5 Proven Strategies to Control Loss in Construction Projects

In today’s tightening insurance market, middle-market builders and specialty contractors must make loss control a top priority to stay competitive and protect margins. Carriers are raising premiums, increasing deductibles and becoming more selective about the risks they’ll cover. Contractors with poor loss histories or limited safety practices are facing reduced options and rising costs.

Loss control is no longer optional; it’s essential to preserving profitability, qualifying for favorable insurance terms and securing ongoing project opportunities. Use this guide to learn how to address today’s greatest risks to the construction industry with a comprehensive loss control program.

Top Drivers of Loss in Construction

As the construction landscape grows in complexity, contractors must identify and manage ever-evolving threats to avoid significant losses and keep projects on track. There are several factors contributing to high claim frequency and severity in the construction industry:

• Workplace Injuries: According to the Occupational Safety and Health Administration (OSHA), falls are the leading cause of death in the construction industry, causing 421 of the 1,075 construction fatalities in 2023. Other factors like extreme heat, electrical hazards and personal protection equipment (PPE) non-compliance increase the risk of injuries and illnesses on the job, often stemming from inconsistent enforcement of safety procedures or lack of training.
  
  
• Fleet and Auto Incidents: Distracted driving, missing motor vehicle record (MVR) reviews poor vehicle maintenance and unclear driver policies are leading to rising liability claims, particularly for construction businesses with small to mid-sized fleets.
  
  
• Property Damage and Defective Work: Installation errors, water intrusion, fire damage and incomplete site shutdowns frequently result in general liability or builder’s risk claims. For example, if your construction project is situated in an area prone to adverse weather like hurricanes, you may be at a higher risk of project delays and experiencing claims.
  
  
• Subcontractor Risk Transfer Gaps: While working with subcontractors can help your business tap into specialized expertise and complete projects more efficiently, they also introduce third-party risks. Incomplete contracts, missing certificates of insurance and poor documentation can leave contractors exposed to liability for a subcontractor’s actions.
  
  
• Cyber Incidents: As construction firms rely more on digital tools for estimating, billing and project management, they face growing threats from phishing, ransomware and payment fraud. Cyber attacks can significantly stall construction projects by disrupting systems and rendering critical files inaccessible, leading to more expenses down the line.

To identify these risks before they escalate into incidents, your construction business should conduct regular hazard assessments to ensure adherence to all OSHA and industry regulations. Document all safety hazards that are present in your workplace and take corrective actions to quickly address and resolve issues, such as implementing regular safety training, incentivizing employees for safe work practices and providing appropriate PPE.

5 Loss Control Strategies to Mitigate Risk

Contractors with well-structured loss control programs experience fewer claims and stronger insurance outcomes. Focus on these five core areas to strengthen your business’s risk position:

• Fleet Safety: Drivers with the right safety training and tools are more likely to avoid accidents and complete their trips safely. Establish a written driver policy, conduct regular MVR checks, use telematics when possible and designate fleet oversight responsibilities including vehicle maintenance and inspections and ensuring adherence to regulations.
  
  
• Jobsite Safety: Conduct daily hazard assessments, enforce PPE use such as wearing high visibility clothing and hard hats, hold regular safety meetings to review policies and procedures and ensure supervisors are trained in upholding OSHA regulations.
  
  
• Contractual Risk Transfer: If subcontractors make critical errors on the job, your construction business should not bear the consequences. To effectively transfer legal liabilities from your business to subcontractors, make sure to standardize subcontractor insurance requirements, track certificates, verify endorsements and audit key vendors annually.
  
  
• Quality and Close-Out Controls: Document installation milestones, use standardized punch lists and follow shutdown protocols for fire, water and site security.
  
  
• Cybersecurity Basics: Enable multi-factor authentication, limit access to sensitive systems, train staff on phishing and consider adding cyber liability coverage. By creating a culture of cybersecurity awareness, your employees can proactively identify risks and reduce the likelihood of breaches occurring.

Even with a strong loss control program in place, it is impossible to eliminate all risks completely. A comprehensive risk management plan will combine loss control strategies with personalized insurance solutions, ensuring you are safeguarded against financial and legal harm if and when the unexpected occurs. By working with a trusted insurance broker like Alliant Construction, you’ll have the guidance, solutions and expertise necessary to protect your assets and control costs.

How Alliant Construction Can Help Control Your Losses

At Alliant Construction, our team of industry-leading specialists brings decades of experience helping contractors reduce losses and strengthen their insurance position. We understand the various risk management challenges you face, from ever-evolving regulations to safety hazards, and address these complexities head on with tailored loss control programs and insurance coverage. To learn how we can drive meaningful risk management and insurance outcomes, contact the Alliant Construction team today.