Blog - Tag: Measured Risk Insurance
Businesses Scramble to Comply with EEOC’s New Playbook
The Equal Employment Opportunity Commission has rolled out the most dramatic shift in its enforcement posture in decades, narrowing some protections and targeting others, especially around disparate impact, diversity, equity and inclusion (DEI) and gender identity.
Also, with the confirmation of Commissioner Brittany Bull Panuccio in October 2025, the EEOC once again has a voting quorum. Her addition gives the new Republican majority the opportunity to rewrite guidance, revise strategic enforcement plans and launch higher-profile litigation aligned with the administration’s executive orders.
The new enforcement focus, initiated by a series of executive orders by President Trump, stands in contrast to established federal law, opening firms up to litigation by employees that runs counter to EEOC enforcement priorities.
DEI programs under a sharper lens
This year, the EEOC has trained its focus on what it describes as “unlawful DEI-motivated race and sex discrimination.” Programs that once were framed as inclusion efforts are now being scrutinized for potential reverse discrimination.
That includes:
- Mentorship, sponsorship and leadership programs limited to certain demographic groups.
- “Women only” or “underrepresented only” events and resource group activities.
- Hiring, promotion or internship pipelines that expressly prefer certain races or genders.
- Diversity metrics that function more like quotas than broad and aspirational goals.
Gender identity policies
EEOC Chair Andrea Lucas has directed agency lawyers to back away from gender identity litigation and to revisit harassment guidance that spells out protections for transgender employees.
Bathrooms, locker rooms and pronoun policies are likely flashpoints. Employers that wish to maintain strong protections for transgender and nonbinary workers may need to rely more heavily on state law, company values and reputational concerns as their guideposts.
These new policies put employers in a bind. Title VII’s ban on sex discrimination, which covers sexual orientation and gender identity, still stands and many states explicitly protect those groups.
Employers that scale back protections to comply with the new federal posture may reduce the chance of an EEOC probe but increase exposure to private lawsuits, state agency enforcement and reputational damage.
How employers can respond
Audit DEI and talent programs — Inventory all DEI initiatives, resource groups, mentorships and pipelines. Strip out eligibility rules tied to race, sex or national origin. Reframe programs around equal access and business needs.
Refresh public and internal statements — Review diversity pledges, representation goals and reporting. Avoid language that can be read as promising preferences. Emphasize fair processes, bias reduction and inclusion.
Map gender identity and facility policies to actual law — Chart federal, state and local requirements for every location. Where you maintain sex-specific facilities, consider options like single-user restrooms and clear procedures for handling complaints.
Boost religious accommodation practices — Ensure there is a clear, documented process for addressing religious objections, including objections to DEI content or pronoun expectations. Train managers to respond promptly and consistently.
Keep doing adverse impact reviews — Even if the EEOC is stepping back, continue to test hiring tools, promotion systems and layoff criteria for disproportionate effects on protected groups.
Invest in investigation capability — Make sure complaint procedures, investigation protocols and documentation would hold up under scrutiny from private plaintiffs, state agencies or the EEOC under its new priorities.
Takeaway
Finally, ensure that your business secures an employment practices liability policy, which can protect your firm from employee-initiated actions like discrimination or harassment complaints.
These policies can cover court costs, attorneys’ fees, discovery expenses, settlements or judgments and other related costs.
Construction Industry Risks Evolve, Creating Unique Challenges
As the construction industry continues to rebound from the recession, contractors face evolving risks that, left unchecked, can leave their operations exposed to new liabilities.
If you already operate a construction firm, you know that there is a labor shortage that has affected the makeup of your workforce, and that hiring entities are asking builders to take on more of the design function as well. Finally, construction firms must contend with cyber-security risks if they are using technology in their operations.
Accounting for these risks in your risk management strategy as well as ensuring you have the proper insurance coverage is key to protecting your firm from these evolving risks. Here’s a deep dive into three of those risks.
Lack of qualified workers
The construction industry has been wrestling with a labor shortage since before the COVID-19 pandemic, a shortage that’s been exacerbated by the immigration raids carried out by Immigration and Customs Enforcement in 2025.
Approximately 439,000 new workers are needed by the construction industry in 2025 to meet demand and potentially 499,000 in 2026, according to Associated Builders and Contractors.
Now, as home construction starts growing again, many contractors are having a hard time finding qualified workers, as well as project managers, engineers and estimators. That means workers are likely taking on greater workloads, which puts them at risk of injury or making mistakes. It also means longer project times.
Also, contractors have more inexperienced workers in their ranks who are not as aware of workplace safety and lack the experience to identify hazards, which puts them and others at risk of injury.
Professional liability risks
As more project owners want an all-in-one job with the lead contractors designing and building the project, those construction firms now face a new type of risk: professional liability.
The problem is that the typical contractor’s insurance policy doesn’t provide protection for any design work they may take on. If they do design a project, even partially, they’re not absolved of liability if they farm the actual construction work out to a subcontractor.
Courts have found that designers who cross over and perform traditional “builder activities” lose any limitation of liability traditionally enjoyed by design professionals. Builders who cross over and perform “design activities” assume responsibility for design deficiencies and can no longer push that liability to the design professional.
Cyber-security risks emerge
Like all industries, the construction sector has grown increasingly reliant on technology to get the job done. There are numerous solutions in the market that can help optimize workflows and save companies time and money.
While a construction firm is likely not going to keep clients’ credit card information on its website or databases (data that hackers drool over), they do keep confidential information on project designs as well as on employee records.
Recently, a contractor foreman stepped away from his work-issued laptop at a café and upon returning saw that it had been stolen. The laptop contained confidential company information and building information, like modeling construction and design methods.
More building contracts today include confidentiality agreements that require the contractor to be responsible for potential breaches associated with their activities, and that was the case in this instance.
While it was unclear if vital company secrets were exposed, the breach required that the owner’s 2,300 current and former employees be notified that their personal information may have been exposed.
Under the terms of their contract, the contractor was also obligated to pay for credit monitoring to all those employees for a year.
There was no indication that the information was ever exposed, but the notification costs and credit monitoring cost the company $25,000 out of pocket.
The takeaway
As contractors’ risks evolve, it’s important that you discuss any changes to your operations when we are helping you renew your insurance policies. We can help you discern if you need additional coverages like cyber and professional liability to ensure that these risks are covered.
Preventing Substance Abuse in the Workplace
Drug and alcohol use by employees on or off the job is a troublesome societal plague that has put many employers on the defensive.
Research by the U.S. Department of Labor shows that between 10% and 20% of the nation’s workers who die on the job test positive for alcohol or other drugs.
The same research shows that industries with the highest rates of drug use are the most physically dangerous and involve the operation of machinery, such as construction, mining, manufacturing and wholesale.
With this in mind, you need to know all of the tools available to you as an employer to ensure that you keep a strong drug- and alcohol-free workplace policy in place, while trying to minimize the effects of employees who are heavy users off the job.
An effective policy can reduce the risk of workplace injuries to an impaired employee as well as co-workers and anybody your company may come in contact with, particularly customers or vendors. The actions of one impaired person, or someone that uses heavily off the job, can have far-reaching effects and turn out to be a significant liability for your company.
The federal Occupational Health and Safety Administrations as well as state-run OSHAsl offer employers help in sorting out the complexities of putting together an effective drug- and alcohol-free workplace policy.
Federal OSHA outlines five components it considers necessary for a drug-free workplace: a policy, supervisor training, employee education, employee assistance and drug testing.
Drug testing, it says, “must be reasonable and take into consideration employee rights to privacy.”
The federal agency has guidelines available to help resource-challenged small businesses formulate a policy aimed at a drug- and alcohol-free workplace. They include:
- Drug-Free Workplace Advisor Program Builder. For employers needing to develop a policy from scratch, this guides them through the various components of a comprehensive written drug-free workplace policy. It then generates a policy based on an employer’s specific needs.
- Substance Abuse Information Database (SAID). This includes sample drug-free workplace policies, surveys, research reports, training and educational materials and regulatory information.
- Resource directories. These contain current lists of national, state and local resources, including summaries of state laws on workplace-related substance abuse, community organizations that help make businesses drug-free, and help lines for those who have a drug problem.
- Training and educational materials. These include presentations, articles, fact sheets and posters to help employers provide workplace drug and alcohol education.
- Workplace Frequently Asked Questions. These are available free of charge.
More detailed information for each of the above guidelines is online at: www.osha.gov/SLTC/substanceabuse/index.html
The New Zealand example
One good approach to drug and alcohol policies comes from New Zealand. Its OSHA – in simple, practical language – advises employers in that country to:
- Formulate rules, agreed to by all parties, which apply the same for everyone: employees, contractors and employers.
- Write the policy clearly and make it available to all in the workplace.
- Describe steps needed to ensure a drug- and alcohol-free workplace.
- Enforce the rules “consistently and fairly.”
The policy, says New Zealand OSHA, should aim to avoid worker drug or alcohol impairment without discriminating against or punishing employees.
Once formulated, the agency adds, the policy should be part of the company’s official health and management practices in recruitment and training, integrated into its human resources department and widely circulated throughout the business.
Compliance Alert: New Law Expands Protected Paid, Unpaid Leave
California employers have new compliance challenges because of a law that further broadens the circumstances under which employees can take protected paid and unpaid leave.
AB 406, which took effect Oct. 1, 2025, expands on last year’s revisions to the state’s paid sick and safe time and crime-victim leave laws, adding new categories of protected absences that cross multiple statutes — and increasing the complexity of managing employee leave.
Employers will have to once again revise their HR policies to ensure they comply with the new law as some law firms warn that AB 406 affects a number of intersecting statutes.
What AB 406 does
AB 406 amends both the state’s paid sick leave law — the Healthy Workplaces, Healthy Families Act (HWHFA) — and Government Code section 12945.8, which governs unpaid job-protected leave.
Effective Oct. 1 — The new law adds two new reasons for which employees can take protected time off:
- To appear in court as a witness to comply with a subpoena or court order, including if the employee is a crime victim.
- To serve on an inquest jury or trial jury.
Effective Jan. 1, 2026 — The law also extends job-protected leave for employees or their family members who are victims of certain serious crimes (the law cites 14 of them). Covered workers may take leave to attend court or administrative proceedings related to those crimes, such as arraignments, pleas, sentencing hearings, parole hearings or other proceedings where victims’ rights are at issue.
For this purpose, “victim” is defined broadly to include anyone who suffers direct or threatened physical, psychological or financial harm as a result of serious felonies such as domestic violence, sexual assault, felony stalking and DUI causing injury.
Overlapping leave laws complicate compliance
The new rules expand and interlink several different statutes — the HWHFA, the California Family Rights Act and the Fair Employment and Housing Act — making it more difficult for HR departments to determine which law applies to each situation.
For example, an employee attending a sentencing hearing on behalf of a family member could qualify for leave under both the paid sick and safe time law and CFRA if that family member also has a serious health condition. HR teams must carefully review each request to ensure the proper leave type is designated and tracked.
Notice, documentation requirements
The Civil Rights Department has issued a new mandatory workplace notice titled “Survivors of Violence and Family Members of Victims – Right to Leave and Accommodations.” Employers must post and distribute this notice and train managers on confidentiality and retaliation protections.
The takeaway
With some provisions already in effect and others coming Jan. 1, 2026, employers should:
- Update employee handbooks and leave policies to reflect AB 406’s new covered uses.
- Train HR staff and managers to identify overlapping leave rights and apply the proper designations.
- Post the new CRD notice and review confidentiality and anti-retaliation procedures.
- Audit HR systems and time-off codes to ensure new leave categories are captured.
- Coordinate state and local leave requirements to avoid conflicts.
Finally, discuss any planned changes with your legal counsel to ensure compliance with the new law.
New AI-in-Hiring Rules Are in Effect: What You Need to Know
Starting Oct. 1, 2025, any California employer that uses artificial intelligence and other automated tools in recruiting, hiring, promotion and related human resources decisions will have to ensure that the tools don’t discriminate against protected classes.
The new regulations, promulgated by California’s Civil Rights Department, cover any “automated decision system” (ADS) which the rules broadly define to include any computer-based process that makes or influences employment decisions, such as:
- Artificial intelligence,
- Machine learning,
- Algorithms,
- Statistics, and
- Other data-processing techniques.
If your firm uses AI or another data-driven system in hiring, you’ll want to beef up record-keeping and set testing procedures to ensure that the tools you use comply with the new regulations.
What counts as an “automated-decision system”
Examples of systems that are covered by the new regulations include:
- Résumé screeners — These may favor applicants who use certain wording, which can disadvantage older workers or those from different cultural or educational backgrounds.
- Targeted job-ad delivery — Tools may push job ads to preferred genders, age groups, races and other protected classes.
- Puzzle or game-style assessments — These tools may screen out people with certain physical or neurological conditions.
- Voice and facial analysis tools — Tools that assess “enthusiasm” or “communication style” may produce biased results against applicants with disabilities, speech differences or accents.
Basics of the new rules
Discrimination risk — It is unlawful to use an ADS or other selection criteria that discriminate based on any protected characteristic such as race, gender and ethnicity. Crucially, an employer can be liable even without intent if the ADS causes an adverse disparate impact on a protected class.
Anti-bias testing — Employers are required to perform anti-bias testing of their automated systems. In any investigation or lawsuit, regulators and courts may look at six factors to determine whether an employer took reasonable steps to avoid discrimination:
- Quality of the testing
- Efficacy (how well it detects bias)
- Recency (how current it is)
- Scope (which systems or data were tested)
- Results of the testing or due diligence
- The employer’s response to those results (what was changed or fixed afterward)
Failing to conduct or document bias testing could weigh against an employer in a discrimination case.
Record-keeping — The rule requires employers to keep ADS-related records for four years.
What you can do
If you use an ADS system in your personnel decisions, focus on the following to comply with the new rules:
Tracking — Track your ADS system’s involvement in recruiting, hiring, promotion, training selection, performance screens or advertising. Include vendor tools and “off-the-shelf” filters.
Testing — Build a defensible bias-testing program and document the six factors that regulators will look at:
- Quality,
- Efficacy,
- Recency,
- Scope,
- Results, and
- Your response.
Planning — Establish a plan to regularly test your ADS systems for bias-tainted decisions. Most importantly, if you detect deficiencies, document the steps you took to address the problems.
The takeaway
One of the keys to a successful defense is showing you have taken steps to remedy issues with tools that you use in employment decisions. That means being able to show that you have ensured your data-driven personnel tools do not discriminate.
As a side note, employers should expect more AI-related legislation in the years to come as more companies use it in their day-to-day operations.
The Five Most Common Types of Employee Fraud, Theft
At some point, the odds are that a company will be affected by some form of employee theft or outright fraud.
Fraud can severely crimp a company’s finances and put the firm in a serious bind if the theft is large enough. With technology, fraud has in some ways become easier, but at the same time it typically leaves a trail of electronic breadcrumbs that may be hard to disguise.
According to the Association of Certified Fraud Examiners’ (ACFE) global “Report to the Nations on Occupational Fraud and Abuse” report for 2024, the median loss in the U.S. from a single case of:
- Employee fraud was $61,000,
- Manager fraud was $150,000, and
- Executive fraud was $300,000.
Here are the five main types of employee fraud and what you can do to thwart it.
Purchase order fraud
This is typically carried out in one of two ways:
- The employee initiates purchase orders for goods that are diverted for personal use, or
- The employee sets up a phantom vendor account, into which they pay fraudulent invoices, with funds eventually being diverted to the employee.
Company credit cards
Employees who have company credit cards may use them for illegitimate purposes to purchase items or on entertainment and travel. Some common types of fraudulent use of credit cards are fuel purchases, airfares, home supplies, meals that are not work-related and entertainment.
Payroll fraud
There are typically three ways that an employee can pull off payroll fraud:
- Setting up phantom employees on your payroll systems who are paid like regular employees but whose funds are diverted to the perpetrator’s account.
- Paying out excessive overtime.
- Continuing to pay employees after they die or after they leave your employ.
You should have systems in place to detect whether you have more than one employee with the same bank account number or the same address, unusually high overtime payments and whether dead or terminated employees are still on your payroll.
Sales and receivables
Some employees may collude with vendors to make payments for services never rendered or products never received.
Other times, you may have sales reps who inflate sales to receive higher commissions or bonuses.
Data theft
This involves an employee stealing important company data like trade secrets, personally identifiable information, client credit card numbers or client lists. In some cases, the employee would provide this data to third parties.
You may be able to detect this kind of theft by running tests to see if a database has been accessed by an employee without access privileges or if reports were generated by employees without authorization. You may also be able to run tests to find out if any employees have sent e-mail with attachments that include sensitive company data.
What you can do
According to the report, most theft occurs at one or more of the following stages:
- Procurement
- Payment
- Expense
If you are going to do any employee monitoring, these are the places you may want to focus on first.
The ACFE said that by analyzing transactions in these areas (such as with continuous monitoring systems driven by data analysis), it is often possible to test for a wide range of employee fraud as well as bribery and conflicts of interest.
Also, three out of four fraudsters displayed at least one of the following behavioral clues:
- Living beyond means (39%)
- Financial difficulties (27%)
- Unusually close association with vendor/customer (20%)
- Control issues/unwillingness to share duties (13%)
- Irritability, suspiciousness or defensiveness (12%)
- “Wheeler-dealer” attitude (12%)
- Bullying or intimidation (11%)
- Divorce/family problems (10%)
Multi-Unit Facilities Get Better Deal from FAIR Plan
The California FAIR Plan on July 25, 2025, started offering a new “high-value” commercial property coverage option for larger housing developments, farms and businesses with multiple buildings at one location.
The new limits are up to $20 million per building, with a total maximum of $100 million per location — up from the previous limit of $20 million per location. These coverage limits are available to all eligible applicants for both new and renewal policies.
The FAIR Plan covers the following commercial structures:
- Habitational buildings — Buildings with five or more habitational units, such as apartment buildings, hotels or motels.
- Retail establishments — Shops such as boutiques, salons, bakeries and convenience stores.
- Manufacturing — Companies that manufacture most types of products.
- Office buildings — Offices for professionals such as design firms, doctors, lawyers, architects, consultants or other office-based functions.
- Buildings under construction — Residential and commercial buildings under construction from the ground up.
- Farms and wineries — Basic property insurance for commercial farms, wineries and ranches, not including coverage for crops and livestock.
Why the increase
The decision comes as commercial property rates continue rising due to inflationary pressures, particularly for companies in areas considered urban-wildland interfaces.
Rebuilding costs have also risen substantially over the past five years, making the old FAIR Plan limits inadequate.
FAIR Plan limitations
The FAIR Plan is taking on more policyholders as more insurers pull back from the California market. Under state law, if a business can’t find an insurer that is licensed in California, the first option is to go to the “non-admitted” market, which consists of insurers not licensed in the state but often backed by established insurers like Lloyd’s of London.
If there are no takers in this market, the last resort is the FAIR Plan. However, costly FAIR Plan policies are not a complete replacement for a commercial property insurance policy. Policies only provide coverage for damage caused by the specific causes of loss listed in the policy:
- Fire
- Lightning
- Internal explosion
Optional coverages are available at an additional cost, such as for vandalism and malicious mischief.
If you have to go to the FAIR Plan, we can arrange for a “differences in conditions” policy that will cover the areas where the plan is deficient compared to a commercial property policy.
How to Prepare for Rolling Blackouts
As wildfire seasons grow longer and more intense due to rising temperatures, utilities in high-risk areas are increasingly using public safety power shutoffs to prevent fires sparked by electrical equipment, one of the leading causes of wildfires.
These proactive outages can leave communities without power for hours — or even days — especially during dry, windy conditions. If you live in an area that is prone to wildfires and there is a possibility of rolling blackouts by your utility, you need to be prepared if the power is shut off for an undetermined amount of time.
Prepare in advance
According to the California Public Utilities Commission and Ready.gov, an agency within the Department of Homeland Security, the best time to prepare for a rolling blackout is before fire season begins.
Make an emergency plan: Every household should have a plan that includes communication protocols, meeting points and access to emergency contacts.
Build an emergency kit: Stock it with:
- Flashlights and fresh batteries
- First-aid supplies
- Portable phone chargers or power banks
- A hand-crank or battery-powered radio
- At least one gallon of water per person per day (plus water for pets)
- Nonperishable food that doesn’t require cooking
- Blankets and manual can openers
Plan for medical needs: If you or a loved one relies on electrically powered medical devices, talk with your doctor about alternative power sources. Know how long medications can be safely stored at higher temperatures if refrigeration is unavailable.
Prepare your home:Bookmark your utility’s outage map, learn how to manually open electric garage doors and understand your home’s circuit breakers and fuse boxes.
During the outage
During a blackout, you can stay safe and manage daily life without power by:
- Staying informed: Use a battery-powered radio or your car’s radio to listen for emergency updates.
- Unplugging electronics: Unplug appliances and electronics to avoid damage or data loss. Unplugging also prevents power surges when electricity is restored.
- Keeping refrigerators and freezers closed: The refrigerator can keep food cold for about four hours, while a full freezer can maintain a safe temperature for about 48 hours. Monitor temperatures with a thermometer and use coolers with ice if necessary.
- Using generators safely: Always run generators outdoors, at least 20 feet from windows or doors, and never inside garages or enclosed spaces. Improper use can cause deadly carbon monoxide buildup.
- Avoiding open flames: If using candles, keep them away from anything flammable and never leave them unattended.
- Watching for downed lines: Southern California Edison recommends staying at least 100 feet away from fallen power lines and calling 911 to report them.
When the power comes back on:
- Check food and medications: Discard anything that has been above 40°F for more than two hours or shows signs of spoilage. Replace any temperature-sensitive medication unless the label says otherwise.
- Reconnect electronics gradually: Turn appliances back on one at a time to avoid overloading circuits.
The takeaway
While homeowners in at-risk areas must be prepared for wildfires, they also have to be ready for rolling blackouts during wildfire season.
That requires preparation and a plan you share with the family. Consider working on it together so everyone is familiar with the plan should a power outage hit your neighborhood.
OSHA Updates Its Inspection Targeting Plan
The Occupational Safety and Health Administration has overhauled its Site-Specific Targeting (SST) inspection program, marking a major shift in how the agency identifies and prioritizes workplaces for inspection.
Effective May 20, 2025, the new guidance applies to non-construction employers with 20 or more employees and significantly increases OSHA’s reliance on employer-reported injury and illness data submitted every year on Form 300A.
For business owners, especially those in high-risk industries like warehousing, transportation, distribution and health care, this shift brings the potential for more frequent and comprehensive inspections, even if their workplaces appear to be in compliance on the surface.
A deeper dive into OSHA’s new approach
Under the updated SST plan, OSHA will use Form 300A data from calendar years 2021 through 2023 to generate inspection lists. Employers may be selected for inspection based on:
- High DART (days away, restricted or transferred) rates in 2023
- Upward-trending DART rates over the three-year period
- Unusually low DART rates compared with industry averages (to verify data accuracy)
- Failure to submit Form 300A
The DART rate, which reflects the number and severity of injuries or illnesses affecting an employee’s ability to work, will play a central role in OSHA’s targeting decisions. Even employers who have submitted their data correctly and on time may find themselves flagged for inspection if their DART rates stand out, either for being too high or suspiciously low.
Compliance officers are instructed to assess hazards across the entire workplace, not just to focus on areas where injuries have occurred. This means that while an inspection may be triggered by injury rates in one part of your operation, inspectors are free to examine other areas and issue citations for unrelated violations they encounter.
What’s changed — and what hasn’t
The new guidance eliminates the previous requirement that OSHA conduct a partial inspection even if an establishment was mistakenly included on the inspection list.
At the same time, inspectors are now encouraged to conduct thorough walkthroughs of workplaces, potentially over multiple shifts, to evaluate exposure risks and overall safety conditions.
What hasn’t changed is the program’s reach: the SST still excludes construction, agriculture and maritime sectors but applies to all other industries. OSHA also continues to divide establishments into manufacturing and non-manufacturing categories, applying different thresholds for DART rate comparisons.
What employers should do now
Business owners should treat these changes as a call to action. Being proactive is key to avoiding costly inspections and penalties.
Here are some practical steps employers can take:
- Audit your OSHA 300 and 300A records: Ensure that only recordable incidents are reported. Avoid over-reporting non-recordable events that can inflate your DART rate and draw OSHA’s attention.
- Prepare for inspections: Designate a trained point person who will handle OSHA visits and make sure that any inspection stays within its legal scope.
- Know your rights: You are not obligated to allow an inspector on site without a warrant. Employers may ask OSHA to verify whether they are on the SST list before proceeding.
- Limit the first-day disclosure: Do not voluntarily turn over documents beyond your OSHA 300 logs, 300A summaries, 301 forms and relevant Safety Data Sheets on the first day of inspection.
- Stay inspection-ready: Conduct internal walkthroughs using the same criteria OSHA uses — especially focusing on high-hazard areas, employee exposures and recent injuries.
- Train employees: Educate your team, particularly non-supervisory staff, on what to expect during an OSHA visit and how to respond appropriately to inspector questions.
Review Your Property Coverage Limits as Construction Inflation Continues Apace
Rapidly rising commercial building construction costs could result in your facility being underinsured if you suffer a major loss and haven’t increased your insurance policy replacement cost limits lately.
Your policy has a maximum amount it will pay to rebuild your building, and that limit should reflect current construction costs. Otherwise, the policy may not be enough to pay for rebuilding after a total loss like a fire razing your business. And whatever the insurance doesn’t cover, you would have to pay out of pocket.
Construction costs
According to a report by Verisk, reconstruction costs in the U.S. increased by 5.2% from April 2024 to April 2025.
Those rising costs come on the heels of massive material price increases of 40% from 2020 to 2023 when supply chains were snarled.
Some prices have come down a little, but they are still mostly higher than before the pandemic.
With tariffs coming on many goods used in construction, we could be in for another round of construction cost increases.
Also, the construction industry faces a labor shortage, which has added to the cost of rebuilding and the time it takes to complete a project.
Escalating construction costs can extend rebuilding and repair timelines for properties.
Longer waits for materials or workforce can also increase compensation periods and can be a serious burden for a business that has lost access to its facility.
Many policies will also cover business interruption costs, which can be exacerbated by increased downtime at the damaged or destroyed facility.
Revisit your replacement cost
One of the critical parts of the claims settlement process is determining the cost to reconstruct a building to its original state with new materials and current labor rates. When these costs rise, so should your policy limits.
For example, a property owner bought insurance five years prior with a coverage cap of $1.5 million.
With escalating material and labor expenses, the present reconstruction price has soared to $1.8 million. Should a total loss occur, the insurance compensation would fall $300,000 short, forcing the occupier to pay the rest out of pocket.
What you can do
Proactive management of your insurance coverage ensures you have the necessary resources to recover from unforeseen events.
Review your policy — Work with us to conduct an annual policy check to ensure that your coverage matches current reconstruction expenses, averting monetary shortfalls.
Opt for a replacement cost policy — Choose a replacement cost value policy over actual cash value policy. The former offers better financial security. Actual cash value policies discount depreciation, usually covering less than the actual construction cost. Replacement cost value policies, despite being slightly costlier, guarantee reconstruction with contemporary materials at prevailing market rates, lessening personal expenses.
Expand your coverage — Ask us about expanded coverage options like:
- Extended replacement value coverage, which boosts dwelling limits if costs exceed standard coverage.
- Loss of use insurance, which aids in financing temporary housing if the property becomes uninhabitable.
- Ordinance or law insurance, which covers expenses for conforming to current building codes.