Why You Should Use Hold Harmless Agreements (And Sign Them!)

We frequently receive inquiries from contractors pertaining to contractual insurance requirements and how to obtain “additional insured” status on a policy.  We’ve learned throughout the years that the answer is not always the same.  Insurance forms read differently, and then can change as soon as you think you know them.

However the forms may read, there are some “best practices” you should adhere to when hiring subcontractors, or when you are accepting a job as a subcontractor:

Use a Contract

If you hire subcontractors, you already require them to sign a hold harmless agreement to protect yourself from covered losses arising out of their ongoing and completed operations.  These contracts should contain properly worded indemnification and additional insured requirements for the subcontractor’s insurance to recognize you as an insured, and to cover you.

Many insurers use additional insured forms that contain language similar to, “additional insured status when required by written contract or agreement.”  Some go as far as requiring an “executed” contract prior to the commencement of work.  It’s imperative for general contractors to have a signed contract before a subcontractor begins work in order to obtain additional insured status.

See our article “Recommended Procedures & Documentation When Hiring Subcontractors” for more information on contractual insurance requirements.

Read the Contract and Understand What You are Agreeing to

If you are a subcontractor, read the contract the general contractor presents to you.  Understand what you are promising when you agree to the terms and conditions of the contract.  We have seen contracts ask for more than what standard insurance forms will actually do.

If you are a subcontractor of a subcontractor, be sure to obtain and read the prime contract between the general contractor and the subcontractor who is hiring you.  You may be agreeing to the terms and conditions in that contract as well.

Sign the Contract

Some courts have determined that subcontractors “agreed” to provide the contractual additional insured requirement by beginning work.  However, when the subcontractor caused or contributed to a loss on the job, their insurance did not respond to recognize the general contractor as an additional insured because of the absence of a previously signed (relative to the claim) or “executed” contract.  This left the general contractor exposed to cover the cost of defense and indemnification with their own resources, then sued the subcontractor for a “breach of contract.”


Mason & Mason is an insurance agency.  We are not members of the Massachusetts Bar Association, the information above is for informational purposes only.  We strongly suggest you consult an attorney before making any decision on the wording and/or use of legal contract documents.

Handling Lead and Asbestos and Other Hazardous Materials

Biohazard SignIf you work in construction, it’s not uncommon to encounter asbestos, lead, and other hazardous materials on a remodeling or deconstruction job. When that does happen, here are the appropriate steps you’re going to want to take:

Clear the Area

If you find asbestos in a home, you’ll want to clear the area right away. Lead exposure can take years to create any lasting damage in the human body, but even mild exposure to asbestos can be dangerous.


As soon as possible, report your findings to the proper authorities. In more cases than not, this will be the EPA. False alarms do happen, it’s not uncommon for some other material to be mistaken for asbestos, but the EPA will typically have some tests conducted in order to determine what it is that you’re dealing with. You’ll also want to let your client know that anyone who has been living or working in the building has potentially been exposed to the hazardous material.

For Asbestos and Other Hazards: Get a Professional

If you’re removing asbestos, you need to be certified, and if you are certified, you still need to report to the proper authorities that you’re going to be taking asbestos out of an old home.

If you would like to get certified to remove asbestos in order to prevent any findings from slowing a construction job down too much, you can get started at the EPA website. https://www.epa.gov/asbestos/training

For Lead: Proceed With Caution

You can remove lead on your own in most states with or without certification, but it can be a tricky process. Make sure that anyone involved in the job is wearing a dust mask, goggles and gloves, and be sure to clear the area to ensure that lead dust doesn’t get on anything. Sweep and clean the area thoroughly when you’re done.


Asbestos is more troublesome than it’s worth, but it is very good at one thing: preventing fire damage. It is nearly impossible to get the stuff to burn. Following the removal of any hazardous building material, you have to take a moment to consider why it was installed in the first place. Lead pipes are easy enough to replace with PVC, while asbestos removal should be followed up with the installation of something to replace it, like fiber-cement siding.

Finally: You’ll want to keep an eye on the health of yourself and your crew. The real threat is prolonged exposure, and most remodeling jobs are over and done with by the time the effects of exposure to hazardous materials can really be felt, but as always, it’s better to be safe than sorry.

Recommended Procedures & Documentation When Hiring Subcontractors

You hire subcontractors as part of your regular construction operations.  You expect your subcontractors to be qualified to perform the work and to be properly insured to protect themselves and you if there is a problem arising from the job.

When qualifying subs based on their ability to protect themselves and you, we suggest you have a written subcontractor agreement with every sub on the job.  It should include the following provisions at a minimum:

  1. Subcontractors must carry Commercial General Liability insurance with at least $1,000,000 per occurrence with an aggregate of no less than $2,000,000.
  2. The subcontractor’s policy must name you as an Additional Insured on the General Liability policy on a primary and non-contributory basis.
  3. All subcontractors must carry a Workers’ Compensation policy. You should make no exceptions to this rule.
  4. Subs must provide proof of this insurance by providing a Certificate of Insurance prior to the start of any work. No payments can be made to a sub prior to the receipt of the Certificate; this must be in the contract.
  5. The Certificate must be an original Certificate with an original agent signature. Do not accept photocopies or fax copies.
  6. The contract should contain an indemnity/hold harmless clause. A sample of such a clause is as follows: “To the fullest extent permitted by law, Subcontractor shall indemnify and hold harmless the builder and owner against any claims, damages, losses, and expenses, including legal fees, arising out of or resulting from performance of subcontracted work to the extent caused in whole or in part by the subcontractor or anyone directly or indirectly employed by the subcontractor.”

It is important to note that the Workers’ Comp law makes you responsible to insure workers of uninsured subs and may even make you responsible under many circumstances to insure injuries to a sole proprietor.  If you do not receive Certificates of Workers’ Comp from each and every subcontractor, the insurance auditor will probably make a charge for this sub when he completes a payroll audit.  If you are told no charges will be made for uninsured subs, you should demand a statement in writing from the insurance company, not agent, that uninsured subcontractors will not be picked up at audit.

Mason & Mason is an insurance agency.  We are not members of the Massachusetts Bar Association, the information above is for informational purpose only.  We strongly suggest you consult an attorney before making any decisions on the wording and/or use of legal contract documents.

Cyber Liability – Protect Your On-Site Computers

cyber liabilityConstruction sites provide a golden opportunity for cyberspace mischief makers and thieves alike. Contractors and subcontractors share huge data sets including pictures, drawings, submittals, photographs and various other files where viruses and spy ware hides.

And, if the site is WiFi friendly, hackers and the disgruntled gain easy access to everyone else’s computers.

Even with the normal defenses, firewalls, anti-viral software and password protection, the legal responsibility in most states is absolute – you must protect data from compromise. Think about smaller subcontractors that may keep employee personal identification information on their job site laptop.

The costs associated with a breach of sensitive data includes:

  1. Public relations – a nightmare
  2. Forensic analysis – determine the extent, cause and source of the breach
  3. Revenue loss
  4. Business disruption – can you continue to build or plan securely
  5. Legal – defense costs
  6. Notification to any party potentially affected

The cost to rectify these factors approaches $200 per record. According to the Travelers website, in large companies, the average claim is over five million dollars.

Too small for a cyber attack? Over one quarter of all attacks are against companies with fewer than one hundred employees. Those laptops are a goldmine of personal data.

It’s wise to think about using dedicated computers for shared job site communications which do not access personal or company sensitive data.

Buy Cyber Liability coverage to insure the costs associated with:

* Network and information security liability
* Communications and media liability
* Regulatory defense expenses which pays for fines and penalties.

Cyber liability can often be purchased as an add-on coverage in a package or as a single policy. This coverage is an important part of your risk management plan, particularly when sharing massive data with other stakeholders.

And, cyber breaches occur more frequently every day — up over 40% this year. A claim like this could bankrupt your company. Use every avoidance risk management technique to avoid the loss, but insure to avoid disaster.

For more tips on protecting yourself with regard to cyber liability, see our article on cyber liability and prevention planning.

When “Any Knucklehead” Can’t Do It

Plumbing pipe wrenchYou don’t need special training to haul an armful of 2×4’s across the job site, and most anyone can manage a hammer and nails, help to pull a rope to lift a wall, or attach hurricane ties to the joints. A lot of the skills that are required on a job site are easy enough to pick up as you go. Even the stuff that seems impossible to the greenest gofer on the first day of the job usually sinks in with a little on-site experience.

But, that doesn’t really describe every job on the site, does it? No experienced foreman hands the new guy a box of copper and says “Go install the wiring right quick.” Are there some tasks on the site that demand less training and expertise than their respective unions would like to think? Well, that’s a debate for another day. But it’s hard to deny that there are some jobs that not just any knucklehead can get done.


Laying tiles and brick isn’t the most complicated job on the site, but quality masonry is a little more nuanced than slinging cement and gluing bricks together. Stone masonry, for instance, involves the use of actual stone, and results in a wall that can last for decades with little to no maintenance. Basic brick-laying is something that you can learn in a weekend of apprenticing, but serious stone masonry demands real training and experience.


Sticking two pipes together isn’t rocket science. You might or might not be able to hook an entire office building up without help, but most anyone who’s worked on a building project can figure out most of the basic tasks involved with plumbing. A big part of what a professional plumber brings to the table is an intimate knowledge of building regulations, safety standards and other laws and guidelines regulating the field. A professional not only ensures that the pipes work just fine, but that you don’t get hit with an order to tear those pipes out of the walls and start over because you failed to file the proper paperwork.


You don’t need special licenses or permits to lay down some drywall, but it really isn’t something that any gofer hopping off the back of a truck can handle. It’s not so much that drywall is difficult to do, but that there’s an artistry to it if you don’t want to wind up with big globs of plaster sticking out under the wallpaper. On that note, painting is a task that’s easy to do, and not so easy to do right.

Over time, you’ll learn where each worker’s strengths and weaknesses lie. Not every task requires a special license, but some do demand a little more experience than others.

Identifying (And Saying No To) Dangerous Work

Danger SignYou’re not going to last very long in the construction business if you turn down any job with even the slightest hint of danger. In building contracts, your whole business is dealing with pneumatic drills and sledgehammers and table saws all day long, oftentimes three stories up in a building with no walls on it. The trick is being able to identify unmanageable, unnecessary danger, and knowing when to say no.

The source of danger doesn’t always come from the nature of the job itself. Roofing a two story home offers the risk of falling and spending the next couple months on worker’s comp, but that risk is relatively slim if you have the right tools, the right people, and the right timeline and budget to do the job safely. On the other, something as simple as building a doghouse can lead to serious injury if you’re trying to rush the job along for a client with unrealistic expectations.

The cornerstones of safety on a job site come down to the following:

  • The time and budget to do the job safely. A client asking you to do a $2,000,000 job for $500,000 could well be the biggest contract a fledgling company has ever been offered, but it may well be the last one they’re ever offered if they wind up understaffed and under-equipped in order to stay within the budget.
  • A crew with the requisite experience to handle the job without incident. Some tasks we learn on the job. Electrical wiring, welding and operating heavy machinery usually aren’t those. Don’t take a job if you don’t have, or can’t get, the people you’ll need to do the dangerous parts.
  • A safe work environment. If you’re hired to install sunlights in a section of a shopping mall and the proprietors refuse to close that section off while you’re working there, an injury is effectively guaranteed. Construction is best conducted in an environment that the construction company is able to control.
  • Proper insurance coverage. Adequate coverage doesn’t ensure that nobody’s going to get hurt, but it does ensure that you’ll be prepared should that happen.

If you don’t have these cornerstones in place, then it really doesn’t matter how well trained your people are in responding to an emergency, because they’re not going to be able to keep up with the emergencies that are taking place no a daily basis.

If you have questions about your insurance or need some guidance and advice on how to properly cover your company and employees, give us a call!

The Worst Construction Mistakes Ever Made

Forgetting one hurricane tie before drywalling probably isn’t going to see a house going up in a tornado like in The Wizard of Oz. Some mistakes aren’t that big a deal. Others… well, here are some of the biggest mistakes ever made in construction, engineering and architecture:

The Aon Center

The Aon Center, completed in 1973, was known for its beautiful exterior made of Italian Carrara marble. A fetching addition to the Chicago skyline, it turns out that there’s a reason they don’t use Carrara marble on most buildings. It’s a very thin material. Just one year after the building was completed, pieces started to crack and fall off, one of them smashing through the roof of the nearby Prudential Center. Replacing the exterior with granite cost over $80 million. There’s something to be said for using the right materials the first time.

NASA and Lockheed Martin’s Mars Orbiter

Long story short: in 1999, Lockheed Martin used the English system of measurement on a project with NASA, while NASA used the metric system. The Mars orbiter was then unable to transfer its coordinates to the lab in California. Now there’s a $125 million chunk of useless metal floating around the galaxy. You might not be building a satellite any time soon, but it’s important to get on the same page with your crew and your client when it comes to how many inches are in a meter.

Vdara Hotel & Car Dashboard

The Vdara Hotel & Spa is a classic example of a designer putting form before function. All those reflective surfaces on the windows surrounding the pool looked absolutely stunning, but at mid-day, they created a sort of magnifying-lens-on-an-ant effect, scorching people in the swimming pool and turning the whole area into a car dashboard on a Summer afternoon. One man even claims to have had some hair singed right off his head while going for a swim.

Piper Bravo Oil Rig

The smallest mistakes can have major complications. The Piper Bravo Oil Rig exploded, killing 167 people, simply because safety inspectors forgot to replace a single safety valve after a routine check of the rig. The repairs cost more than $3 billion in 1994 USD. This is something worth thinking about the next time a worker decides that he doesn’t need to wear his goggles if he’s only going to be using the table saw for a couple minutes.

The Origins of Workers’ Compensation

Read about how workers were treated in the old days and it can be a little scary. Few industries were as brutal for the worker as mining, but it’s generally safe to say that companies didn’t really care about the people who worked for them 150 years ago.

That being said, we tend to think of progress as being a straight line: Things used to be bad, now they’re not so bad. In truth, worker’s compensation is a very old concept. As far back as 2050 B.C., ancient Sumerian law dictated that workers be compensated for injuries, with each body part being valued differently. For instance, a thumb was worth only half what a finger was worth.

In the mid-1600’s, the famous pirate Captain Henry Morgan would compensate injured men to the tune of 600 pieces of eight for the right arm, 500 for the left, 500 for the right leg, and 400 for the left. If you’re wondering: Yes, that’s the same Captain Morgan from the rum bottle. Bet you didn’t know he was a working class hero, huh?

Modern worker’s comp laws have their beginnings with Prussian Chancellor Otto von Bismarck. von Bismarck created the Employer’s Liability Law of 1871 in order to settle social unrest. By 1884 he would establish Workers’ Accident Insurance, providing monetary compensation as well as medical and rehabilitory considerations. The intention of these laws was primarily to ensure that employers not be hit with civil lawsuits. By giving workers a way to recover and to seek compensation without harming the financial well-being or reputation of their employers.

In the US, modern worker’s compensation dates back to the early 20th Century. With industrialization, workplace injuries began to rise, and worker’s compensation laws proved an effective way to address this. Authors like Upton Sinclair are often cited as major proponents in the push for safer working conditions and worker’s compensation for the American laborer. Sinclair’s book The Jungle detailed fact-based accounts of workers falling into meat grinders and being served to the public… leading to the Food and Drug Administration Act of 1906. The shift in public attitudes was slow going at first, with people showing more concern for their food than for the people producing it.

In 1910, a conference was held in Chicago where the guidelines for compensation law were first established, and then passed into law, first in Wisconsin, in 1911, and spreading to other states, ending with Mississippi in 1948.

Worker’s compensation has been a fundamental principle in most industrialized nations. Many historians actually consider it odd that the US took so long to enact such laws to protect workers.

Completed Operations – Defined

Operations concerns work in progress such as constructing the steel for a bridge. Completed operations is the finished process or scope of work put into its intended use by someone other than another contractor.

The steel skeleton is an operation when the concrete subcontractor pours the decks. It’s a completed operation when traffic begins to flow, whether or not the guardrails are functional.Completed operations liability covers the consequences of faulty work: not damage to the faulty work, but bodily injury and property damage as a result of the faulty work. The steel isn’t covered, but the car it lands on is. completed operationsThree tests must be met to secure completed operations coverage for a specific claim:

1. The bodily injury or property damage must arise from your work product or completed operation.

2. The claim occurs away from insured premises owned or rented.

3. The work must be completed or abandoned when the injury occurs.

The subcontractor exception can be difficult to understand:

1. The exclusion does not apply to work done by subcontractors.

2. The exclusion does not apply if the damage arises out of work by a subcontractor.

If your general contracting company installs an HVAC system incorrectly that burns the building down, your work will not be reimbursed by your insurance carrier, but the work of your subcontractors will.

If a subcontractor installed the faulty system, all the work will be reimbursed by your insurance company. Of course, your company will likely subrogate (that is sue), the subcontractor.

The best risk management technique for this exposure is only perform work within your expertise and subcontract the balance of the contract, and perform quality control inspections on your work and that of your subcontractors. Document specific work completed by your subcontractor. Test your materials and fix defects as you work on the project.

Make sure your work is completed correctly to your satisfaction before releasing the project for its final use.

OSHA – Embrace the Mission

OSHA safetyThe Occupational Safety and Health Administration (OSHA) mission concerns the reduction and elimination of workplace conditions which lead to accidents and illness.

OSHA is rumored to be feared by many contractors for surprise inspections and handing out steep fines. We recently noted some of these in our post about new OSHA reporting requirements for 2015.
OSHA, however, administers safety and health more than policing it. If you embrace their mission, OSHA becomes a great partner.

Use OSHA Research
OSHA has libraries of manuals and fliers regarding on the job hazards and alerts for newly discovered perils. The publications, available on their website, bring awareness and solutions to potentially dangerous job conditions.
The literal A to Z coverage of dangerous chemicals and occupational risks can be found at https://www.osha.gov/pls/publications/publication.html in English or Spanish.

Use OSHA Paper work and Forms
Some are mandatory anyway, so adapt the forms to your reporting purposes and cut back on data entry. Their injury log organizes essential data for injury occurrences on the job. Add to these data by keeping records of near misses, prevention responses, or any in house data or follow up within your own safety culture.
Read and review OSHA forms to mine ideas regarding your own programs. OSHA responds to general safety and health needs, but you can tailor ideas to fit your specific conditions.

Use OSHA Spanish Language Signs and Instructions
OSHA serves as a built-in interpreter for essential safety communications which require a specialty lexicon. Non-English speaking labor does not automatically know the United States standards of or tolerance for safety. OSHA helps with the teaching.
Some signs serve as a reminder of important employee rights and procedures. OSHA has these signs available in Spanish to assure your compliance.

Use OSHA Training Classes
HAZMAT response may be a specialty occupation, but most laborers should have basic knowledge of how to spot a potential toxic chemical spill. OSHA certified training is quite good in this area.
If you’ve been cited unfairly or just don’t like the idea of OSHA site inspections, don’t deprive yourself of OSHA research, posters, language help or ideas. Embrace the health and safety aspects for your employees. You have that in common.