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Got enough insurance?

Aggravated about the rising costs of your insurance coverage? Every time you sign a contract to either do something or have something done, you have to increase your coverage, get an umbrella, add additional insureds with Waiver of Subrogation – and this all just costs you more money. Why?

All we’re talking about here is maybe a road bore – how difficult is this? What is the big deal? You’ve done this many times before – nothing went wrong!
Road bore – could this cross the utility right of way? Phone lines, gas lines, water, oil…perhaps even propane. Do you know what’s underground where you’ll be working? You’d better call 811!

Did you know that if you just scrape some of the protective coating off a gas line, within a few years, it WILL blow? Not “might” or “could”, but will. In Pennsylvania, a sewer line installation that scraped off some of the protective coating led (five years later!) to an explosion that killed one and severely injured several others – destroying several homes and damaging others. Got enough insurance for that, you think? (Trust me – you don’t!)

Several insurance companies paid several millions, yet it could all have been avoided with a phone call and a day or so wait until all the utility lines were marked. Of all the stakeholders, none have a bigger financial stake in the underground damage prevention process than the insurance companies.

Insurance rates are based on loss experience – each class of operations, regardless of where you fit into the process – excavator, utility provider, pipeline, even landscaper and tree services, carries a specific rate upon which your insurance premium will be based. It will vary based on specifically what you do, and the risk thereof. While a lot of factors are included in the rate, a large factor will definitely reflect what kinds of losses have been paid out. The more losses paid out for a given class, the more insurance is going to cost for that class.

Obviously, an office risk isn’t going to be expensive, and why should it be? Slip and fall will likely be the only losses the insurance company will be likely to have to pay out. An oil or gas pipeline carries a much higher potential for claims, including environmental exposures. But these pipeline companies – gas, oil, propane – are sitting ducks! They can be doing everything right, and someone cuts or damages one of their lines, fails to report it – then WHAM! They’re tagged with an enormous claim. If the investigation doesn’t point to the actual culprit, their insurance company shoulders the entire loss. In the Pennsylvania case, investigation showed that the sewer line intersected the gas line at the point of the explosion – whoever laid that sewer line was obviously responsible for damaging the gas line.

Was it the water sewer company? Or did they hire someone who did it as just an odd job – and carried no insurance? Where would the claim fall then? Back on the water sewer company! Next time, they should hire someone to do their work who carries insurance of at least $1 million, and require that they be named as additional insured with Waiver of Subrogation – which means that the insurance company of the guys doing the work cannot come back on the water sewer’s insurance if something goes wrong. (Example of subrogation: you are in a car wreck that’s the other guy’s fault, but you get your car fixed under your comp and collision. Your insurance company then gets their money back from the company of the guy that was at fault.)

Without a doubt, the subrogation department of the gas line company’s insurance company would now try to recoup most or all of their losses from the water sewer company – or the city water sewer department – whoever laid that sewer line for the homeowner.

Several states have what’s known as “Tort Claims” protection – limiting how much the municipality can be sued for; most water sewer systems carry $1 million in General Liability – which, obviously is NOT enough given the Pennsylvania scenario. The water sewer company – or association – could be stuck with paying millions more for many years to come. A judgment isn’t reduced because you don’t have enough insurance!

That’s how it works. But a simple phone call, and waiting the appropriate time, will eliminate all of this. No one can carry enough insurance to handle a loss like what occurred in Pennsylvania – but your best insurance is membership in 811 – and making the call before you dig! It might be worth millions to you!

More directly, you can help your insurance rates go down! Just think of it as money in your pocket – make the call and be sure you tell everyone you know to also make the call whenever they plan to dig.

It’s your money! It’s also the law!