RISK MANAGEMENT CONCEPTS FOR BUILDERS RISK PROJECTS

Adam Sellars, Inland Marine Risk Control Specialist - Travelers Insurance

What is Builders Risk

• Insurance coverage for buildings, infrastructure, renewable energy, etc. which are under construction

• Covers temporary and permanent works• Broad additional named insured• May include soft costs, loss of rent, and can be customized to match

your needs• Typically coverage ends once project is complete or when converted

to permanent property coverage• Coverage can be secured by owner/contractor

Sources of Damage for Builders Risk

• Water damage• Vandalism• Theft• Fire• Collapse of structure/equipment• Severe weather• Soft Costs from delays

Water Damage – Potential Risks

• Water leaking from piping • Poor installation techniques• Frozen pipes• Penetration• Defective components• During testing

• Wind driven rain entering building• Flood• Water from sprinkler head or

firefighting efforts• Clogged/inadequate roof drains

Water Damage - Solutions

• Develop water damage prevention plan• Isolate water sources• Identify and post locations of control valves• Curbs and sleeves around vertical penetrations • Monitor water flow electronically• Monitor for water leaking in select areas• End of day inspection• Provide emergency response resources should a leak occur

Water Damage – Vertical Penetrations

Water Damage – Coupling Failure

• High Rise Condo• Job was running behind schedule• Occurred in mechanical penthouse• Project 90% complete• Water flowed for 5 hours• All floors had some damage• $1 million+ loss

Water Damage – Frozen Pipe

• Commercial Building• Freezing temperatures in uninsulated area• Lack of temporary/permanent heat• Responding personnel couldn’t locate shut

off valves• Water flowed for 8 hours• Six inches of water on first floor• Multi-million dollar claim

Water Damage – Booster Pump Failure

• High Rise Condo• Failure occurred during testing• Limited staff during test• Project 80% complete• A temporary water line, tied into the

booster, was not capped• When pump couldn’t maintain pressure,

test was called off• Water flowed for six minutes from open

line – down electrical buss to basement• $1 million+ claim

Water Damage – Flow Sensors

• If water is to remain charged after work hours, consider water flow sensors

Water Damage – Flow Sensors

Water Damage – Sprinkler Tool

Fire – Potential Risks

• Hot work• Smoking• Temporary heating equipment• Flammable liquids/gases• Gas powered

equipment/refueling• Arson/Intrusion• Cooking• Housekeeping

Fire - Solutions

• Develop and communicate fire prevention/response plan• Identify activities requiring hot work• Enforce hot work permits• Enforce a no-smoking policy from the start• Security measures• Charge and monitor sprinklers early, if possible• Provide fire extinguishers• UL Listed self closing fuel cans/containers• Keep waste containers and fuel storage well away from building

Fire – Hot Work Permit

Fire - Temporary Heating Equipment

• Indirect vs. Direct• Jobsite expectations/limitations for this equipment• For direct fired heaters inside buildings:

• Placement/clearance• UL listed/CSA, ETL• High temperature shut off • Mechanically secured to prevent movement• Tip over switch with auto shut off• Electronic flame sensor/pilot safety valve• Refueled outside building after cool down• Shut off at night or monitored

Theft/Vandalism – Potential Risks

• Material staging in and out of building• Theft during working hours and at night• Vandalism• Theft of copper piping and other theft sensitive

materials• Jobsite equipment being used to gain access to

connexes/buildings

Theft/Vandalism - Solutions

• Secure building during non-working hours• Provide durable locks for

connexes/buildings/gates• Security guard

• Post orders• Electronic surveillance

• Centrally monitored/UL Listed• Site lighting• Fencing/gates• Inventory management/just in time delivery

Theft/Vandalism – Electronic Surveillance

Your Role

• Develop a plan• Communicate expectations• Verify utilization• Enforcement• Evaluate effectiveness of plan

Questions

Thank you!

Adam SellarsInland Marine Risk Control Specialist Travelers Insuranceasellars@travelers.com