Construction industry risks aren’t limited to those at worksites. Among the biggest challenges contractors face are those found on the road – how to keep their drivers and vehicle fleets safe. As the number of miles driven by Americans continues to increase in the years since the pandemic, drivers are more frequently distracted or are behind the wheel impaired, with accidents becoming all too frequent.

Apart from the risk to their drivers, construction companies also face an increasing likelihood that accidents could end in litigation resulting in large claims. Nuclear verdicts are becoming all too common against companies that operate fleets, particularly those with large trucks and other commercial vehicles. Additional liability risks remain in focus for contractors, including the continued systemic labor shortages fueling a skilled labor crisis within the industry, as well as concern for worker physical and mental health in a rapidly evolving environment.

Zurich customers are using camera-based telematics systems to help reduce their number auto claims and improve driver safety. The systems not only capture what happens around a vehicle but can also be used to alert drivers about risky behavior.

“For example, some systems can alert a driver who is looking at their phone that such a lapse in attention should be corrected. Such functions can go a long way to ensure that contractors’ fleets are safer,” says James Savage, Head of Construction Casualty.

Some tactics to improve fleet safety are as simple as awareness campaigns that can be used to warn drivers of the dangers of texting while driving or operating a vehicle while impaired. Teaching drivers to be on the lookout for motorists who engage in those behaviors can also be an aim of the campaigns.

Studies show that distracted and dangerous driving behaviors are significant risks. The IIHS found that 74.1% of people who drive every day reported engaging in a non-driving-related task most or every time they drove. The AAA Foundation for Traffic Safety’s 2021 Traffic Safety Culture Index revealed that 23.7% of drivers were behind the wheel when they thought they had consumed enough alcohol to put them over the legal limit.

As the number of miles that vehicles travel has increased in recent years, there has been a shift in where many of those miles are driven. Populations have dispersed to areas where roadways and infrastructure aren’t adequate to support the influx of traffic, resulting in more accidents. In addition, electric vehicles are making up an increasingly larger number of cars and trucks on the road. EVs are powered by batteries that are heavy, making the weight of the vehicles substantially higher than traditional gas-powered vehicles.1

“When you have vehicles traveling at the same speed, some weighing 50% more than others, collision impacts may be more violent, potentially causing more injuries as a result,” Savage says.

Commercial fleets with EVs can expect extended wait times to have damaged vehicles repaired, Savage points out. “Because there are not enough mechanics to replace those who are leaving the workforce, there are too few qualified to work on vehicles that essentially operate as a smartphone on wheels,” he adds.

As discussed within Tackling lawsuit abuse, contractors, especially those that maintain large vehicle fleets, must contend with the possibility that an accident could lead to a substantial settlement. Nuclear verdicts, those higher than $10 million, have become increasingly common, with some reaching as high as hundreds of millions of dollars.

The Geneva Association found that the notion that companies put profits over safety is a common one, for example. The research also revealed that 63% of those surveyed felt that safety should be a company’s top priority no matter how impractical and costly. And, perhaps most importantly, 82% said their decisions are based on right and wrong, even if they conflict with the law. Fifty-seven percent said they would ignore a judge’s instructions to avoid Internet research on a case.2

“Construction firms and their risk managers need to focus carefully on making sure drivers have up-to-date log books and ensuring they are not distracted by phones or other devices while driving,” Savage says. “When plaintiffs’ attorneys are able to argue that distracted driving may have contributed to an accident, chances are high that a large verdict will follow.”

The construction industry needs to hire an additional 500,000 workers in 2024 in addition to the normal pace of hiring simply to keep up with the labor demand, according to trade group Associated Builders and Contractors.4 In 2025, the association predicts, 454,000 additional workers will be needed, and that is assuming that construction spending growth will slow significantly next year. In 2025, the association predicts, 454,000 additional workers will be needed, and that is assuming that construction spending growth will slow significantly next year.

Such an acute labor shortage creates issues that can endanger workers and increase insurance costs.

With fewer skilled workers on the job, construction accidents are more likely. And that leads to rising workers’ compensation costs. Studies have shown that up to 50% of work comp claims are filed by workers in their first year of employment, Savage points out.

“Because the demand for skilled construction labor is so high, companies are advised to ensure that the workers they hire are well-trained for the demands and hazards of the job,” Savage says

Clearly, the weather in the U.S. is getting hotter. Heat causes worker fatigue and injuries are more likely when workers are tired.

“Frequent breaks are advised as parts of the work routine when temperatures are dangerously high,” Savage points out “Some days, it can simply be too hot to work; the risk to the welfare of workers is too great.”

As climate change affects workers’ ability to work, additional financial risk can be created for contractors. A parametric weather product such as the one offered by Zurich is triggered if temperatures at a worksite reach a certain level and workers are unable to safely perform their job duties. Such coverage could serve as a risk management tool to help subsidize the potential financial burden created by halting progress on a project out of concern for the safety and health of employees.

Mental illness is a leading cause of disability in the construction workplace, according to the Construction Rehabilitation Plan, a nonprofit that provides mental health services to the construction industry in Canada. The group’s research revealed that 83% of construction industry workers have experienced some form of moderate to severe mental health issue.6

Sadly, the incidence of suicide is alarmingly high among construction industry workers. The Centers for Disease Control published statistics that showed suicide rates in 2021 among construction workers were among the highest for major industries, second only to mining.7

Zurich works with several vendors, as well as supports Construction Safety Week, to create mental health awareness products. WYSA is one such product, an AI-led support program that gives users an anonymous and safe space to work through mental health issues before they escalate.

Construction liability risks span from roadways to courtrooms, and from tight labor markets to worker health. Managing the myriad of risks construction-related businesses face calls for solutions that can range from simple awareness campaigns to complex strategies aimed at addressing the potential for nuclear verdicts.

Working closely with insurers and brokers can help contractors manage these risks, helping to prevent losses before they occur while keeping claim costs as low as possible when they do take place.