Crane Collapse: Between Ruin and Restart in Insurance

The recent crane collapse in New York City raises new questions and concerns about policy and safety procedures being followed on construction sites. Though it’s a rarity when an accident like this actually occurs, city investigators are working to discover exactly what caused the crane to collapse, if operator or mechanical failure played a part, and how the incident figures into public safety during a record-breaking surge of construction activity in New York.

The initial steps to determining what actually happened starts with constructing a timeline of events and asking: Who was at the site of the accident? Was the decision to lower the crane made quickly enough? Was the operator actually onsite to secure the crane in a timely fashion? Were the crane and operator in compliance with NYC Department of Buildings mandates?

Agents and brokers understand that the investigation really begins when the insurance carriers get involved, as they will dig back as far as the original purchase transaction for the crane in an effort to put together a complete picture for their appearance in court.

The high-profile nature of the incident can compound the insurance companies’ problems because the spotlight is shining extra bright, opening the door to false injury claims and other types of insurance fraud. The due diligence of the insurance companies will determine the financial outcome of this case.

Given the consequences of an accident like this, onlookers might wonder if there’s anything that can save a company from complete financial ruin. After all, the resulting property damage is always in the millions, not including the mammoth costs related to a death.

As simple as it sounds, having the right kind of insurance in place for your client will help them get through this type of catastrophe without having to go out of business.

While General Liability coverage, which will cover any damage the crane inflicts including loss of life, is the starting point, special insurance coverages exist to protect crane operators specifically. Riggers Liability covers things “on the hook” and the damage that those items might cause during crane operations, and Inland Marine covers the damage to the crane itself. This is especially important coverage in an accident like the one in New York, where workers had to cut the crane into pieces to remove it from the street.

However, as most of these operators are subcontractors, general contractors need to make sure that the crane operator has adequate insurance limits or else, in the case of an accident with massive losses, the claims could start dipping into the GC’s insurance policy for payment.

The Occupational Safety and Health Administration is coming out with some increased crane safety guidelines in October of 2016. Cranes have been on the back burner at the agency for quite some time, but this high-profile loss in New York will help push OSHA to finalize new guidelines around maintenance, certifications and general safety issues allowing agents to insure their clients more effectively.