Page 19 - Alabama811

Wanna Really Get Sick?
By Virginia Reames,
The Policy Center, Jackson, MS
It was just a normal day. Joe Contractor got a call to do some work, and called in a sub for the trenching part. Everything was going along just as expected when, suddenly, the sub “failed to make a
turn for the underground power lines. The power was knocked out for a few hours, and the power company had to replace the lines. When the power came back on, there was a power surge and the boats at the marina had electrical damage, and the claimants’ damages ranged from a few hundred dollars to over eight thousand dollars. You advised our independent adjuster that you did not have a locate ticket and that you had no contract with the subcontractor.”
The above language is an excerpt from a letter from a national insurance company to a contractor denying coverage for the accident. It’s not a normal day anymore. Joe Contractor is facing huge losses – maybe even the loss of his business!
There is now NEW language within many policies specifically addressing coverage ONLY IF A LOCATE HAS BEEN DONE. This language is direct from the policy:
Prior to commencing work (1) You have either
a) Contracted the appropriate local underground locating service, or
b) Verified that a local underground locating contact has been made by another with that responsibility; and
c) The locating service has responded, and prior to the commencement of
your work, marked all underground property including, but not limited to, all underground lines, pipes, cables or utilities.
The letter continues, “You advised that you did not get a dig ticket; therefore we have no choice but to advise you that there is no coverage for these damages and we will not be handling this claim on your behalf.”
There is now
NEW language
within many
policies
specifically
addressing
coverage ONLY IF
A LOCATE HAS
BEEN DONE.
What’s critically important is that insurance companies are now specifically allowing coverage for underground utilities IF, and ONLY
IF, a locate has been called in, while denying coverage for a claim if a
locate has ¬not been called in. If your company isn’t doing it yet – trust me, it will soon.
Up until now, companies covering excavators often did pay utility damage claims – the word “excavator” itself says “dig,” so it would be a little hard to deny coverage for digging.
Yet, if it isn’t written correctly, an excavator could also find himself without coverage. Every job description carries a specific code that determines the rate and coverages for which the policyholder will be charged. Certain coverages are extended through the use of the specific code. A “dog groomer” for example, has no need for “underground utility” coverage – so it would not be
in their policy and they wouldn’t be charged for it.
But, if in the interest of price, the contractor told his agent “all I do
is hang sheet rock” so he can get a cheaper rate, he is NOT going to have coverage if he hits an underground utility – because a sheet rock installer doesn’t dig – and there is no coverage built in for it. Proper coverage costs what it costs – just like your services do. Don’t risk everything you have to save a few dollars!
If you want your day to stay normal, tell your agent the truth about everything you do, and make sure it is listed on the policy; have a contract with your subs, put calling 811 as a requirement in that contract– have their agent send you a certificate of insurance naming you as Additional Insured
AND
CALL 811 BEFORE YOU DIG. It’s not only the law, it won’t be insured if you don’t!
2024, Issue 1 Alabama 811 • 17