Risk Control Contractor’s Equipment Guide to Risk Control Introduction Contractor’s Equipment presents a great diversity of exposures in a wide variety of environments - afloat, ashore, in cities or villages, in quarries, in forests or mountains - virtually anywhere. Contractor’s equipment may be owned or used by building contractors, road contractors, excavators, steel erectors, landscapers, carpenters, electricians and a great many other construction specialties. States, counties and municipalities may own many kinds of equipment for maintenance, road construction, snow and trash removal and other services.

Covered Equipment Almost anything used in the construction process could be insured under a Contractor’s Equipment policy: tractors, bulldozers, cranes, graders, forklifts, drills, loaders, backhoes, draglines, concrete mixers, derricks and other specialized equipment. Policies also are written for smaller items such as compressors, generators, hoists, pneumatic tools, cables and even hand tools - all of which may present significant insurable values.

Losses Direct losses to contractor’s equipment are estimated to be in excess of $1 billion annually. Major causes of loss include fire, theft, vandalism, collision, upset and overturn. Many losses are the result of lack of training, inattention, oversight and carelessness. Increasingly, drugs - including alcohol - contribute to losses and accidents.

Management Practices A. Administration 1. Establish criteria for selection of qualified employees. This should include securing and checking references of new employees. 2. Establish loss prevention programs involving all personnel, including appropriate monitoring and feedback procedures. 3. Join a trade organization within your specialty. B. Training Program 1. Designate an individual responsible for a formal training program 2. Establish written operation/maintenance instructions for equipment. 3. Train operators in established procedures. 4. Verify qualifications of temporary employees on specific equipment through demonstration of ability. 5. Indoctrinate temporary employees in management’s procedures and methods. 6. Evaluate operator performance periodically. 7. Maintain records to identify qualified personnel and those not meeting requirements.

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Risk Control C. Safety Program 1. Designate an individual to establish overall safety programs including safety training sessions and emergency drills. 2. Designate an individual to review safety procedures and inspect work practices and job site conditions, with written reports to management. 3. Post in a prominent location equipment operating instructions and procedures. 4. Conduct accident investigations and evaluate to establish preventive measures. 5. Establish safety incentive award program. D. Equipment Maintenance 1. Designate an individual responsible for a maintenance program. 2. Establish preventive maintenance requirements and procedures for all equipment. 3. Inspect equipment regularly and maintain records to monitor compliance with procedures. 4. Establish requirements for qualifications and training of individuals responsible for maintenance. 5. Maintain a current inventory of all equipment to assure the continuance of a proper maintenance program. 6. Provide daily operator check of equipment and feedback to maintenance personnel. 7. Maintain records of equipment operating hours, breakdown and damage repairs to establish machinery history.

Fire Prevention Fire has caused severe losses in the construction industry through the damage of valuable construction equipment. The loss of use of this equipment for extended periods, whether to make repairs or obtain replacements, has delayed contract completion. Often this has resulted in contracts being nullified, penalties being incurred for failure to complete work on schedule, as well as increased insurance premium levels. The following outline summarizes basic practices that will reduce the probability of damage to equipment caused by fire: A. Construction Site 1. Water for fire fighting purposes should be made available as soon as possible. 2. Access for emergency equipment to the site should be provided in the initial stage of site preparation. 3. Employees should be trained in fire extinguisher use. 4. Emergency telephones numbers should be posted at each jobsite telephone. B. Equipment Fueling 1. Main fuel supply should be stored in an approved, secured tank located on level ground, remote from work areas. 2. An adequate-sized fire extinguisher, suitable for use on flammable liquid fires, should be permanently mounted nearby. 3. Park, shut down and secure all equipment prior to fueling. 4. Hot engines, catalytic converters, etc., should be allowed to cool prior to fueling. 5. Eliminate all ignition sources (smoking, open flames, etc.). 6. Fuels should be transferred by approved pumps or safety cans where applicable. 7. A continuous ground should be maintained between the pump nozzle and the equipment filler pipe. 8. Reserve fuel should not be stored on equipment, except in an approved fuel tank. 9. Fuel spills should be cleaned up immediately by absorbing compounds, or other approved methods. 10. An approved fire extinguisher should be mounted on all equipment remote from the fuel system when refueling.

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Risk Control C. Hydraulic System 1. Where possible, “high flash point” hydraulic fluids should be used. 2. Hydraulic systems - including reservoirs, pumps and distribution lines - should be protected against external damage. 3. When field repairs to systems involving combustible fluids are necessary, precautionary measures and filling instructions provided by the equipment manufacturer should be observed. D. Special Hazards 1. High value, high hazard, essential equipment should be protected by a suitable fixed fire extinguishing system, either on a new or retrofit basis. 2. When not in use, equipment should be stored in the open with adequate separation from other equipment, buildings, yard storage and fueling areas. 3. Brush and other debris should not be allowed to accumulate under or around equipment. E. Prevention and Maintenance 1. Equipment repair areas should be located away from work, storage and fueling areas, and an adequate number of suitable fire extinguishers should be provided. 2. All equipment should be inspected on a regularly scheduled basis. 3. Worn or damaged electrical wiring, cables, fuel or hydraulic lines, etc., should be repaired or replaced. 4. Equipment should be cleaned on a regular basis with special attention given to engines. 5. Fixed and portable fire extinguishing equipment should be tested and serviced as recommended by the manufacturer. 6. Welding and cutting should not be conducted in areas where combustibles are stored for flammable vapors are present.

Weather-related Perils and Natural Disasters Contractors’ knowledge of site exposure to equipment is often inadequate because of the tendency to place emphasis solely on the more obvious problems of operator error, fire, theft and vandalism. While these problems occur more frequently, none present greater potential for catastrophic loss than exposures relating to natural disasters and weather conditions. Contractors must be aware of the special climatic, geological and topographical conditions of the areas in which they will be working. These conditions will vary from jobsite to jobsite and will require a specific loss control program designed to handle the problems on each job. The following should be considered when designing a program to control the jobsite exposures: A. Store equipment away from flood plains, valleys, narrow passages, gorges, canyons or other areas subject to flooding. B. When working in an area subject to flooding, have an emergency plan to remove equipment to a safe location when a flood is threatened. C. Develop a flood salvage plan when work must be undertaken in areas with a very high flood potential. D. Keep abreast of weather conditions and discontinue operations in weather extremes. E.

Tower cranes should be allowed to swing freely during high wind conditions. Mobile crane booms should be lowered (where possible) or tied off in accordance with manufacturer’s instructions to the leeward.

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Risk Control F.

Spread out high-value equipment. Where a large number of pieces of equipment are stored in one area, separations should be provided between small groups of equipment to prevent damage and minimize exposure.

G. Do not store equipment adjacent to high-rise buildings under construction to prevent damage from falling debris or materials. H. Do not store equipment directly below or on the edge of steep cliffs or embankments. I.

Steep cliffs and embankments in work areas should be sloped back or shored up.

J.

Determine subsurface conditions, e.g., quicksand, caverns, old tunnels or mines, pipelines and electrical conduits.

K. Check overhead exposures, e.g., proximity to airports, power lines and bridges.

Transportation Transportation of equipment is another area of potential loss. Damage in many instances is subtle and does not become apparent until the equipment is placed in operation. The following practices should be considered: A. Preparation for Transport 1. Keep angle of ramp low when loading onto transport. 2. For cranes, keep boom low and facing the ramp. 3. Crane boom section should be dismantled, hoisted and secured according to manufacturer’s instructions. 4. Maintain minimum fuel levels on loaded equipment. 5. Center, stabilize and shackle equipment to the transport to prevent movement, including upper works to guard against rotation. 6. Chock wheels and tracks of equipment. 7. Install adequate warning lights and flags as necessary. 8. Neutralize all operating controls and lock ignition. 9. Set brakes. B. Operating the Transport Vehicle 1. Establish a planned route -- avoid defective road beds, soft ground and slopes. 2. Check all clearance en route, both overhead, sides and underpass clearances. 3. Check road bed and bridge load limits. 4. Operate carrier with lights on and be certain that warnings signs and flags are in place. 5. For large units place flags at front and rear of vehicles. 6. Travel speed should be as low as possible.

Operator Practices Careless and unskilled use of equipment is a major source of personnel injury, damaged machines, equipment downtime and lost time generally. The following suggestions are offered to encourage equipment operators to avoid damage by collision, upset or boom collapse. A. All 1. 2. 3.

Equipment Test machine before operating. Maintain manufacturer’s specified tire pressure. Know work areas, including traffic patterns, speed limits, signals and signal crew, location of holes, mud and ice, and ground irregularities.

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Risk Control 4. 5. 6. 7.

While scraping, hauling and dumping, keep loads low, and keep a safe distance from ditches, excavations, walls and overhangs. When operating on slopes, avoid side hill travel whenever possible. Operate up and down slopes and avoid sharp turns. Never travel with full load or loads near capacity. Center or stabilize load while equipment is traveling.

B. Cranes Only 1. Cranes must be set on a firm base, leveled all around. 2. Outriggers should be fully extended on either firm soil or mats, with all rubber clear of surface. 3. Use alternate levels, as cab-mounted bubble levels are small and can be inaccurate. 4. Follow established maximum load lifts at given radii. Other load lifts require pre-engineering. Note that boom angle indicators can be inaccurate by several degrees. 5. Shipping load weights could be “light” - use gross weight or weigh the load. 6. Know designated signal crew member and his/her signals. 7. Operate smoothly, keeping eyes on the load. 8. Maintain maximum distance from overhead obstructions. Keep maximum clearance to power lines. 9. In emergency release of load, lower both hoist and boom mechanism to avoid boom kickback.

Security No security device or system on the market today can provide absolute protection against theft or vandalism. However, the following are some of the most important practices and steps that can be taken to deter or minimize loss or damage to equipment by thieves or vandals. A. Remove keys from unattended machines and lock them in security boxes when closed for business. B. Install alarm systems on all major pieces of equipment. C. Attach anti-vandalism and anti-theft devices on all machines not protected by alarms. D. Post warning notices on machines advising that all vehicle identification numbers (VIN) and serial numbers are recorded. E.

Keep storage yards well lighted and fenced, with one entrance.

F.

Request police to make frequent area checks when closed.

G. Employ watchman at storage sites and/or jobsites. H. Immobilize equipment when equipment is not to be used; remove rotor, lower blade or buckets, remove battery and electric starting systems. Lock up equipment at night. I.

Use a hardened steel punch (or etching tool) to duplicate the serial number in at least two places -- one obvious and one hidden.

J.

Record all serial and identification numbers. Take photographs of equipment. Keep an accurate inventory.

K. For easy recognition after a theft, repaint equipment with your own color scheme or design.

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Risk Control L.

Secure all shanties and storage buildings at home base and jobsites with alarm systems.

M. Where available, utilize a police activated low-radio frequency recovery system. N. Register Equipment with a nationally recognized equipment registry organization.

For more information, visit our Web site at travelers.com/riskcontrol, contact your Risk Control consultant or email [email protected].

..................................................... The Travelers Indemnity Company and its property casualty affiliates One Tower Square Hartford, CT 06183

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The information provided in this document is intended for use as a guideline and is not intended as, nor does it constitute, legal or professional advice. Travelers does not warrant that adherence to, or compliance with, any recommendations, best practices, checklists, or guidelines will result in a particular outcome. In no event will Travelers or any of its subsidiaries or affiliates be liable in tort or in contract to anyone who has access to or uses this information. Travelers does not warrant that the information in this document constitutes a complete and finite list of each and every item or procedure related to the topics or issues referenced herein. Furthermore, federal, state or local laws, regulations, standards or codes may change from time to time and the reader should always refer to the most current requirements. This material does not amend, or otherwise affect, the provisions or coverages of any insurance policy or bond issued by Travelers, nor is it a representation that coverage does or does not exist for any particular claim or loss under any such policy or bond. Coverage depends on the facts and circumstances involved in the claim or loss, all applicable policy or bond provisions, and any applicable law. © 2008 The Travelers Companies, Inc. All rights reserved.

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