By Ken Kukral
In the world of insuring contractors there are some unique exposures. Tunneling contractors have some unique exposures and insuring them takes a different approach. Some things to consider:
– Most insurance carriers do not understand the exposure and will shy away from these types of accounts.
– Some of the carriers will look to write coverage on a claims-made basis due to the difficulty in writing this type of contractor. Occurrence coverage is available
– Defense outside limits is also available since many carriers will look to do defense inside limits due to the severity type of losses that could occu
-You will want to make sure there are no exclusions for X (explosion) C (Collapse) or U (Underground)
– My times the project owner will want to be named as additional insured along with the project engineer.
-Since the completed operations exposure is of an “extended” nature there may be a request for a 3 or 5 year extended completed operations following the end of the project or end of policy term. This is available but must be negotiated with the carrier.
-Many of the projects being bid out are large so you may need to insured a joint venture or combined program with more than one contracting firm.
– Many times these contractors have a unique builder’s risk exposure. Coverage is available from specialized markets.
Contractor’s professional may also be requested and will need to be explored to cover the internal specialized personnel for the tunneling contractor who may have an engineer on staff.
-Many times pollution coverage will also be requested. The contractor’s pollution should be available on an occurrence basis.
– Most larger projects will require a minimum of $10,000,000 in limits and potentially $25,000,000
-The tunneling or boring equipment is very specialized, very expensive and could take a significant period of time to replace. It will be important to properly cover this equipment with a knowledgeable inland marine market that can cover the business income (including extra expense) exposure. Many of the contracts for tunneling projects have completion date requirements and having the proper coverage can help dealing with this risk.
-There is no real application available for writing tunneling contractors. You will need to find out as much information on the project, get bid specs and make sure you go over these with the carrier. You will need to build an “experience resume” for the contracting firm to help convince the carrier that they have the needed skills and ability to successfully complete the particular project.
– If it is a larger project, you may have multiple contractors bidding on the project using a limited pool of carriers. Find out what the market selection process is so you have the best opportunity to successfully put together coverage for your contractor.
– Finally deal with a broker who has experience in writing these type of projects/tunneling contractors to maximize your chance of putting together a comprehensive insurance program.
While tunneling contractors might be challenging types of accounts to write it will be worth the effort if you work through the details and make sure not items are missed that might cause them to lose the bid. With the number of sewer projects being bid out to meet with the coming EPA requirements there is plenty of opportunity in writing tunneling and boring contractors.