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lower construction insurance premiums

5 Ways Mobile Technology Can Lower Construction Insurance Premiums

Reducing Project Risk with the Right Tech

Construction is a high-risk industry. In addition to workplace safety concerns, owners of construction firms must also grapple with client disputes and miscommunications. The global average value of construction disputes was $42.8 million, according to Arcadis’ 2017 Global Construction Disputes Report.

Disputes cause a number of disruptions during construction projects. Depending on the nature of the dispute and how it is handled, the result might be project delays, broken contracts and even litigation.

Good construction insurance can protect firms from the dire consequences of client disputes, but sometimes premiums can be prohibitively expensive. For smaller construction companies working on tight margins, high premiums can stand in the way of company growth.

A typical insurance premium may cost between 1 and 4% of the total cost of construction for a project. In a tight market, where contractors are competitive with one another, the higher-cost premiums can put some firms out of business or force others to make poor decisions about using lower quality insurance.

Premium costs are based in part on claim history. Therefore, reducing the number of claims made on the insurance policy helps keep the premiums low and puts more money back in the hands of the contractor. Contractors seeking lower premiums must systematically reduce their risk and back up their actions with the right documentation. To do this, it’s essential to have the right mobile technology. With the right systems and software, construction firm owners create a safer culture for workers on projects.

Mobile software can also be used to create more effective communication processes between workers and management. Fewer miscommunications and accidents can lead to a reduction in construction insurance claims.

How is this possible? How can the right mobile technology have such a big impact on a contractor’s insurance premium?

Aon, a firm that provides a range of risk and reinsurance services, recently spotlighted how implementing PlanGrid mobile field collaboration software could reduce risk and lower insurance premiums. Read more about it on Aon’s website, and read below to learn about five major risks that construction software helps to reduce.

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5 Risks Mitigated with Construction Software

What are the significant risks that can be alleviated with the right technology? Here are five that can be mitigated today with the help of the right mobile construction software.

1. Defect

A construction defect can be a costly claim that could require additional work and money to fix. In some cases, defects can even cause harm to a contractor or a member of the general public.

Some defects occur because of a problem with the manufacturer’s product, while other defects arise because of failure to perform a repair or remodel properly. Defects also happen as a result of mistakes or errors in the planning and design stages.

Mobile technology reduces the risk of a defect happening due to a failure to perform a repair or remodel properly. By arming contractors with better data and access to the information they need, construction teams are able to avoid the mistakes that would lead to injuries and claims.

Mobile technology can also reduce the time it takes to resolve or litigate defects, by providing the right documentation of what really occurred after an accident takes place. Regardless of fault, both parties can move on and resolve issues more quickly with the proper electronic documentation.

2. Contractor Default

When subcontractors are unable to perform on a project, contractors are sometimes held responsible for the resulting loss of time or materials–known as contractor default. Considering the productivity problem that exists in the construction industry, it’s easy to see how this is likely to occur on projects.

While vetting and hiring quality subcontractors is essential to creating an efficient jobsite, due to the complexity of work, trades tend to suffer from miscommunication issues. These miscommunications can cause serious mistakes and rework, leading to contractor default. Nevertheless, mobile technology can help improve core productivity by improving coordination with subcontractors.

Collaboration software ensures that contractors and their subs working together on one project can stay in close contact with one another. When working on a big project together, cloud software enables contractors and their subs to access documents, record information and share ideas.

3. Claims Discovery Delay

Contractors are responsible for their work, even long after the project wraps up. If a defect is discovered months after the contractor last sets foot on the jobsite, that contractor is still liable for the damage the error caused.

In the past, contractors found it difficult to defend themselves or clarify their actions when a problem occurred. Mobile software, especially software that incorporates data from building information modeling (BIM) can help prevent these claims for contractors. Any mobile software that improves documentation and provides all information accurately could help the contractor avoid litigation.

4. Property Damage

Occasionally, contractors cause damage to the property they are remodeling or improving. Once again, thorough documentation through mobile construction software can help reduce this risk.

If the damage is not the contractor’s fault, mobile documentation can sometimes prove this to those who would turn to the contractor for answers. Alternatively, mobile software can sometimes help ensure that damage is not created in the first place.

By giving teams the correct information when building begins, mobile software can prevent contractors from making the mistakes that would lead to this property damage. Software that focuses on contractor safety, such as certain types of virtual reality and augmented reality software, can help with this, too.

5. Schedule and Cost Overruns

Due to rework and coordination issues, the majority of projects experience some degree of schedule and cost overrun. Ballooning schedules and costs can cause disputes and litigation between property owners and their contractors.

By creating a collaborative environment and enabling information sharing between the two parties, mobile software ensures that these rework and coordination issues are much less likely to arise. Overall, the right solution helps mitigate job costs and helps ensure the smooth completion of each project.

Mobile Software: A Key Way to Reduce Construction Insurance Costs

Many different types of mobile software can help reduce project risk. Often, the best software can reduce your firm’s chances for an accident or a miscommunication. If you’re interested in learning how specific mobile solutions can reduce risk and lower construction insurance, be sure to check out the Aon article featuring PlanGrid.