How to create a loss control program for your contracting business
Protecting your contracting business takes more than just a great insurance policy. After protecting your business with insurance, it may be a good time to think more about your loss control program.
What is a loss control program?
A loss control program can help business owners manage their risk in two ways:
Reducing the possibility of a loss
Reducing the severity of a loss, should one occur
By mitigating risks, business owners decrease the likelihood of having to file a claim, and in the long run, this can have a positive impact on their claims history as well as their premium.
What are some risks contracting businesses face?
No one expects the worst to happen, but insurers see thousands of claims every year for a variety of issues. When putting together a loss control program, you may want to consider risks and exposures that could occur unexpectedly, including:
Liability
Subcontractors, vendors, and site visitors are a liability. If work isn’t done properly by a subcontractor, and a loss occurs, you may be held liable if they do not have insurance, or have insufficient insurance. When hiring a subcontractor or vendor, due diligence could save your bottom line and deliverables.
Site visitors such as purchasers, suppliers, and home purchasers can get hurt on a construction site, especially if they are unfamiliar with the site and don’t have proper safety gear on. It should be communicated to those visiting the site that they’ll be entering a restricted-access area, and they should check in with the site supervisor.
Cyber risks and use of technology
Construction sites are vulnerable to cybercrime, just like any other business. Workers with access to corporate networks and applications from remote job sites can be particularly vulnerable, as they may end up using their own devices over unsecure networks. Unfortunately, this makes it easier for a cybercrime to occur.
Contracting businesses can manage user privileges and restrict network access to employees and third parties to help manage cyber risks.
If your contracting business has a partner, and you’re sharing data, it is important that they have a secure network, as you don’t want to expose your business to that security risk. Ensure sensitive information is encrypted when transferring or storing it online.
Theft
Construction sites are vulnerable to theft, and year after year, tens of millions of dollars’ worth of heavy equipment and tools are stolen from sites. Not only are heavy equipment and tools easy to steal, they are easy to sell, often being shipped out of the province or country within hours. On top of that, raw materials are also targeted for theft.
Here are a few ways to prevent equipment theft:
Store tools in a secure location or off-site after use.
Use on-site lock boxes or secure tools in an enclosed building with alarms.
Use etching or marking technology to deter theft and discourage re-sale.
Theft of stolen equipment, tools, and materials can have multiple consequences for a contracting business, including:
The cost of replacing these items can impact your bottom line and delay project completion.
If a project is delayed, this can trigger late penalties, which can also impact your bottom line.
If stolen equipment causes damage to property of a person, your business could be held liable, which could also be costly.
Creating a loss control program for contracting businesses
Considering the risks mentioned above, business owners and their employees should work together to come up with a loss control program that promotes a culture of safety. When building an effective loss control program, here are some things to consider:
Enhancing security measures (fencing, alarms, motion sensors)
Equipment theft prevention measures
Training and having materials available on safety, policies, and guidelines
Following inspection guidelines for all equipment, machines, and tools
Reporting unsafe conditions, situations, and accidents to management
Using personal protective equipment where required
There are many moving parts on a construction site or worksite – and on top of that, there can be a lot of people involved, including contractors, subcontractors, and tradespeople. Being aware of the risks your business could face, as well as having a loss control program, can help protect people as well as your business. Learn more about contractors insurance today.
This blog is provided for information only and is not a substitute for professional advice. We make no representations or warranties regarding the accuracy or completeness of the information and will not be responsible for any loss arising out of reliance on the information. Terms, conditions and exclusions apply to coverage. See policy for details.
