Five Tips to Protect Your HVAC and Plumbing Vehicles from Break-Ins

Author, Matt Gorham, Account Executive, Rancho Mesa Insurance Services, Inc.

Contractors’ vehicles have long been a preferred target for thieves. Due to their distinct shapes and often eye catching branding, contractors’ vehicles are generally easy to identify, and they often contain thousands of dollars’ worth of tools, equipment, and materials.

Heating, ventilation, air conditioning (HVAC) and plumbing business owners that allow their employees to drive their work vehicles home face an especially difficult challenge to keep their tools and equipment safe. And, the cost of a vehicle break in goes far beyond the financial cost of replacing what has been stolen.

Being the victim of a vehicle break-in will lead to delays in your operations, it can cause frustrated customers, and the affected employees can suffer psychologically, especially if they have had their own personal tools stolen.

Here are the top 5 tips to help navigate the risk of vehicle break-in’s at an employee’s home:

1. Have clearly defined policies and discuss them with your employees.
Before allowing employees to drive their vehicle home, ensure that they understand what is expected of them. Having policies to avoid or minimize losses are only effective if the driver is held responsible for actually following them.

And drivers are more likely to follow the policies if they:

• Are aware of them

• Clearly understand them

• Are accountable for implementing them

2. Leave expensive equipment, tools, and materials at the shop.
While it may be inconvenient for your techs to unload their trucks at the end of the day, creating and reinforcing a habit of securely storing expensive equipment at the shop is much more likely to prevent theft of that equipment.

If taking the equipment home is unavoidable or impractical, discuss with them if it is preferred to bring the equipment inside their home overnight.

Capreece Serna, Senior Safety Services Consultant with Sentry Insurance, offers an important reminder: Anything that is kept in the truck should be placed out of sight from the outside, and do not leave the keys in the ignition, on the seat, or tucked in the visor. Leaving electronics, keys, garage door openers, security badges, wallets, purses, or expensive tools in plain sight to potential criminals can encourage them to break into the vehicle.

It is also important that your techs know what is on their trucks. Having them conduct a quick inventory check at the start and end of their shift can help increase security of your tools and equipment, as well as theirs.

In the event that you ultimately experience a vehicle break-in, having an inventory of what was on the truck will help expedite the process of getting tools and equipment replaced.

3. Lock your vehicles and set your alarms.
This may sound basic, but locks are one of the most effective ways of securing your vehicle. Keep in mind that many technicians are getting in and out of their trucks repeatedly throughout the day, often times without locking their vehicles. This can lead to a false sense of security and unconscious habit of leaving a vehicle unlocked overnight. Having security bars or grates on the interior of the windows or doors will provide little security if the doors themselves are unlocked.

It is also important to recognize that there are different types of locks available. While not fail safe, aftermarket locks can provide an added layer of security on either the exterior or interior of a vehicle. As an example, puck locks are commonly found on the exterior, while cable locks or chain locks can be used in the interior to secure tools, tool cases, or equipment to mounted shelving.

Having an alarm system installed on each vehicle that gets driven home can be another effective deterrent. Would-be thieves are much less likely to target a vehicle with an alarm. However, if they are undeterred, the attention that an alarm system attracts in the event of a break-in can substantially reduce the amount of time they have to find and take anything.

4. Be aware of and monitor surroundings.
There are a number of environmental factors that employees can leverage or put in place to increase the security of the company vehicle. Serna offers the following suggestions whenever possible:

• Parking inside the employee’s garage or behind a security gate,

• If in the driveway, backing up to the garage door to prevent the vehicle doors from opening fully,

• If in the street, parking in a well-lit area or using a physical obstacle to limit door access,

• Making use of motion activated lights or cameras pointed at the vehicle,

• Placing a camera inside the vehicle facing tools and equipment.

5. Review coverage for tools, equipment, materials, and employees’ tools with your insurance broker.
Each of the above tips will help reduce the risk and severity of break-ins. However, eliminating the risk of a break-in altogether is impossible.

Serna points out, “When thieves decide to commit their crime, they are looking for the biggest payoff with the lowest potential for getting caught. The focus of your practices should be to minimize the appeal of your vehicles to thieves, which will also minimize the loss to your business.”

Talk with your insurance broker to develop a coverage strategy that aligns with your appetite for risk and have the carrier take on the remaining risk.

A unique advantage for Rancho Mesa clients is their access to the SafetyOne™ mobile app. Within it, business owners are able to make their vehicle policies available to their employees digitally, as well as provide security checklists through a QR code, while also being able to take pictures of their parked vehicle at the end of the work day, helping to reinforce safe practices, accountability, and employee implementation.

For a complimentary review of your current tool and equipment coverages, as well as your safety practices, you can contact me at (619) 486-6554 or mgorham@ranchomesa.com.

Protecting Your HVAC and Plumbing Business with Proper Classifications

Author, Matt Gorham, Account Executive, Rancho Mesa Insurance Services, Inc.

Within the construction industry, it is common for questions to arise about how to categorize work that a contractor performs. While organizations like the Insurance Service Office (ISO), Workers’ Compensation Insurance Rating Bureau (WCIRB), and the National Council on Compensation Insurance (NCCI) have created classification systems, nuances in worksite demands can lead to confusion about which class code to use for a given business’s operations.

Even though many types of work have similarities, mistakes in classification can lead to:

1. Problematic coverage exclusions

2. Surprise audit bills

3. Overpaying insurance premiums

General liability class codes differ between types of work, such as commercial/industrial plumbing and residential plumbing, or heating and air conditioning with or without liquefied petroleum gas.

Problems can arise for businesses when their coverage fails to match the work being performed, especially when certain endorsements are included within their policies. When a loss happens in this situation, a carrier may deny coverage, leaving the business to respond to the damage or injury on its own.

We recently started working with an HVAC contractor that had previously found themselves on the wrong end of this scenario, having incurred over $350,000 in property damage costs because they were held responsible for flooding an apartment while moving a water line. Their previous carrier denied the claim because of a coverage limitation endorsement, which specifically limited coverage only to the classification codes listed on their policy.

In severe cases, a carrier may also choose to cancel or non-renew coverage for the business if they learn that the business’s operations are heavier or significantly different than what was previously represented.

Like general liability, workers’ compensation class codes can also cause challenges for contractors.

Consider the example of an HVAC contractor. Their workers’ compensation payrolls could easily be categorized into either 5183/5187 or 5538/5542. There is a subtle difference that separates whether payroll should be classified within the plumbing class codes or the sheet metal class codes. However, there can be a substantial difference in the corresponding premium a company would pay for workers’ compensation, especially when you consider that these classifications are subject to different dual wage thresholds.

An HVAC company with a technician getting paid $32 per hour whose payroll is classified as 5187 could expect to pay premiums from a $4 to $5 base rate per $100. Another HVAC company with a technician getting paid the same, but categorized as 5538 could expect to pay premiums from a $10 to $12 base rate per $100. While the lower rate may at first be appealing, if payroll is improperly classified throughout the policy term, an audit could lead to a substantial additional premium, so it is best that you classify your work correctly from the start so that your premium properly reflects the risk of the work being done.

Plumbers often encounter a similar classification challenge. Should they be categorizing payroll under the plumbing class code only? Do they have any sewer or excavation exposure? That depends on some key details in their operations and will directly influence which carriers are willing to partner with them and how aggressively they price their coverage.

Rancho Mesa recognizes the importance of proactively working with accurate, complete information. To better serve the needs of our clients, we have developed a comprehensive submission and renewal process, which includes:

• Pre-renewal meetings 90 to 120 days before the renewal date to understand any changes in the business

• Industry specific supplemental applications to gather more thorough and relevant information

• Open, honest communication with carrier partners that fosters trust and transparency

• Policy reviews and audits to identify potential coverage issues

To request a policy audit, and ensure that the coverage and pricing for your insurance program properly aligns with your industry, contact me at (619) 486-6554 or mgorham@ranchomesa.com.

The Rising Risk of Metal Theft from Jobsites

Author, Kevin Howard, Account Executive, Construction Group, Rancho Mesa Insurance Services, Inc.

Metal theft is one of the fastest growing crimes in the country. Copper, aluminum, nickel, stainless steel and scrap iron have become the desired target of thieves looking to make a quick buck.
 
Of particular concern is copper, which is found in gutters, flashings, downspouts, water lines and electrical wiring – all of which can be quickly stripped from vacant buildings, industrial facilities, commercial buildings and construction sites. Air conditioning units are especially attractive, and are often tampered with or stolen for their copper coils and pipes that connect to HVAC systems. The metal is then sold to recycling companies and scrap yards for a tidy profit. 

Common Targets

Subcontractors who store material on jobsites overnight are a common target for metal theft. Typically, subcontractors are designated specific areas on jobsites for their product waiting to be installed. And, it remains common for this material to be stored over multiple nights. Electricians often leave copper wiring; HVAC contractors can store duct work; and, plumbing contractors may store valuable fixtures. Exposure to theft can come from employees of other trade contractors on the site, as well as professionals who monitor the job, picking the right time and place to strike. 

Preventing Metal Theft

To combat theft of materials, many states and municipalities have passed laws tightening the restrictions on scrap dealers. In some instances, purchases of scrap metal are required to be held in reserve for a week or more before being resold in case they have been stolen. In other instances, states require dealers to record the seller’s name, address and driver's license.

Another approach to prevent metal theft involves reducing exposure to risk at the jobsite.  Examples can include:

• Installing security cameras with video recordings that are maintained for sufficient periods of time.

• Securing all equipment and scrap metals in locked buildings or in properly lit areas secured by fencing.

• Posting "No Trespassing" placards or signs indicating the presence of a surveillance or security system.

• Removing access to buildings and roofs, such as trees, ladders, scaffolding, dumpsters and accumulated materials such as pallet piles.

• Securing your building access with deadbolts on doors and window locks.

• Increasing exterior lighting and protecting fixtures (such as AC units) with locked metal cages.

Protecting Contractors’ Equipment on the Jobsite

Insurance for contractors that wish to transfer risk of theft at jobsites is commonly seen with Installation Floaters and Builder’s Risk policies.

Installation Floaters cover business personal property and materials that will be installed, fabricated or erected by a contractor while away from their premises. They extend coverage to the property until the installation work is accepted by the purchaser or when the insured's interest in the installed property ceases.

Builder’s Risk policies protect insurable interest in materials, fixtures and/or equipment being used in the construction or renovation of a building. While trade contractors can be held responsible for securing a Builder’s Risk policy, it is more typical that general contractors and/or building owners carry these policies during the course of construction. As a result, these policy terms fluctuate based on the length and scope of each project.  

Rely on your insurance advisor to discuss these and other exposures to risk on jobsites. In advance, consider the amount of product stored at any jobsite at one time, the amount of product that can be at risk in transit, the value of product stored offsite (i.e., storage units) and the protections in place that secure your product. These will offer your broker, and ultimately the underwriter, key information in developing the right program for coverage.

For more information, contact Rancho Mesa at (619) 937-0164.

Why All Trade Contractors Must Consider Pollution Liability

Authors Sam Clayton, ARM, CRIS, Vice President, Construction Group and Daniel Frazee, ARM, CRIS, Executive Vice President, Rancho Mesa Insurance Services, Inc.

Contractor’s Pollution Liability (CPL), once viewed as expensive and unnecessary, has now become an integral part of every trade and environmental contractor’s insurance program. The industry is seeing requirements for this coverage from a combination of building owners, developers and general contractors for projects of all sizes.

Protecting contractors from pollution exposure by transferring this risk to a CPL policy supports a best practice approach. Contractors' pollution liability insurance provides coverage for third party bodily injury, property damage and pollution clean-up costs as a result of pollution conditions for which the contractor may be responsible. A pollution condition can include the discharge of pollutants brought to the job site, a release of pre-existing pollutants at the site or other pollution conditions due to the performance of the contractor’s or a lower tier subcontractor’s operations. In addition to the potential loss of reputation, often overlooked expenses that can negatively impact a profit & loss statement are the costs incurred to defend a company involved in a pollution claim.

Contractors who choose not to purchase Contractor’s Pollution Liability Insurance generally fall into two categories. Many believe that their operations do not have a pollution exposure. And countless others assume that their Commercial General Liability (CGL) policies offer protection in the event a pollution claim arises. Neither of these assumptions is accurate. Pollution coverage is not commonly found in CGL policies by virtue of the Total Pollution Exclusion. This form excludes pollution coverage for any bodily injury, property damage and/or the clean-up costs. Examples of pollution incidents apply to many different types of trade contractors, in addition to traditional environmental contractors. A handful of those are listed below:

1. An HVAC system is installed improperly which, over time, causes moisture and ultimately mold to spread throughout a residential building, causing bodily injury and property damage
2. A painting contractor accidentally disposes paint thinner through a public drain causing polluted water to a local community
3. Dirt being excavated from one area of a job site to another is contaminated with arsenic and lead. The chemicals are then spread to a larger area which is later found by a soils expert
4. Construction equipment on a project site has hydraulic fuel lines cut by vandals, causing fuel to leak out and contaminate the soil
5. A contractor punctures an underground storage tank during excavation, causing the product to spill into the soil and groundwater.
6. A gas line ruptures during excavation causing a gas leak into a neighboring building that leads to an explosion

The common thread seen above describes how contractors are causing some type of “contamination” on a job site. And, contamination is the operative word in all pollution exclusions. With such a broad definition extending to so many types of construction, beginning your search now for CPL options is just simply good business.

And, with a multitude of insurance companies aggressively pricing CPL policies, securing competitive quotes to compliment your current insurance program can fill significant gaps at more reasonable costs than you think. 

Take time to consult with your broker and learn more about how pollution liability impacts your firm.

For more information, contact Sam Clayton at (619) 937-0167 or Daniel Frazee at (619) 937-0172.