The citizen response to Hurricane Harvey was awe-inspiring to the entire nation. Those of us who make our living in the Houston area and the State of Texas are right to feel a sense of pride at the way our community has come together to respond to this challenge. We seem to have made it past the initial crisis stage but a much longer and perhaps more difficult trial remains: RECOVERY.
Texas construction contractors will be critical from here on out, and the construction community is chomping at the bit to get going. Workforce and escalating material costs will be a problem, but every contractor we know wants to get involved and help by any means necessary! They are inspired by the examples of those first-responders (and may have actually been among them)! As well they should be!
Get going, but please don’t forget your company’s “PPE!” We wouldn’t let our workers work on any job without proper PPE, whether it be gloves, hard hats, or breathing masks. So too, we cannot be so eager to respond that we forget the essential PPE that protects our companies: appropriate subcontractor agreements and insurance. Here are some things to consider BEFORE you set to work.
AGREEMENTS IN PLACE
You would not start work, even for your best customer, without an agreement in place. There is no need to make an exception now. Your normal waivers, indemnities, additional insured requests have become no less important now even if time is of the essence. Get those agreements signed.
BEWARE OF MOLD!
Flood damage brings special risks that you will not normally encounter with new construction or renovation work. One of the biggest risks is the potential for mold. There is little to almost no coverage for mold within your standard general liability policies. Moreover, even if you purchase a separate pollution policy with mold coverage, its limits will not match those of your standard insurance program. Accordingly, you need to do more than you would normally do to protect yourself from future mold claims.
At a minimum, you should avoid the responsibility for deciding whether a building has been adequately dried out for interior construction to begin. Perhaps, that means you bring in a separate company to clear the building and run tests. Bottom line, if you do not have expertise in determining whether a building is ready for interior construction, do not take on that responsibility. Five years from now, no one will remember how you helped out this building owner when he could not get another contractor to set foot on the job. If the building is uninhabitable due to mold, they will be looking for someone to blame.
BEWARE OF A “CHINESE” DRYWALL REDUX
The last time we had two hurricanes hit within days of each other (Katrina & Rita), it created a drywall shortage that led to the importation of toxic drywall from overseas (mostly China, hence the name). Since that time, insurers have begun to exclude damages from “tainted” drywall. Contractors need to keep an eye on their drywall supply chain to make sure the drywall used in repair work meets appropriate standards.
INSURANCE FOR POLLUTION IS LIMITED
Yes, you can buy an insurance policy that will cover mold. HOWEVER, pollution policies are very limited in scope and coverage. They are typically “claims made” policies that will only provide coverage if they are in force when the claim is actually made (which could be several years from now). Buying a policy today will do you no good if you decide to drop it three years from now. Moreover, defense costs paid under a typical pollution policy will erode the limit. Thus, a $1 million pollution policy will only pay $750,000 in damages if $250,000 is spent defending the claim.
Please do not read this and swear off helping Harvey victims recover! Get in there and help (and please do your best to make a reasonable profit at the same time)! But, even the Coast Guard rescuer remembers his life preserver BEFORE he jumps from the helicopter! Please don’t jump into the recovery without forgetting your company’s essential PPE!