Contractors: Get your subcontractor insurance house in order!

subcontractorIt’s a tough landscape for the building trades in Connecticut. Jobs are out there, but bidding is competitive and margins are tight.

We’re nearly 10 years past its beginning, but we’re still not fully recovered from the Great Recession that wiped out trillions of dollars in real estate equity.

Given that reality, it doesn’t surprise me when a construction firm — super eager to get started on a newly won job — starts bringing subcontractors into the tent without worrying about “little things” like insurance.

The work needs to get done now, so paperwork can wait, right?

If you don’t mind owning all the risk for the mistakes of your subcontractors, sure, but that’s not a healthy way to do business and it’s a dangerous approach that all but guarantees you won’t be in business very long.

At Sinclair Risk & Financial Management, we teach our clients about an important concept called “risk transfer.” Like a game of hot potato, you want to hold as little risk as possible when you’re working with others, and you want to make sure your subcontractors are operating in a way that minimizes their own risks…after all, you are relying on them to help you complete an important job. You need them to be stable and healthy.

Two important concepts here are “contractual risk transfer” and making sure your subcontractors have adequate worker’s compensation insurance.

Whenever you plan to bring a subcontractor on board, it’s an industry best practice to have a contract in place that clearly spells out the terms of the arrangement. You should also verify that the subcontractor has proper amounts of liability, auto, and worker’s compensation insurance. As part of your agreement with the subcontractor, you should be named as an “additional insured” on their policy, which means that their coverage will extend to you should something go wrong. This transfers risk to their carrier and prevents you from having to tap into your insurance (and run the risk of premium increases) for a situation where you were not at fault.

Some people think getting a “certificate of insurance” is proof of coverage, but it’s not, it’s just informational about the kind of policies your subcontractor has…unless very specific language is included on it. The certificate must accurately name you as an additional insured and include language to the effect that the coverage is binding as per the contractual agreement between you and the subcontractor. The agreement you put in place with your subcontractors needs to specify the amount and type of insurance they must carry, and that you are to be named as an additional insured for a particular period of time.

Some smaller contractors will carry liability and auto insurance but not worker’s compensation insurance, especially if they are a very small firm. This is a mistake, and opens you up to tremendous liability if they get hurt on your job. You don’t want your worker’s compensation policy paying out claims to individuals who don’t work for you.

So what kind of worker’s compensation do they need, and how much? Like contractual risk transfer, these are complicated questions with multiple factors at play. At Sinclair Risk, we specialize in helping construction firms manage their risk in a smart, efficient way, saving lots of dollars on the bottom line.

Besides helping you navigate contractual risk transfer, Sinclair’s Risk Safeguard Advantage program includes accident investigation programs, claims management, OSHA compliance, DOT compliance, return-to-work programs, safety seminars, supervisor safety training, pre/post injury management, workplace wellness, worker’s compensation cost containment, and much more.

We can even help you attract and retain top talent. (Check out my recent white paper about construction industry best practices for getting and keeping awesome employees.)

Drop me a line to learn more.

Jonathan Belek
Risk Management Consultant

Jon Belek

8 Steps to Vet Construction Subcontractors

subcontractorAs a general contractor, it’s likely that you’ll use subcontractors at some point. Subcontractors can be an efficient way to outsource work. As specialists, they’ll often do a better job than a generalist and their smaller size means they can work quicker and leaner.

However, the construction job is your responsibility. The performance of the subcontractor will reflect on you. To complete the job properly and satisfy your customer, you need to make sure your subcontractors will produce quality work in a timely manner.

Before you officially hire any subcontractors, protect your business and your customer by taking these steps to vet the subcontractor.

1. Examine their past and current performance

Request information from the potential customer about their licenses, accreditations, history, and references. Look for any public data on lawsuits, disputes, complaints, or bankruptcies. Ask for the contact information of previous contractors they worked for. Then, search for references independently (without the subcontractor’s involvement) to get some unbiased and unfiltered information.

2. Look at their queue of work

It’s smart to make sure potential subcontractors can actually complete the work you need, so you’ll want to examine their log of previous, current, and future work. If the subcontractor seems too busy for their size, your job might overextend them.

3. Ask about their safety practices

Unsafe operations can leave you exposed to liability and force an inspector to close the job site, so make sure any subcontractors have clean or reasonable safety histories. They should also have ample safety protocols in place and a crew who is coached to prioritize safety.

4. Investigate the subcontractor’s employees

Ask the subcontractor about their team. Are they temporary workers, or do they work full time? Have they worked in construction before, or are they new? Does the subcontractor have the proper number of licensed professionals for the site? Do the workers have the right tools and reasonable workloads? Do any have serious felonies or drug problems that might make them unreliable? Answers to these questions will determine whether the subcontractor is right for your job.

5. Validate bonding and insurance

In most states, contractors are required to have bonding. In all states, they must be insured, including worker’s compensation insurance. If the subcontractor doesn’t have these protections in place, you could be held liable if there’s a problem. If the subcontractor doesn’t have these, reject them as candidates.

6. Investigate the subcontractor’s financial health

If your job is large, you’ll want to make sure the subcontractor’s financials are healthy enough to commit. You don’t want their employees to walk off the site one day due to lack of payment, or an inability to purchase materials. Request their annual contractor volume, two years of financial statements, and their total sales and net worth (you might have to sign a confidentiality agreement). Look for signs of poor health, like poor cash flow, a mountain of debt, or declining income.

7. Ask about their quality control process

In order to avoid rework and warranty work, you want your subcontractors to certify the quality of their materials and finished work. Every professional business should have a procedure in place to guarantee quality assurance. This procedure is rarely complex, but a successful business will have an answer to your questions.

8. Demand a written contract

It is shocking how many people work without a written agreement. As a contractor who is purchasing labor, you need to protect your investment. Every deal should be bound by a contract that clearly describes your expectations, including the scope of work, timeframe, and payment arrangements. Describe what you will provide and what the subcontractor will provide in terms of materials, warranties, and cleanup.

Hiring a subcontractor is like hiring an employee: You want someone who will represent your business well without adding drama, stress, or financial burden. If you follow the steps listed above, you’ll find the right candidate and build a lasting relationship.

Jonathan Belek
Risk Management Consultant

Jon Belek

Construction P&C Pro-File Newsletter – February 2017

New OSHA Beryllium Standards

On Jan. 9, 2017, the Occupational Safety and Health Administration (OSHA) issued a final rule to amend its beryllium standards for the construction, shipyard and general industries.

The final rule will reduce the eight-hour, permissible beryllium exposure limit from 2.0 micrograms per cubic meter to 0.2 micrograms per cubic meter. It also establishes a short-term exposure limit of 2.0 micrograms per cubic meter over a 15-minute sampling period.

The rule will require additional protections that include personal protective equipment, medical exams, medical surveillance, and training.

The final rule becomes effective on March 21, 2017. Affected employers must provide newly required showers and changing rooms within two years after the effective date and implement new engineering controls within three years after the effective date.

OSHA estimates that the new rule will prevent 46 new cases of beryllium-related disease and save the lives of 94 workers annually.

Employers should become familiar with the new standards and evaluate their current workplace practices to ensure compliance with the final rule.

DOL Sues Contractor for Firing Safety Manager

According to a lawsuit filed on Dec. 28, 2016, a Tampa roofing contractor discriminated against its safety manager after he cooperated with an OSHA investigation. The Department of Labor (DOL) lawsuit was a result of an investigation by OSHA’s Whistleblower Protection Program.

Under the program, employers are prohibited from retaliating against employees who raise protected concerns or provide protected information to the employer or government. The lawsuit seeks back wages, interest, and injunctive relief as well as compensatory and punitive damages.

Construction Workers at Highest Risk for WMSDs

According to a recent Occupational and Environmental Medicine report, U.S. construction workers are at a higher risk of work-related musculoskeletal disorders (WMSDs) than all other industries combined. The back is the primary body part affected, with overexertion named as the major cause of WMSDs.

Employers should adopt ergonomic solutions at construction sites, such as training employees on safe lifting practices, in order to reduce the number of WMSDs and prevent lost wages.

Jonathan Belek
Risk Management Consultant

Jon Belek

Contractors – Hiring summer help? Follow these safety tips

Jonathan-BelekChances are you remember your first summer job. Maybe you delivered newspapers or hauled bales of hay on the farm. Looking back, the experience and skills you gained on the job was invaluable. And the money you earned helped pay for college or to buy a new stereo.

Each year, about 6 million young people swell America’s workforce by taking summer jobs. It seems like a win-win situation for everyone involved. But hiring young workers can be risky for your company if they aren’t properly trained.

It’s a proven fact that new employees are more likely to be injured on the job than seasoned workers.  The statistics rise dramatically for younger workers. According the Occupational Safety and Health Administration, 335 young workers died in job-related injuries in 2013.Construction Worker

If you are hiring young workers this summer follow these safety tips from OSHA to reduce work-related injuries.

  • Communicate with your young employees. Giving them clear instructions for every task they are responsible for will cut potential injuries. Encourage them to ask questions. When new employees, especially teenagers, understand why they’re being asked to do something, they’re more apt to comply.
  • Make sure equipment operated by young workers is safe and legal to run. Let them know what equipment they are not allowed to use. Young workers should never work alone.
  • Train young workers to recognize job hazards and to know what to do if they get hurt on the job. They also should know how to report an injury, or spot a hazard.
  • Provide young workers with personal protective equipment required for your industry such as steel-toed shoes and hard hats.

For more information on hiring young workers visit OSHA’s teen worker website by clicking here or give me a call – that’s what I’m here for!  203-265-0996

Make it a safe and happy summer for your company and for your young workers.

At Sinclair Risk & Financial Management, managing risk is in our DNA.

Jonathan Belek

Construction Risk Management Consultant

Fairfield CT Contractor Insurance: Common Winter Safety Hazards

Fairfield CT Contractor Insurance: Common Winter Safety Hazards Fairfield CT Contractor Insurance Common Winter Safety Hazards

As Fairfield contractors know, construction doesn’t stop when the weather begins to chill, but working on a Connecticut job site in the dead of winter comes with many hazards and challenges. It’s important at this time of year for contractors to begin preparing for all the winter weather nature has in store.  Construction site hazards can be created by a number of conditions and weather events. Cold temperatures, snow, ice, rain, and frigid winds can take a drastic toll on both workers and construction sites, which can cause work delays and costly repercussions.

Here are a few common hazards Fairfield contractors might face when encountering winter weather:

  • Snow, rain and ice build-ups can create slippery surfaces, cause erosion and even structural damage.
  • Slips and falls are some of the most common construction site accidents year-round, however the odds of such injuries increase exponentially. The Occupational Health and Safety Department recommends that site managers and workers inspect walkways, work platforms, scaffolds, stairs and ladders throughout the day to check for changes in environmental conditions, such as thawing or increased build-up.
  •  Icicles are another safety hazard which should be removed or roped off to avoid injury resulting from falling ice.
  • Site visibility is huge concern, and experts warn contractors not to pile snow too high or in areas which might obstruct the view of working areas.
  • Heaters can be a valuable asset, but can also create a safety hazard as well. Heaters should be situation in well ventilated areas and away from combustible or flammable materials.
  • Working long hours in extreme cold with low visibility creates prime conditions for cold injuries, ailments and accidents.
  • Over exposure to winter weather can take a greater toll on a worker’s body, as such it is important ensure that workers are wearing proper attires and for safety and warmth. Water repellent clothes, waterproof boots, insulated coveralls, gloves and headwear can all help keep workers warm on the job.
  • Bulky clothing can hinder workers’ job performance, limit mobility and the risk of becoming caught on or in machinery. The trick it so ensure that their layers and strive for warmth does not become a safety hazard.

As a Fairfield contractor your livelihood and reputation are at risk when working in less than ideal weather conditions. At Sinclair Risk and Financial Management we understand the vast array of risks Connecticut contractors encounter on a regular basis. We specialize in crafting comprehensive risk management solution to protect you, your workers and your assets.  Our specialists will help you find the perfect Fairfield CT contractor insurance coverage to meet your needs. From Workers Comp to Professional Liability, our Fairfield CT contractor insurance solutions will ensure that your operation is protected from any claim. Give us a call today at (877) 602-2305 for more information about any of our offerings.

Common Middlesex County Surety Bonds Used in Construction

Common Middlesex County Surety Bonds Used in Construction Common Middlesex County Surety Bonds Used in Construction

As we discussed in our previous post, surety bonds function very differently than insurance policies. They also play a very unique role in the construction industry. Middlesex County contractors and subcontractors will regularly encounter surety bonds throughout the course of their career and as such should be familiar with a few common types of bonds and how to obtain them.


Bid bond are obtained by a contractor or subcontractor when placing a bid on a project to guarantee that they have the financial resources to undertake the project at the set bid price. These bonds are the offer financial assurance to the project owner that a bidding contractor is serious and well prepared to undertake the project at hand. Once obtained bid bonds guarantee to the project owner that the principal will honor its bid and will sign all contract documents if awarded the contract. Should the principal refuses to honor the bid, the project owner is entitled to financial compensation for the difference between the winning bid and the next lowest amount, as well as any other costs incurred due to the contractor’s default.


Once a bid has been accepted and a project has been awarded to a contractor, the contractor will then have to obtain a performance bond. These bonds act as financial guarantees that a project will be completed according to the contractual specifications, especially completion time and price. Just like with a bid bond, if the contractor defaults or is terminated for default by the project owner, the owner may call upon the surety entity to ensure completion of the contract. This means that the surety company will either have to completing the contract itself by taking up the contract, select a new contractor to contract directly with the owner, or allow the owner to complete the work and compensate the costs incurred.


Payment bonds guarantee that subcontractors and suppliers will be paid what they are due. These bonds are slightly more complex because there are now multiple parties involved, however the agreement is still between the contractor and the project owner. Subcontractors and suppliers are listed as “beneficiaries” of the bond which also gives them the ability to sue the bond should a contractor fail to properly compensate them. The project owner benefits indirectly from a payment bond because the subcontractors and suppliers are assured of payment and will continue work on the project.

There are many more types of Middlesex County surety bonds available to contractors, including financial guarantee bonds, license & permit bonds, and various miscellaneous state and municipal bonds. At Sinclair Risk and Financial Management we offer a complete array of surety services to businesses through Connecticut. As part of our holistic risk management approach, we specialize in providing complete business insurance and strategic solutions. Our Middlesex County Surety Bonds specialists can help you secure the financial qualifications you need to stay competitive. Give us a call today at (877) 602-2305 to learn more about all of our unique business solutions today.

Middlesex County Contractors Insurance: Painting in Hot Weather

Middlesex County Contractors Insurance: Painting in Hot Weather
Middlesex County Contractors Insurance Painting in Unideal Weather

Working in the hot days of summer is no easy task for Middlesex County contractors and can turn many standard jobs into huge challenges. Not only can hot weather create health and safety concerns, sometimes it can actually compromise the outcome of your work as well. Painting for example is a temperature sensitive process where the integrity of the paints can vary base of thermal factors.

Temperature directly affects the quality, consistency and functionality of the paint and can create many hurdles during the application process. Cold temperature will affect the time it takes for the paint to dry, often causing cracking and uneven distribution as the paint can start to clump due to thickening. High temperatures can actually cause the paint to thin and bubble when applied to walls or other structures. When the layer of paint dries too rapidly do to the high temperatures, the chemicals in the paint do not have enough time to vaporize and thus become trapped between the film and the surface. Sometimes these bubbles are microscopic while other times they are large enough to view upon close examination. This process is called thermal blistering and it occurs when painting in high heat conditions, typically when the temperature is over 80 degree Fahrenheit. Humidity and moisture will also affect the smoothness and evenness of a coat of paint for the same reasons.

Not all paints are created equally. Manufacturers typically formulate paint for specific uses, locations and temperature ranges. Choosing the right paint for a project and using proper application techniques is essential to the achieving the a favorable outcome. Some manufactures make paint specifically designed for high and low temperature use, especially in areas were those weather patterns are more common. These products are crafted for the best performance under unideal temperature conditions.

When painting in hot weather there are a few ways to help achieve a more uniform paint coat. Working in shaded areas and adjusting as the sun shifts through the day will help minimize the direct sun exposure the paint receives allowing more time for the paint to dry naturally. Many professional and paint manufactures advise using a paint sprayer to achieve a more uniform coat and avoid highly concentrated areas. There are also hot weather paint thinners available on the market which can be utilized as well.

As a Middlesex County contractor your livelihood and reputation are at risk when working in less than ideal weather conditions. Weather will not only impact the outcome of your efforts but can pose health and safety risks to your workers as well.

At Sinclair Risk and Financial Management we understand the vast array of risks Connecticut contractors encounter on a regular basis and can provide comprehensive Construction Insurance solution. From Workers Comp to Professional Liability, our Middlesex County Contractors Insurance solutions will ensure that your operation is protected from any claim. Give us a call today at (877) 602-2305 for more information about any of our offerings.