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Understanding Construction Contracts - December 2017

Construction contracts can contain terms that impact your company’s bottom line. Reviewing them carefully prior to signing is indispensable, and can save your company time and money. This contract review guide is meant to be a starting point for reviewing contracts in general. It highlights some common contract terms and their potential impact. You can begin to understand which terms are most often negotiated in contracts generally. Then, with the help of licensed inside or outside counsel, analyze the commercial risks associated with construction contracts in depth and understand terms and conditions to protect your company’s assets.

Scope of the Agreement

Examine the definition of services to be provided to ensure the language is clear enough for an unrelated third party to understand the scope. The contract should include a time frame for completion of services. The rights and obligations of both parties should be clearly outlined. Any mechanism for changing the scope of the contract, as well as any of the terms, if allowed, should also be outlined within the contract.

Terms of Payment

Terms of payment should be clearly listed within the contract so that the expectations of both parties are clear. The contract should specify the agreed payment schedule for goods received.


There are two types of warranties: express and implied. Both types are assurances regarding particular issues, such as performance.

Express warranties are those that are defined specifically in the contract. Implied warranties are based in statutory and/or common law, depending upon your jurisdiction. They are two-fold: a warranty of merchantability, which requires that goods/services must reasonably conform to an ordinary buyer’s standards, and a warranty of fitness for a particular purpose, which states that if a seller knows the intended purpose for the product or service, the act of selling the product to that customer implies that it is fit for that purpose.

Be aware of warranty disclaimers and understand how the disclaimer limits your statutory rights. If it disclaims all warranties, express and implied, then you will likely be limited to the remedies in the contract for issues related to things like performance. You should also examine any disclaimer in the context of the contract. While it may require you to disclaim your statutory rights, other contract language may give you adequate rights and remedies regarding the points about which you are most concerned.

Damages, Limits of Liability and Indemnification

These three items are often in close proximity to one another in a contract, as they are interrelated. Damages may be defined as certain types of losses that could create liability under the contract. A limit on liability would restrict the amount of damages that a party would be required to pay if found liable for such damages. Sometimes this may also include a limit for indemnification.

Indemnification provisions allocate risk and cost between the parties. It is important to examine whether the party assuming the risk is the party with the most control over that risk. For instance, when a company’s employees are required to work at a customer’s location, the company is often asked to release the customer from all liability relating to the employees presence at the customer’s location.

In some cases, indemnification is limited to negligence or to a specific dollar amount, under a heading of “limits of liability.”


Some contracts will contain minimum bodily injury and property damage liability coverage amounts that the party must possess and also may require that the customer is added as an additional insured on those coverages.

Prior to consenting to any contract, it is prudent to examine insurance coverage against the amount of liability exposure in a particular contract.

Terms and Conditions

It is also vital to examine any terms and conditions contained in the contract:

  • Governing Law & Jurisdiction – Look at the governing law provision to make sure that you are comfortable with the implications of the state law chosen by the drafter. This can impact the interpretation of the contract from warranties to indemnification. Additionally, when specific statutes or regulations are referenced in the body of a contract, it is as though that statute or regulation is wholly contained within the contract itself. It is vital to read and understand that language prior to giving your consent. This happens regularly in government contracting situations.
  • Dispute Resolution – This is another clause with which you must be comfortable with the laws of the state or forum chosen by the drafter. The rules chosen to govern dispute resolution can impact the outcome. Additionally, you should consider whether dispute resolution is right for your situation.
  • Intellectual Property – When you are disclosing and/or licensing your company’s intellectual property, be it trademarks, copyrights or patents, it is important to include a clause that recognizes the owner of such intellectual property and affirmatively states that the agreement does not transfer any rights.
  • Standard of Care – A standard of care clause may appear in certain types of contracts. The standard of care that is provided by the law should provide the minimum standard of care for the provision of services under the contract.
  • Term/Termination – The contract should provide both parties with the right to terminate the contract. The situations in which termination is allowed will vary from contract to contract. Some contracts will allow the right to terminate in cases of dissatisfaction; others will allow it with a specific notice, for no cause. It is important that you contemplate in what cases you would want the right to terminate the contract. There should also be language defining the term of the contract. Does it have a finite term? Does it automatically renew each period?
  • Right to Cure – Related to termination, some contracts will contain a right to cure clause. This would give the defaulting party notice of a breach and a finite period of time in which to remedy such a breach.

Standard Form Contracts

Unlike other industries, construction lacks a consistent set of laws like the Uniform Commercial Code or a federal statutory scheme. Contracts produced by professional and trade associations for architects (American Institute of Architects), engineers (Engineers Joint Contract Documents Committee) and commercial contractors (Associated General Contractors of America) can serve as important references and benchmarks when drafting a new contract. They are a good source of industry best practices, and using them can greatly reduce drafting and review time, meaning lower overall transaction costs for your company.

For all of their advantages, there are several things that you should be cautious about when using standard form contracts. Note the following cautions about standard forms before using them:

  • Standard forms, which are written broadly to encompass many different contexts, require transaction-specific and jurisdiction-specific modifications. For example, certain states require that indemnities be written in a certain way.
  • Changes made to one part of the document, such as definitions of words or terms, may affect other parts that make reference to it.
  • Custom-drafted and industry-drafted forms are often incompatible. Even industry-drafted forms from different publishers can be incompatible.
  • Standard forms always contain the bias of the drafter. Use this bias; know when to use various standard forms published by different industry organizations.

General Understanding

Reviewing general terms and features of construction contracts will help you grasp the consequences of its terms and conditions for your business. In any case, to ensure its completeness and accuracy, it is necessary to submit each contract you must sign to legal review.

Contractors Pollution Liability Insurance - November 2017

Contractors, no matter what industry they work in, face environmental risks stemming from operations on a daily basis. For most contractors, a single pollution incident or loss can seriously damage their reputation, operations and even their balance sheet. Making matters worse, pollution incidents can be sudden or occur gradually over time.

While many contractors assume that environmental claims will be covered under their commercial general liability (CGL) policy, the unfortunate reality is that most CGLs contain pollution exclusions that leave contractors uninsured in the event of a pollution incident.

Thankfully, contractors are increasingly turning to contractors pollution liability (CPL) insurance to ensure they have the right coverage in place to remain secure and profitable.

CPL Coverage Basics

CPL policies provide contractor-based insurance for third-party coverage for bodily injury, property damage, defense, and cleanup as a result of sudden and gradual pollution incidents arising from contracting operations performed by or on behalf of the contractor. CPL insurance is intended to provide coverage to all types of contracting operations, including contractors who are involved in building construction and environmental firms that remediate polluted sites.

CPL policies are offered on either a claims-made or occurrence basis. What’s more, CPL policies are nonstandard, meaning each policy is different and can be modified to cover the various needs of the contractor purchasing the policy. Policies can be offered on a project or blanket program basis.

In some instances, CPL policies can also be used to cover losses from civil fines, penalties and punitive damages.

Covered Pollution Incidents

Contractors should keep in mind that CPL insurance policies differ in regard to the types of pollution incidents that are covered. Two important considerations when evaluating CPL insurance policies are:

  • Whether or not the policy will respond to gradual releases of pollutants, as opposed to sudden and accidental releases
  • The types of substances that are considered “pollutants” under the terms of the policy

Generally, policies that cover both gradual and sudden releases of pollutants provide contractors with a broader scope of coverage. In addition, policies that provide a broad definition of pollutants are considered superior to those that contain a narrow definition. Accordingly, it is important that contractors work with their broker to find a CPL policy that is tailored to their needs.

CGL Pollution Exclusions

A primary reason why contractors obtain a CPL policy is due to the various pollution exclusions contained in most CGL policies. The pollution exclusions found in most CGL policies take one of two forms, either “absolute” or “total.”

CGL policies with an absolute pollution exclusion remove coverage for most pollution events that would occur in the course of an insured's business operations. However, despite its name, an absolute pollution exclusion may preserve coverage for certain incidental pollution damages, products and completed operations liability, and certain off-premises work.

However, more commonly, CGL policies include a more restrictive “total pollution exclusion.” This type of exclusion effectively removes coverage for any event the insurer characterizes as a pollution incident.

Contractual Requirements

Contractual requirements serve as another motivating factor that lead many contractors to obtain a CPL policy. In many instances, project owners and general contractors will require contractors to obtain pollution insurance that meets certain, predetermined standards.

From this perspective, having a CPL insurance policy in place can serve as an upfront sales tool during the bidding process that enables contractors to qualify for opportunities when such coverage is required.

Finding the Right Policy

Regardless of specialty, all contractors should be mindful of the pollution risks associated with their work. A CPL insurance policy can provide much-needed security in the event of a pollution incident, even in the most unlikely of circumstances.

Let CMR Risk & Insurance Services, Inc. work with your organization to find the CPL coverage that is right for you.

Hazards of Operating Unguarded Stonecutters and Splitters - October 2017

When used improperly or without proper training, stonecutting machines can cause amputations and other serious injuries. Workers can suffer eye and face injuries from flying rock fragments; amputations can also occur when shears or stone cutters are not guarded properly and a worker's hands or other body part is placed in the point of operation during operation.

The following measures will prevent or greatly reduce the chance that a worker using a stone cutter or splitter will suffer an amputation or other serious injury:

  • Identify the hazards of powered stone cutters and splitters prior to being used, asking questions such as the following:
  1. Does the equipment have machine guarding at the point of operation?
  2. Can the guarding be easily removed or bypassed?
  3. Does the guarding keep the operator's hands, fingers and body out of the danger area?
  4. Is there evidence that the machine guarding has been tampered with or removed?
  5. Could changes be made on the machine to eliminate the point of operation hazard entirely?
  6. Are the machine manufacturer's recommended safety procedures available to the operator and being followed?
  • Ensure stone cutters are equipped with machine guarding to prevent worker access to the point of operation, as required by 29 CFR 1910.212(a)(3)(ii) and 1926.300(b)(4)(ii). A good system eliminates the possibility of the operator or another worker placing parts of their bodies where they could be injured by hazardous moving parts. Examples of machine guarding methods include two-handed starting devices, barrier guards, remote-operator controls and electronic safety devices.
  • Conduct regular inspections and keep machinery clean and properly maintained. Good inspection, maintenance and repair procedures contribute significantly to the safety of the machine operator. Routinely inspect and maintain machinery according to the manufacturer's recommendations and good engineering practice.
  • Identify other possible machine-related hazards that may pose a risk of injury and necessitate the use of personal protective equipment (PPE), as required by 29 CFR 1910.132(d) and 1926.95(a).
  • Provide workers with PPE that adequately protects them from recognized hazards and ensure that it is used properly, as required by 29 CFR 1910.132(d)(1) and 1926.95(a). For example, provide safety glasses with side shields or face shields for workers exposed to eye hazards, face shields to protect workers' faces from flying rock chips, or gloves to protect workers' hands from cuts and abrasions from handling rock or stone.
  • Train workers on the following topics:
  1. All hazards in the work area, including machine-specific hazards
  2. Machine-operating procedures
  3. The purpose and proper use of machine guarding, including instruction in the safe use and care of the machines
  4. Procedures for addressing unsafe conditions, such as immediately reporting problems with machine guards
  5. Safe use of PPE, as required by 29 CFR 1910.132(f)
  • Provide adequate supervision and reinforce safe practices by ensuring the following:
  1. Only trained workers operate machinery
  2. Machine operators do not wear loose-fitting clothing, jewelry or other items that could become entangled in the machinery
  3. All other workers are prohibited from being near the machine during cutting operations
  4. For more information on keeping workers safe from stone-cutters, or to examine the relevant OSHA standards, go to www.osha.gov.

Completed Operations Liability and Obligations - September 2017

Even quality workmanship is not immune to potential claims of property damage or bodily injury. All operations carry the risk that injury or damage may occur as a result of the work, leading to costly lawsuits. Considering the complicated mix of contractors and subcontractors that contributes to each project, who is liable for this risk?

Defining Responsibility

In insurance terms, “your work” as used in an insurance policy is a broadly defined term that includes operations performed by the policyholder or on the policyholder’s behalf, including material, parts or equipment in connection with the operations. Operations or work performed on behalf of the policyholder means work done by a subcontractor is considered the contractor’s work. Therefore, faulty electrical work performed by an electrician that causes a fire or other damage could be considered the contractor’s liability, but would be covered under a standard commercial general liability (CGL) policy.

Contract Requirements

Because a contractor or other involved party could be held liable for defects in a subcontractor’s work years after it has been completed, and filing the claim under the contractor’s CGL policy could cause the premium to rise, many construction contracts require subcontractors to provide insurance coverage for claims resulting from their completed work for a finite period of time, typically the one- to five-year range. Typical contracts also require that the subcontractor name the owner, the architect, the general contractor and other third parties as “additional insured” parties, entitled to coverage under the insured subcontractor’s CGL policy. Naming additional insured parties requires a separate endorsement to that policy.

Contract Implications

This means that as a subcontractor, you can be held liable for claims of property damage or bodily injury resulting from a defect in your work. It is also critical to maintain this coverage into the future; failure to do so could lead to a breach-of-contract lawsuit brought by the contractor or other party.

It is important to understand this commitment when signing the contract–the insurance commitment doesn’t end with the project. Furthermore, in the event of a large claim, the subcontractor could be faced with a substantial increase in premiums on the policy.

Reducing Risk

To avoid litigation, it is crucial to know local regulations and adequately document proper performance. Know your company’s documentation practices relative to each subcontract, and carefully keep records of all processes.

Respecting the Contract

It is crucial for subcontractors to respect this requirement if included in the contract. Failure to do so could result in breach-of-contract lawsuits. Naming additional insured parties can be complicated, and it is very important to work closely with CMR Risk & Insurance Services, Inc. to ensure that your contractual obligations are satisfied.

Permit-required Confined Spaces and Emergency Responders - August 2017

OSHA recently developed a standard for confined spaces in the construction industry (29 CFR 1926 Subpart AA). These spaces can present conditions that are immediately dangerous to your workers’ lives or health if not properly identified, evaluated, tested and controlled. As a result, preparing to respond to an accident in a confined space is just as important as training workers to enter them.

One provision of the standard requires employers to develop and implement procedures for summoning rescue and emergency services in permit-required confined spaces. Any employer who relies on local emergency services for assistance is required to meet the applicable requirements of the OSHA standard.

However, not all rescue services or emergency responders are trained or equipped to conduct rescues in confined spaces. When you identify an off-site rescue service, it is critical that the rescuers can protect your employees. The emergency services should be familiar with the exact site location, the types of permit-required confined spaces and the necessary rescue equipment.

Employer Considerations

Pre-planning for a rescue will ensure that the emergency service is capable, available and prepared to save your workers.

Before the start of any rescue operation, you must evaluate prospective emergency responders, and select one that has the following traits:

  • Adequate equipment for rescues, such as the following:
    • Atmospheric monitors
    • Fall protection
    • Extraction equipment
    • Self-contained breathing apparatus (SCBA) for the particular permit-required confined space
  • The ability to respond and conduct a rescue in a timely manner based on the site conditions, and the capability to conduct a rescue if faced with potential hazards specific to the space. These hazards may include the following:
    • Atmospheric hazards
    • Electrocution
    • Flooding or engulfment
    • Poor lighting
    • Falls
    • Chemical hazards
  • The ability to notify you in the event that the rescue team becomes unavailable.

To ensure the safety of your workers, you must take a proactive role in securing the services of emergency responders. This includes finding the most efficient way of contacting emergency responders, conducting a tour of the project site with them and communicating any changes made to the site before a rescue becomes necessary.

Communicating With Emergency Responders

Talking with emergency responders about the hazards they might encounter during a rescue will assist in preparing for the situation. The following are some questions responders should be able to answer when you request their services:

  • Are you able to respond and conduct a rescue in a timely manner based on the site conditions?
  • Do you have the appropriate equipment for response and rescue?
  • Are you prepared for the hazards identified at the project site?
  • Are you aware of the exact location of the work site? This includes information on access routes, gates, site plans and GPS coordinates.
  • Can you visit the site and hold a practice rescue?
  • What is the best way to contact you? How would I communicate any changes to site conditions throughout the project?
  • Could other emergencies or group training preclude you from responding, and how will that be communicated?

Additional Resources

Complying with OSHA’s new standard will protect your workers and save you from costly penalties. Contact us today at (619) 297-3160; we can provide you with our comprehensive resource, “Permit-required Confined Spaces in Construction Program and Training Materials.”

Preventing Heat-related Illness - July 2017

Helpful tips for beating the summer heat

Summer heat can be more than uncomfortable; it can be a threat to your health. Unfortunately, you do not have much of a choice when it comes to job site. Follow these tips to stay safe in the searing heat.

Heat Exhaustion

Heat exhaustion occurs when a person cannot sweat enough to cool the body—usually the result of not drinking enough fluids during hot weather. It generally develops when a person is playing, working or exercising outside in extreme heat. Symptoms include:

  • Dizziness, weakness, nausea, headache and vomiting
  • Blurry vision    
  • Body temperature rising to 101°F
  • Sweaty skin
  • Feeling hot and thirsty
  • Difficulty speaking

A person suffering from heat exhaustion must move to a cool place and drink plenty of water to avoid a more severe heat-related condition—heat stroke.

Heat Stroke

Heat stroke is the result of untreated heat exhaustion. Symptoms include:

  • Sweating stops
  • Unawareness of thirst and heat

Body temperature rising rapidly to above 101°F

  • Confusion or delirium
  • Possible loss of consciousness or seizure

Heat stroke is a serious medical emergency that must be treated quickly by a trained professional. Until help arrives, cool the person down by placing ice on the neck, armpits and groin. If the person is awake and able to swallow, have them drink a small glass of water every 15 minutes or until help arrives.

Tips for Staying Cool

The combination of heat and humidity in the summer months can be downright uncomfortable and even dangerous. Stay cool by following these safety tips:

  • Drink plenty of water. In hot weather, drink enough water to quench your thirst. The average adult needs eight 8-ounce glasses of water a day, and even more during hot weather.
  • Skip the caffeine and soda; drink water instead.  
  • Dress for the weather. When outside, wear lightweight clothing of natural fabric and a well-ventilated hat.
  • Eat light. Replace heavy or hot meals with lighter, refreshing foods. And always eat smaller meals before work or intense activity.

Controlling Workers’ Compensation Costs - June 2017

Has your construction business experienced rising workers’ compensation costs due to on-the-job accidents? If so, your first response was most likely aimed at trying to reduce insurance costs and spending. While this may seem like the best approach, a sound safety program designed to continuously improve can yield significant savings by reducing injuries and illnesses—ultimately reducing workers’ compensation costs in the long run.

5 Steps to Building a Solid Safety Program

You can control workers’ compensation costs with five easily implementable steps designed to create a well-rounded safety program that produces a safer job site, achieves OSHA compliance and reduces accidents—saving your bottom line.

  1. Develop safety programs required by the OSHA standards.
  2. Integrate those programs into daily operations.
  3. Investigate all injuries and illnesses.
  4. Provide training to develop safety competence in all employees.
  5. Audit your programs and your worksite on a regular basis to stimulate continuous improvement. 
Develop Programs Required by OSHA Standards

In addition to being a requirement for those in the construction industry, OSHA standards provide a good pathway to incident reductions. Many accidents stem from poorly developed or poorly implemented OSHA programs: not using the proper fall restraint system when working at heights more than 6 feet, improper use of personal protective equipment when working with hazardous job site materials and poor lifting techniques resulting in back strains are just a few examples.

OSHA construction standards require that written programs be developed and then communicated to workers. Experience shows that companies with thoroughly developed, OSHA-compliant programs have fewer accidents, more productive employees and lower workers’ compensation costs.

Integrate Programs into Daily Operations

Policies alone won’t get results; your safety program must move from paper to practice to impact your bottom line. Achieving this requires a strategic plan clearly communicated to workers, good execution, and a culture that both inspires and rewards people to do their best.

When developing your safety initiative, there must be an emphasis on helping your site foreman succeed. If the site foreman understands the safety program and is motivated to make it work, it succeeds; if not, the program is a source of struggle and an endless drain on resources. Providing your site foreman with knowledge and skills through training is critical to the success of your safety program. 

A solid OSHA program, integrated into your worksite’s daily operation and led by competent site supervisors, is just the beginning. Successful safety programs are also proactive instead of reactive.

Investigate All Injuries and Illnesses

Accident investigations provide an excellent source of information on real or potential issues present on the job site. Because workers’ compensation covers a worker’s wages for injuries or illnesses that arise from or out of the course of employment, increasing claims drive up workers’ compensation costs. To reduce costs, you must reduce accidents. And the ability to reduce accidents is significantly enhanced when they are fully investigated instead of simply being reported.

Accident reports cite facts; accident investigations go deeper to uncover the root cause of an accident and make improvements to prevent its reoccurrence. To stop your workers’ compensation costs from rising unnecessarily, you must have an effective accident investigation process. Unless you can determine the root cause of an accident, recommendations for improvement will remain fruitless. Again, training proves beneficial because a site supervisor skilled in incident analysis is a better problem solver for all types of project management issues, not just safety.

All accidents should be investigated to find out what went wrong and why. Some may suggest investigating every accident is a bit over the top and only those that incur significant costs are worthy of scrutiny, but this approach is shortsighted. If your emphasis is only on those incidents that have to be recorded on the OSHA 300 log, you ignore the single largest accident category: first aid-only incidents. Many firms focus solely on recordables or lost-time accidents because of the significant costs involved, but they don’t realize that the small costs and high numbers of first aid-only incidents really add up.

Reducing serious accidents means you must reduce your overall rate of all accidents—including first aid-only incidents. That only happens when every incident is fully investigated, and corrective actions are identified and integrated into daily job tasks.

Training and Auditing for Continuous Improvement

The final steps focus on training and auditing your program for continuous improvement. Training plays a significant role in safety and in reducing workers’ compensation costs. The goal of training is to develop competent people who have the knowledge, skill and understanding to perform assigned job responsibilities. Competence, more than anything else, will drive down costs. Site supervisors must have the knowledge and ability to integrate programs into each job on the job site so that employees know what is expected of them.

Once the programs are developed and implemented, they must be reviewed on a regular basis to make sure they are still relevant and effective. This might require a significant change in how you manage your safety program, but if your workers’ compensation rates are high, it may be time to make this leap.

Tangible Benefits

  1. Studies indicate there is a return on investment and that firms see direct bottom-line benefits with a properly designed, implemented and integrated safety program.
  2. A competency-based safety program is compliant with OSHA construction requirements and therefore reduces the threat of OSHA fines.
  3. A competency-based safety program lowers accidents, which reduces workers’ compensation costs. When incidents do occur, a competency-based safety program fully evaluates the issue and finds the root cause to prevent reoccurrence and provides a job site that is free from recognized hazards.
  4. A safer job site creates better morale and improves employee retention. Auditing keeps your programs fresh and effective, and drives continuous improvement.
  5. A competency-based program produces people who are fully engaged in every aspect of their job, producing high-quality craftsmanship.

How Can We Assist You?

At CMR Risk & Insurance Services, Inc., we are committed to helping you establish a strong safety program that minimizes your workers’ compensation exposures. Contact us today at (619) 297-3160 to learn more about our OSHA compliance and safety program resources.

Safety on Walking/Working Surfaces - May 2017


Slips, trips and falls account for many accidents and accidental deaths on the worksite. These accidents are especially prevalent in the construction and contracting industry because as the site changes, safety hazards will evolve and change as well. Paying close attention to the areas where we walk and work to eliminate the potential for slips, trips or falls is essential to the success of our business.

On the job, there can be many different types of slip, trip and fall hazards. For instance, material debris on the ground is just as hazardous as cords or hoses lying in walking areas. Also, materials stored improperly present spill hazards and can cause slips. The point is that there are many different types of hazards that can be in our work areas. Being aware of these hazards and addressing them is the first step to avoiding slip, trip and fall injuries at the worksite.

What other types of situations do we need to look out for? Here is a brief list of some of the common hazards seen frequently in working areas:

  • Cords lying on the ground or other walking areas
  • Water, oil, lubricants or other liquids spilled on the ground or on elevated areas at the site
  • Materials (pallets, boxes, etc.) stored in a walking area
  • Materials stored near ladders or in machine traffic areas
  • Poor lighting in walking or working areas
  • Poorly marked pedestrian or machine traffic only paths

Cords and Hoses

One of the biggest trip and electrical hazards comes from cords and hoses, and both are commonly used in working areas. First, cords and hoses should not be uncontrolled in walking areas because they pose trip hazards. Secondly, cords and hoses need to be monitored so they don’t become damaged. Cords that have broken insulation pose electrical shock and fire hazards.

Use extra caution when working with extension cords. Extension cords should only be used on a temporary basis. Temporary means only using the cord when you need additional power for a short period of time, such as when operating a power tool. Extension cords may not be used as a substitute for permanent wiring. Extension cords that are wrapped around poles or other equipment are not being used on a temporary basis and are likely being used as a substitute for permanent wiring. This use creates both trip and electrical hazards. Look in your work area and see where extension cords are in use. Report any misuse to your supervisor immediately to prevent trip, fall and electrical hazards at the site. 

Material Storage in Working Areas

Look around your work area and consider how materials are stored. Look specifically at pallets, carts, trays and other material handling or material holding equipment to see if the way it is stored creates a hazard. 

Pallets should not be stored on end because they are not stable in that position. They can easily tip over onto workers or equipment. Storing boxed materials properly will prevent slips, trips and falls. Always think about where material is stored and how it may create a trip hazard or ignite because of what it is stored by.

Stacking materials in work areas is unavoidable, but can also create hazards if materials are not stacked properly. It is important to not stack boxes of materials too high to avoid tip-over hazards. Also, heavier boxes should not be placed on top of lighter boxes for the same reason—even for short periods of time. Whatever materials are needed at your site, stacking them properly will help prevent tip or trip hazards.

Passageways and Other High-traffic Areas

Aisles and passageways are used by both workers and motorized vehicles. Combining pedestrians with motorized vehicles can be dangerous when safety procedures are not followed. When you are walking anywhere in the workplace, be mindful of where you are walking and what traffic is in the area.

Keeping Your Area Free From Hazards

Some of the most serious safety hazards found in walking or working areas are due to poor housekeeping. As you look at your work area, keep the following issues in mind.

  • Sweep work areas so dust and debris do not accumulate and create a trip or slip hazard.
  • Clean up spilled materials immediately.
  • Don’t let trash overflow in work areas.
  • Don’t store materials in passageways.
  • Always be mindful of powered equipment operations. As a pedestrian, watch for traffic.  As an operator, always be aware of workers and civilians in the area.
  • Never store materials near ladders or machinery.


Walking and working surfaces can cause many different and serious injuries when safety precautions are not followed. The more we pay attention to the hazards in our work area, the better chance we have at preventing injuries and keeping ourselves safe and healthy on the job.  

The Value of Surety Bonds - April 2017

The way project owners evaluate and manage risks on construction projects and make fiscally responsible decisions to ensure timely project completion are crucial to their success. Since private owners cannot afford to gamble on a contractor whose reliability is uncertain or who could end up bankrupt halfway through the job, a surety bond is a great safety net for the investment.

What is Suretyship?
Suretyship is a very specialized line of insurance that is created whenever one party guarantees performance of an obligation by another party.

A surety bond is a written agreement where one party, the surety, obligates itself to a second party, the obligee, to answer for the default of a third party, the principal.

Types of Surety Bonds

There two main types of surety bonds:

  1.  Contract (or Corporate) Surety Bond

The contract (or corporate) surety bond provides financial security and construction assurance for building and construction projects by assuring the project owner (obligee) that the contractor (principal) will perform the work and compensate certain subcontractors, laborers and material suppliers, as outlined via their contract. Contract surety bonds include the following:

  • Bid bonds provide financial assurance that the bid has been submitted in good faith and that the contractor intends to enter into the contract at the price bid and provide the required performance and payment bonds.
  • Performance bonds protect the owner from financial loss should the contractor fail to perform the contract in accordance with its terms and conditions.
  • Payment bonds guarantee that the contractor will pay certain subcontractors, laborers and material suppliers associated with the project.
  • Maintenance bonds guarantee against defective workmanship or materials for a specified period.
  • Subdivision bonds make guarantees to cities, counties or states that the principal will finance and construct certain improvements such as streets, sidewalks, curbs, gutters, sewers and drainage systems.

2.   Commercial Surety Bond

Commercial surety bonds guarantee performance by the principal of the obligation or undertaking described in the bond. Commercial surety bonds include:

  • License and permit bonds are required by state law or local regulations in order to obtain a license or permit to engage in a particular business (contractors, motor vehicle dealers, securities dealers, employment agencies, health spas, grain warehouses, liquor and sales tax).
  • Judicial and probate bonds, also referred to as fiduciary bonds, secure the performance on a fiduciaries' duties and compliance with court orders (administrators, executors, guardians, trustees of a will, liquidators, receivers and masters). Judicial proceedings court bonds include injunction, appeal, indemnity to sheriff, mechanic's lien, attachment, replevin and admiralty.
  • Public official bonds guarantee the performance of duty by a public official, (treasurers, tax collectors, sheriffs, judges, court clerks and notaries).
  • Federal (non-contract) bonds are required by the federal government (Medicare and Medicaid providers, customs, immigrants, excise and alcoholic beverage).
  • Miscellaneous bonds include lost securities, lease, guarantee payment of utility bills, guarantee employer contributions for union fringe benefits and workers’ compensation for self-insurers.

Who Are the Three Parties That Make Up the Surety Agreement?

Surety agreements typically have three parties:

  • The principal is the party that undertakes the obligation.
  • The surety company guarantees the obligation will be performed.
  • The obligee is the party who receives the benefit of the bond.

How is Suretyship Similar to Other Forms of Insurance?

It’s important to recognize the similarities between suretyship and other forms of insurance:
  • State insurance commissioners regulate both suretyship and other insurance.
  • They both provide a safety net for financial loss.

How is Suretyship Different?

Key differences exist between suretyship and other insurance:

  • In traditional insurance, the risk is transferred to the insurance company. However, in a suretyship, the risk remains with the principal and the protection of the bond is designated for the obligee.
  • In traditional insurance, the insurance company assumes that part of the premium for the policy will be paid out in losses. Yet, in true suretyship, the premiums paid are "service fees" charged for the use of the surety company’s financial backing and guarantee.
  • In underwriting traditional insurance products, the goal is to "spread the risk,” while in a suretyship, surety professionals view their underwriting as a form of credit. Therefore, the emphasis is on the pre-qualification and selection process.

Government Regulations

Since 1893, the U. S. Government has required contractors on federal public works contracts to obtain surety bonds to guarantee that they will perform such contracts and pay certain labor and material bills. The current federal law on federal public works is known as the Miller Act. It requires performance and payment bonds for all public work contracts in excess of $100,000 and payment protection, with payment bonds the preferred method, for contracts in excess of $25,000. Almost all 50 states, the District of Columbia, Puerto Rico and most local jurisdictions have enacted similar legislation requiring surety bonds on public works as well. These are generally referred to as "Little Miller Acts."
While surety bonds are mandated by law on public works projects to protect taxpayer dollars, the use of surety bonds on privately-owned construction projects is at the owner's discretion. Alternative forms of financial security, such as letters of credit and self-insurance, don't guarantee performance or payment protection of a surety bond or ensure that a contractor is competent. With a surety bond, the risks of project completion are shifted from the owner to the surety company. For that reason, many private owners require surety bonds from their contractors to protect their company and shareholders from the enormous cost of contractor failure. Subcontractors may be required to obtain bonds to help the prime contractor manage risk, particularly if the subcontractor is completing a significant part of the job or is a specialized contractor who is difficult to replace.


How Do Contractors Obtain a Surety Bond?

Surety bonds are issued through agents and brokers who are knowledgeable about the surety and construction industries. Surety bond agents and brokers usually work for companies that specialize in surety bonds or in insurance agencies that have a sub-specialty in surety bonds.

The professional surety bond agent or broker usually maintains a business relationship with several surety companies, which enables them to match a contractor with an appropriate surety company. Also, a solid surety company and producer will help a contractor maintain and increase its capacity.



Hazard Communication Program – For Your Protection - March 2017

Through the course of your job duties, you may be required to work with dangerous chemicals. [C_Officialname] is dedicated to ensuring your safety, so we have a Hazard Communication Program in place. The goal of this program is to make you aware of chemicals you may be in contact with on the job and to help you understand the potential hazards of those chemicals. This education is required by the Occupational Safety & Health Act (OSHA). It is equally important to learn this information to keep customers safe in the event they are exposed to any hazardous chemicals.

Safety Data Sheets

One important key to a Hazard Communication Program is the Safety Data Sheet (SDS), which contains information broken down into 16 different categories. This sheet tells you everything you need to know about a specific chemical, including:

  • The health hazards associated with the chemical
  • How flammable the product is, and at what temperature it may ignite
  • The reactivity of the chemical with water or other agents and how likely it is to explode
  • What personal protective equipment (PPE) is needed to work with the chemical
  • Other important aspects of the Hazard Communication Program include:
  • Accurate labeling of containers that contain chemicals, including warning labels when applicable.
  • Ensuring that labels are not removed.
  • Employee training in accordance with your job duties relating to chemicals.

Important Questions to Ask

Through our Hazard Communication Program, every employee should learn the following information:

  • What chemicals might I handle or be exposed to on the job?
  • Where are the SDSs kept for the chemicals I am exposed to?
  • What kinds of hazards do I face when I use, or misuse, a particular chemical?
  • Do I understand the emergency procedures to follow in the event of a spill?

Though it is our goal to teach you the information you need, it is your responsibility to learn it and ask questions if necessary. You should follow all safety procedures when working around chemicals, keep in mind potential hazards and always wear appropriate PPE. You are also entitled to obtain a written copy of our Hazard Communication Program – simply ask your supervisor.

Achieving Safety Together

It may seem overwhelming to learn about all the chemicals you may handle or be exposed to, but it is important knowledge that all workers should have. Always be sure to ask questions or reference the appropriate SDS if you forget or have yet to learn about a certain chemical. Failing to do so could result in an extremely hazardous situation for you, your co-workers and our customers.

Machine Guards are for Your Protection - February 2017

Machine guards are made to protect you when working with dangerous equipment on the construction site. Unfortunately, many workers also view them as an inconvenience or an obstacle to the task at hand. Regardless, guards are for your protection, and using them properly is a safety requirement here at.

Guarding Against Hazards

Specifically, machine guards are used to protect against:

  • Direct contact with moving parts
  • Flying debris
  • Kickbacks
  • Splashing of metal or harmful liquids
  • Mechanical and electrical failures
  • Any number of potential human errors

While guards may often appear to be a hindrance, overall they have proven to be otherwise for both security and production. Greater machine speeds are made possible through proper guarding, as work does not have to stop due to injuries and employees can often work quicker knowing they have the proper protection in place to do so safely.

Types of Guards

Two types of guards are used to protect machine operators: fixed guards and interlocking guards. Fixed guards are most commonly used and are generally preferred because they protect you from dangerous parts of machines at all times. Interlocking guards are used if a fixed guard is not practical. This type will not allow the machine to operate until dangerous parts are guarded. The interlocking guard is designed to disconnect the source of power from the machine.

Safety devices such as pullbacks, sweeps and electronic devices are used where neither a fixed nor interlocking guard can be used satisfactorily. Safety devices are operated by the machine itself. Regardless of the type of guard or safety device used, all provide the operator with the greatest possible protection while using the machine in question.

Make Safety Your Priority

Of course, no guard can do the job without the cooperation of the person operating the machine. Machine guards are a part of our workplace, and using them properly is your responsibility as an employee. Please observe the following safety requirements:

  • Do not adjust or remove a guard unless permission is given by your supervisor or unless the adjustment is a normal and accepted part of your job.
  • Do not start machinery without the guards in place.
  • If guards are missing or defective, report it to your supervisor immediately.
  • If guards are removed for repair or adjustment, the power for the machine should be turned off and the main switch locked and tagged.
  • Loose clothing, watches, rings and other jewelry should not be worn around mechanical equipment, and long hair should be tied back.

Safety is our top priority at.  To accomplish this, we need the commitment of all employees to respect our safety rules and to use machine guards as intended, to keep everyone on the job site safe and productive. If you have any questions regarding guards or other safety issues, please ask your supervisor.