess its risks and develop a plan for improving worker safety and reducing construction site hazards. Contact us to learn more.

EPLI Coverage as a Proactive Defense Against Pregnancy Discrimination

Finding talented employees is a difficult process. Employers must wade through numerous applications, conduct interviews, and determine which candidate is best for the job. Discrimination laws add an additional layer of complication to the hiring process. Many employers know they cannot refuse to hire someone based on their age, race, sex, sexual orientation, disability, or religion. Even so, several businesses find themselves at the center of discrimination lawsuits due to pregnancy.

Recent Pregnancy Discrimination Court Cases

Peggy Young, a former UPS truck driver, filed a suit against UPS for failing to give her a less demanding shift after her doctor ordered her not to lift heavy objects. As a result, Young had to go on extended leave. During this time, she received no pay and lost her medical coverage. After going to the Supreme Court, Young won her case in 2015.

Another example of a pregnancy discrimination lawsuit from the same year is EEOC v. Brown & Brown Florida, Inc. Nicole Purcell applied for a position at the company, and, after several interviews, secured the job. When she informed the company she was pregnant and inquired about their maternity leave policy, Brown & Brown rescinded their offer of employment. Their explanation was they needed an employee long term. The EEOC filed a federal lawsuit on Purcell’s behalf. The company and Purcell reached an agreement to resolve their conflict, requiring Brown & Brown to pay her $100,000 in damages.

EPLI for Prevention and Protection

Taking preventative measures in the workplace is key to avoiding discrimination lawsuits. Conducting risk management assessments, training employees on legal hiring practices, and investing in Employment Practices Liability Insurance (EPLI) can help lessen the risk of litigation. If a lawsuit does occur, EPLI coverage helps finance legal defense and protects businesses from going bankrupt during the litigation process. To learn more about protecting your business with EPLI, contact The Reilly Company.

3 Ways EPLI Protects Your Business

No employer hires an individual with the intent to provide an unhealthy work environment. However, mistakes happen and those mistakes can lead to lawsuits. Employment Practices Liability Insurance (EPLI) protects a company and its employees in the event of an unfair employment practices lawsuit. These types of claims cover a wide range of offenses such as:

  • Harassment
  • Discrimination
  • Failure to employ or promote

It is not always clear to business owners how they could end up embroiled in such a lawsuit. However, failing to invest in adequate EPLI coverage can bankrupt a business. The following scenarios illuminate how EPLI can help save businesses.

Emotional Distress

Workplaces can be stressful, especially during busy periods. However, if an employee feels his manager is creating stressful situations on purpose, he may file a lawsuit for intentional infliction of emotional distress. EPLI coverage protects the business as well as the accused manager.

Wrongful Termination

While EPLI provides coverage for a variety of situations, this type of suit is becoming much more prevalent. To avoid wrongful termination suits, business owners need to make sure that manager know what is grounds for legal termination and what is not. For example, managers cannot terminate employees because of their age, race, gender, or any other attribute not related to job performance.

Denying Employment

There are very few industries where characteristics such as gender or race affect job performance. As such, recruiters should not rely on these aspects during the employment process. If a prospective employee believes the interviewer did not hire her because of her gender, she may file a lawsuit for failure to employ. Just as managers cannot fire an employee due to their gender, employers cannot refuse to hire an individual for the same reason.

Implementing appropriate hiring and workplace practices can help reduce the likelihood of EPLI lawsuits. For example, employers can prominently display company policies around the workplace. A thorough and well-written company handbook can help as well. However, no business is impervious to litigation. Contact The Reilly Company Group to learn more about protecting your business with Employment Practices Liability Insurance.

General Liability Insurance vs BOP

Every business owner understands the importance of obtaining insurance to protect themselves and their company. However, which type of policy they need is not always clear. For liability coverage, businesses have two options available to them: General Liability Insurance or the more expansive Business Owner’s Policy (BOP). Each type of insurance has its own benefits. Which one suits a business owner’s needs depends on the type of financial protection they require.

What is General Liability Insurance?

This type of insurance offers comprehensive coverage for several common issues business owners may face such as:

  • Slander, libel, etc.
  • Property damage
  • Bodily injuries

No matter how carefully a business owner operates his or her business, they are likely to face one or more of these types of claims. General liability insurance helps business owners pay for lawyer expenses, court costs, and settlements.

What is a BOP?

A BOP is a more robust version of a General Liability Insurance policy. It combines several types of policies into one bundle at a reduced cost. BOPs provide:

  • General Liability Insurance
  • Property Insurance
  • Business Interruption Insurance

This means in addition to general liability coverage, a BOP provides compensation for property damaged by fire, wind, or theft. Should unforeseen events force a business owner to stop business operation for a short period of time, this policy compensates for lost income as well.

However, not everyone qualifies for a BOP. To be eligible, the individual must own a small business, work in a low-risk industry, and require a year or less of Business Interruption Insurance. To learn more about these policies and which would work best for your business, contact The Reilly Group. We can also help your business identify risks as well as implement solutions to mitigate them.

Does Your Construction Business Have Adequate Insurance?

The large number and wide array of employees and contractors involved in the operation of a construction business creates extensive risk exposure. With the right coverage, construction companies can significantly reduce the financial risks associated with construction sites and the people who work in them and live around them. These risks include:

  • Damage to company property or equipment
  • Injuries or property damage caused to others not affiliated with the company
  • Income loss due to business interruptions such as fires or severe weather
  • Employee injuries that occur on the job

What are the critical components of construction insurance?

Construction insurance usually consists of multiple policies working in concert to protect a business. Failing to invest in the appropriate policies can make the difference between a profitable project and a losing investment. Further, insufficient coverage can bring about situations that damage both reputation and credibility. Some of the most common construction coverages include:

  • General liability insurance. This provides coverage if a company injures an individual or damages another person’s property.
  • Professional liability insurance. Sometimes called errors and omissions insurance, this provides coverage for if a client files a claim related to consultation services, advice, and so on provided by a construction company.
  • Loss of income insurance. This coverage accounts for loss of income due to business interruptions.
  • Workers compensation. Laws often dictate that construction companies invest in this type of insurance. It provides coverage in the event that an employee is injured on the job.
  • Builders risk insurance. This functions like construction liability insurance. This type of insurance encompasses any on-site damage. Some policies include tools and materials as well.
  • Commercial vehicle insurance. If a construction company uses trucks or vans for business purposes, they need this type of insurance. It provides coverage in the event of personal injury or property damage caused by company vehicles.

Investing in the right type of insurance is vital to maintaining a successful construction company. However, navigating which policies your company needs and how much coverage to invest in can be difficult. The Reilly Company Group can help you determine which policies are best for your business. To learn more about utilizing construction insurance to reduce risk, contact us today.

What Subcontractors Need to Know About Builder’s Risk vs General Liability

General contractors often hire subcontractors to help them with work they cannot do but are ultimately responsible for completing. For example, a general contractor may hire a subcontractor to do the wiring and electrical or the plumbing for a home. Subcontractors need to know when certain events require them to use their own general liability insurance to cover claims versus when they can rely on their general contractor’s builder’s risk policy.

Why is this important? Knowing which damages fall under the scope of which policy can help subcontractors avoid making unnecessary claims against their own policy. If subcontractors make claims too often, they can see an increase in their insurance premiums.

Which Policy Covers What Damages?

General contractors purchase builder’s risk insurance to protect the structure, materials, and equipment they use to build. Policies vary, but they often cover damage related to:

  • Certain weather events
  • Fires
  • Vandalism

Most builder’s risk policies provide coverages for damages related to outside events rather than issues related to the construction work itself. However, some policies are all-risk. This means the policy covers a wide variety of damages except those clearly omitted—this means the policy can cover damage caused by subcontractors.

General contractors require their subcontractors to have general liability insurance as well. This acts as a safety net for general contractors because they are responsible for their subcontractor’s work. General liability policies provide coverage for:

  • Property damage
  • Injuries
  • Slander, libel, etc.

General liability policies kick in when the claim occurred in a covered location such as the worksite and the subcontractor is obligated by law to cover the damages. This policy can also provide coverage for legal fees as well in the event that the claim goes to court.

The ambiguity derives from the fact that both policies can technically cover damages caused by the subcontractor. The Reilly Company can help subcontractors untangle the subtle nuances between these types of policies. Contact us today to learn more about builder’s risk and general liability policies.

Do Construction Companies Need Environmental Insurance?

Most construction companies know they need several types of insurance to protect their business, projects, workers, and more. There tends to be a heavy focus on general liability and workers’ compensation. However, there is a lesser-known risk that construction companies must consider: environmental damage.

Failing to address this issue can land businesses in court over damages their company inflicted on the environment. The Environmental Protection Agency (EPA) considers construction as a major source of pollution and subsequent damage. As a result, they view engineers, general contractors, subcontractors, and even architects as suspect in regards to pollution damage.

Things to Consider

Construction companies should not take concerns about litigation lightly. The potential for a lawsuit is all too real and can bankrupt smaller businesses. Other reasons to consider environmental insurance include:

  • Most liability policies (general and professional) do not provide coverage for claims related to pollution.
  • Even the most environmentally conscious construction crew can have a chemical spill or puncture an underground pipeline. Accidents happen and companies need to protect themselves from inadvertent releases of hazardous materials.
  • Improper disposal of hazardous materials can result in public exposure and illness.
  • Drainage issues at construction sites can contaminate local water due to runoff.

Having environmental insurance can protect construction companies in the event of a lawsuit. Most policies provide several coverage options that business owners can choose from to best suit their risk level. The construction industry is litigious; construction business owners need to protect their investment by reducing their risk. To learn more about environmental insurance, contact The Reilly Company.

Risk Management Strategies to Improve Operations and Control Costs

groupRisk exposure comes in many forms. The process of managing this risk begins with understanding which risks are most likely to jeopardize your business. Once the primary risks have been identified, it’s time to develop practices to combat them. Though it’s impossible to eliminate all potential risks, creating a risk management plan will help to make them much less likely and less punishing for your organization.

  1. Evaluate Your Risk – It’s never too early to evaluate potential risks. As you create your business plan for your new company you can assess, evaluate, and plan for risks in all aspects of your organization: production, marketing, human resources, and real estate.
  2. Acquire Liability Coverages – After you have completed your risk evaluation, you should determine the types of business insurance coverage you need to protect your company, including liability insurance.
  3. Develop Your Plan – Purchasing liability insurance isn’t the only aspect of managing risk. You should also create a risk management plan that lists each potential risk and outlines how your company intends to handle each risk.
  4. Implement the Plan – Part of your risk management plan should include training your employees about company risk management policies. This way if a risk should develop, employees can take steps right away to help mitigate the risk.
  5. Execute, Measure, Refine – Your company’s risk management plan, insurance coverage and employee training should be routinely evaluated and updated to make sure it is relevant to the company’s current needs and potential risks.

If your company doesn’t have a current risk management plan, or you believe your liability coverages may merit review, contact the experts at The Reilly Company.