Crane collapses are like shark attacks.
Year after year, they occur at a fairly consistent rate, usually out of the public eye except in the locations where they occur.
Once in awhile, however, they occur in high profile locations or in an unusual sequence—or both—that capture media attention and the public imagination. That was the case earlier in 2008, when two tower cranes collapsed at construction sites in New York City, killing nine people in all.
Between those two incidents there were at least five construction crane accidents with fatalities in the U.S. Another worker died in a Dallas-area crane accident a few days after the second New York City incident, and four died in a Houston accident in mid-July.
In the wake of such occurrences, it may surprise readers to learn that the death rate from crane collapses in the spring of 2008 was actually below that of the average annual rate of 82 deaths per year from 1997 through 2006, according to the U.S. Bureau of Labor Statistics.
Nonetheless, the nation’s leading crane industry organizations have seized upon the attention given to recent crane collapses as an opportunity to promote their agenda for improving the safety of crane operations.
About a month after the first New York City collapse in March, the Specialized Carriers & Riggers Association (SC&RA) announced the formation of a “Tower Crane Task Force” charged with reviewing crane collapses and compiling a list of “best practices” for preventing them.
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AAIS recently released updated policy forms and a revised rating procedure in the Riggers’ Insurance section of the Inland Marine Guide, a leading source of policy forms, rating procedures, underwriting guidelines, and other information for the traditionally nonfiled classes of inland marine insurance.
Riggers’ insurance is written for contractors that specialize in hoisting heavy equipment or fixtures onto structures.
The Guide’s base form for this class primarily provides open perils coverage for property of others under the insured’s care, custody, and control. In addition, there
is a new supplemental coverage for the insured’s own
loss of earned rigging charges due to a covered loss to
covered property. Also, two new optional endorsements have been introduced:
- One new endorsement provides coverage for contract penalties incurred due to delays caused by covered perils.
- The other new endorsement provides coverage
for expediting expenses needed to complete a
project on time after covered property is impacted
by a covered peril.
The revised rating procedure for this class includes a new step for rating those coverage options, as well as expanded risk characteristics used to document selection
of the basic load.
Although riggers’ insurance is one of the nonfiled inland marine classes, AAIS has filed the forms and endorsements for this class in 21 states that do not exempt inland marine insurance from filing requirements.
For information on affiliating with AAIS for use of
the Inland Marine Guide, contact Rick Maka, director
of marketing, at rickm@AAISonline.com or by calling
800-564-AAIS. |
Then, a week after the second New York City incident, SC&RA representatives teamed up with spokesmen of three other crane industry organizations in a press conference to promote “enhanced training and rigorous new standards for safe crane construction, operation, and maintenance.”
“It cannot be overemphasized that the time for action is now,” said Bill Smith, one of the participants and president of NationsBuilders Insurance Services, Atlanta, Ga., a brokerage that provides the SC&RA’s endorsed insurance program.
The groups represented at the press conference are primarily interested in having public officials implement and enforce uniform standards for the certification of tower crane operators.
“The largest percentage of crane accidents occur as a result of human factors,” Smith said in his remarks. Most accidents reportedly happen when workers try to “jump” a crane by attaching sections to make it taller.
“Generally speaking, the equipment itself is safe and reliable, but the technology in our industry continues to advance,” he added. “New technology creates a need to stay current on technological changes.”
Smith and the others reported great progress in getting more crane operators certified by the National Commission for the Certification of Crane Operators (NCCCO, one of the organizations participating in the press conference).
But, “such certification is not uniformly required nationwide,” Smith said. “Some states and municipalities have their own requirements. Some don’t have any requirements.
“Further, not all contractors demand that their operators adhere to the certification standards developed by the NCCCO.”
More specifically, industry groups are urging the U.S. Dept. of Labor to implement a uniform certification standard for crane operators that SC&RA says has “languished” without action since being proposed in July 2004.
While concern for public and worker safety is principally driving the push for crane
operator certification, the stakes are also great for inland marine insurers that cover property exposures related to construction cranes.
According to Michael Berg, chief inland marine underwriting officer for Fireman’s Fund, it’s too soon to tell what impact the highly publicized crane accidents will have on the underwriting and pricing of inland marine coverage of cranes and related risks.
He agrees, however, that “states should require operators to be licensed,” adding that “jobsite inspection by state and local agencies would be a positive step.”
First-party exposures of cranes are typically covered under three traditionally nonfiled classes of inland marine insurance:
- Builders’ risk, which covers a structure under construction (and materials to be installed in the structure);
- Contractors’ equipment, which covers the cranes themselves, as well as other equipment; and
- Riggers’ insurance, which covers property (usually heavy machinery or equipment) being hoisted onto a structure.
“Crane exposures require specialized underwriting,” says Rich Soja, global manager of Chubb Marine Underwriters and the current chairman of the Inland Marine Underwriters Association.
“In addition to the collapse peril so highly publicized in the news recently, cranes also catch fire, turn over during transit, and suffer water damage,” he says.
“Underwriting large cranes requires an understanding of the utilization of the equipment, the terrain on which it operates, its catastrophe exposures, its age and maintenance, and the operator experience and procedures for vetting operators.”
Underwriters need to be especially careful when writing time element coverage for projects that involve cranes, because many cranes used in the U.S. are manufactured overseas, and there can be long delays in securing replacement parts.
“Large cranes are not mass produced and, in some cases, there are only a few of their type worldwide,” Soja says. “If a crane is destroyed, a project could be delayed for months awaiting a replacement crane.”
The need for sound underwriting is especially important when you consider that inland marine coverage for property exposures of tower cranes is almost always written on open perils forms with few, if any, exclusions to protect carriers from loss.
For example, a “weight of load” exclusion appears only in the most restrictive Contractor’s Equipment forms provided in the AAIS Inland Marine Guide, and not in the more widely used blanket coverage form. That exclusion eliminates coverage for contractors’ equipment losses caused by loads that exceed registered lifting capacity under operating conditions at the time of a loss.
Proprietary contractors equipment forms often exclude “boom or jib collapse,” says Soja at Chubb, but the coverage is commonly “bought back” by endorsement.
“Brokers want the broader coverage, and the market is such that they can usually get it,” says Robert Guevara, AAIS vice president of inland marine.
Even when they are in place, such exclusions are rarely invoked because they are difficult to enforce. The same holds true for builders’ risk and riggers’ policy exclusions for faulty “workmanship.”
According to Guevara, “proving the actual cause of a loss is not a straightforward determination.” The complex considerations involved in the setup and operation of cranes often make it impossible to determine if human
error or fortuitous circumstances caused a loss.
“It’s a very difficult thing to prove after a loss because of the damaged condition of the equipment,” says Berg at Fireman’s fund.
“Unless there are deaths or severe injuries, an accident site is usually cleaned up immediately,” adds Guevara. “You can’t always prove that a load was too heavy or some other error was made.”
Underwriters, therefore, need to understand and price their exposure to cranes when writing broad form contractors’ equipment coverage.
“The policies are not going to save you, for the most part,” says Guevara, “Nobody should look to the form to save them from claims arising from crane collapses.”
Crane safety 
