Insurance company adjusters and estimators should ensure that they are including costs for a safe workplace when making construction estimates. Since failing to do so would constitute breaking federal law, it is per se bad faith if those costs are not included because all of us are expected to follow federal law.1 My recent blog post, Getting the Xactimate Construction Price Right! drew a few comments, but the most informative was from Tim Varga.

Tim Varga has numerous credentials demonstrating his education about property insurance estimating and passion for this line of work. Vargas provided several government-published handouts on the topic regarding safe workplace requirements for roofing. At his very generous request, I am providing all of them, so readers of this blog can be further educated on the topic:

One guide, Protecting Roofing Workers, stated the following about the danger of falls to construction workers and roofers:

Falls are the leading cause of death in the construction industry, accounting for over 3,500 fatalities between 2003 and 2013. Falls from roofs accounted for nearly 1,200, or 34%, of the fall deaths during that period. Roofers encounter many hazards on the job, including hazards associated with working at heights and from ladders, power tools, electricity, noise, hazardous substances, and extreme temperatures. Unless these hazards are controlled by the employer, roofers risk serious injury, illness and death.

The guide listed frequent cited violations of roofing contractors which property insurance adjusters should be especially concerned about when making estimates for the repair or replacement of a commercial or residential roof:

  1. Duty to have fall protection
  2. Ladder safety
  3. Fall protection training requirements
  4. Eye and face protection
  5. General scaffold requirements
  6. General safety and health provisions
  7. Head protection
  8. Fall protection systems criteria and practices

To include all of these items, property insurance adjusters and estimators have to be educated and trained about construction practices and workplace safety laws and regulations. Merlin Law Group sponsors OSHA 10 training courses for estimators and public adjusters as a public service—we are lawyers that want to encourage safe standards for workers. We strongly suggest and encourage that this should be included in the basic training for all property insurance adjusters that work for insurance companies or as independent adjusters.

God knows I need more training about construction practices, processes and materials. The more I keep delving into my little area of property insurance, the more I understand that I know less than what I thought I knew before my study and learning from others. But even I have an OSHA 10 Certification, and I suggest that others who make a living estimating construction losses should contemplate getting such training and certification.

Thought For The Day

The safety of the people shall be the highest law.
—Marcus Tullius Cicero
1 Jerman v. Carlisle, 559 U.S. 573, 582 (2010) (“We have long recognized the ‘common maxim, familiar to all minds, that ignorance of the law will not excuse any person, either civilly or criminally.’ Barlow v. United States, 7 Pet. 404, 411, 8 L.Ed. 728 (1833) (opinion for the Court by Story, J.); see also Cheek v. United States, 498 U.S. 192, 199, 111 S.Ct. 604, 112 L.Ed.2d 617 (1991) (‘The general rule that ignorance of the law or a mistake of law is no defense to criminal prosecution is deeply rooted in the American legal system’). Our law is therefore no stranger to the possibility that an act may be ‘intentional’ for purposes of civil liability, even if the actor lacked actual knowledge that her conduct violated the law.”).

  • Gary Rowland

    How does one get past State Farm’s argument that those studies for contractors, though very good, are the responsibility of the contractor and “we” are not responsible for a contractor’s schooling; those are part of normal training and the built in 10 & 10%.

    • Gary,

      You need to come to the OSHA 10 seminar and learn all this stuff! So do the
      State Farm adjusters who are obviously ignorant.

      The training times are project costs and are not included in Xactimate overhead because it is a per project cost. Just look at the descriptions in Xactimate for this.

    • Tim Varga

      State Farm cannot control the contractors costs for the work performed, only the costs owed to the insured for the incurred expenses at a reasonable amount. State Farms policy does not itemize construction costs and requirements under coverage. The only remedies available to insured’s with relation to your question are appraisal or litigation.
      O&P, OSHA Safety Standards, materials and methods are not “coverage” disputes. The only concern to State Farm is whether or not the loss to the dwelling or structure is a covered loss. The rest is up to the experts. Construction management and cost management is not within State Farms rights as the insurer; unless the policy so expresses itself in writing.

      • Tim,

        I think the adjusters at State Farm have to understand construction methods and laws that pertain to construction to properly do an estimate. You are right that once it is a covered loss, they cannot dictate how the construction method is going to take place.

        • Tim Varga

          Yes sir :)

          As a retired GC, I never let anyone, including insurance carriers and adjusters, tell me how to do my job and what my worth was. It was my job as a GC to educate others about the responsibilities of compliant construction. Any contractor that would so much as write in their contracts that they will do the job for what the insurance company is paying and estimating for, does not need to be a contractor!

    • Tim Varga

      To understand 10 & 10 means only as an industry average in estimating when itemizing cost for compliant estimates. The true costs for overhead and profit are subject to individual contractors based on their general overhead expenses, non-job specific overhead expenses and profit margin needed for business betterment. Those variables are subject and contractor specific. The only entities that know how must O&P is actually needed on each job are the contractors and their accountants. I can no more determine what your needs are for overhead and profit for your survivor-ship, than I can tell what A&B Constructions needs are. Our jobs as adjusters is to provide an estimate of reasonable costs as a “guess” as part of the path to making the insured whole again. Estimates are guesses and not actual’s. We only know exactly what it cost to do the job once it has been incurred and billed.
      Truthfully, understanding overhead is more complex than meets the eye. Overhead expenses can include training costs to a company and that company has to consider the costs of maintaining continuing education of their employees and sub-contractors as a matter of liability; especially relating to job safety. I love hearing the statement from adjusters that are not educated in overhead expenses that state that job safety compliance is a cost of doing business. That statement alone shows me their complete ignorance as the cost of doing business has a price tag. Whom pays for the price tag? Consumers! There are no government grants for the cost of doing business; no bailouts and no free money. As a business owner, I have to factor the educational requirements into my businesses overhead expense so I have money to cover the cost of doing business. Simple economics!

  • Angela Henderson

    If an adjuster were to write OSHA safety regs into a repair estimate for the purpose of ensuring the independent contractor is able to perform the role, what’s to stop a clever attorney from seeking W/C coverage from the Carrier if the allocations weren’t sufficient to prevent a job site injury? I understand the elements of “control” have to be demonstrated but there are likely factors present where the conditions could be met.

    This seems dangerously close to attributing the contractor’s duty as an employer to the insurance carrier. Intent is arguable. Am I misunderstanding something here?

    • Angela,
      This is estimating. The Xactimate pricing is assuming that the subcontractor
      is paying a correct worker’s comp rate as part of its labor.
      This is about estimating correctly and not holding people responsible. Those
      are two different issues.
      However, an owner can have a construction specification which requires all contractors and subs to show that each worker is on a workers comp role. Especially in Texas and some other places, many subs pay cash to avoid show workers in the costs to avoid a workers comp penalty.

    • Tim Varga

      The intent is to provide enough financial value to the loss in order for the insured to have enough money to pay for the compliant work to be performed. Failure of the contractor to perform their work accordingly or safely does not fall on the carrier, but the insured. Also, keep in mind, that if the carrier fails to reimburse the insured for costs associated with the covered loss, then that is a breach of contract. The contractor is obligated to perform their duties and protect their workers directly in relation to construction standards and Federal requirements and if the carrier does not pay for those, that does not release the contractor from their duty and obligation to their workers and compliance.
      The risk of accidental injury on the job-site is ever present. If a contractor or their workers or sub-contractor are injured in the course of performing their responsibilities, then the insured and the carrier could be subject to a personal injury claim. Negligence on the contractor’s part has nothing to do with what the insurance company is agreeing to pay for. The point is that the carrier is liable to provide financial restitution for compliant and proper repairs or replacement of the covered loss and they cannot pass those costs on to the insured, as the insured’s obligation in the loss is limited to their deductible, so long as they are not “upgrading” the work outside the policy coverage’s.
      The carrier has a duty to protect the insured, not the contractor.

  • Chris Pce

    When’s the next class?? 😁

    • Chris and anybody interested,

      Please call Will Mitbo at (813) 229-1000.

      The events have a maximum of 40 students

    • Tim Varga

      They run an online class that can be taken immediately after signing up and ordering the class. The best thing about it is that it is an online class and can be completed at your own pace.

  • shirley heflin

    Dear Chip:

    I think it’s nice that the Merlin Law Group sponsors an OSHA 10 training course on safety. I’ve always admired people that get up on roofs as they risk their life every time they climb up on one. Indeed, I admire all the people engaged in construction because it is a dangerous profession.

    Even with all the safety precautions, it remains a dangerous profession so shortcuts are not an option.

    Tampa, FL

    • Shirley,

      Thanks for the comment. Everybody should follow the law. Proper construction is only proper if it follows the law. Insurers must follow the law. Insurers following the law should pay for legal construction and not refuse to do so if they are acting ethically and legally.

  • Keith Steno

    I don’t consider myself an expert on any particular topic, but happen to have an OSHA, 10, 30 and some environmental certs as a P.A. and I took the article’s focus to not be so much about the carrier’s obligation to train the contractor’s employees (which should arguably be a part of their “Overhead” in properly training their employees to be proficient in their trades as well as in safely executing those tasks), but rather addressing the fact that the carriers and their adjusters have fiscal and ethical obligation to consider the inclusion of any additional costs that would prevent the contractor from violating any OSHA Safety Regulations and putting their employees’ health and safety at risk as a result of the carrier excluding those provisions.
    There are indeed some financial costs in doing what is right and protecting your people, but ultimately there are real life costs associated with taking shortcuts by saving a few bucks when it comes to safety…..and I see no harm in reminding the carriers of that fact whether it be during an onsite inspection or in front of a jury.

    Keith Stenovitch

    • Keith,

      Thank you for your response. You are right —Safety is Job #1!

      The carrier has no obligation to train the contractor’s employees.

      The carrier has an obligation to pay for costs of construction. If a cost of
      the construction is for the contractor to have a safety meeting of its workers
      required by law, the insurer has to pay for it.

      The carrier has an obligation to train its own employees about how to properly
      estimate construction costs so that they can adjust property insurance claims
      involving construction.

      • Tim Varga

        Point well taken. Part of our job is to encourage carrier’s and their representatives to consider factual information that helps them make a better decision. One of the hardest parts of our job is to get the carrier’s and their representatives to see that the issue starts with them. Human nature can sometime prevent us from looking inside first for the change ass it is easier to point out the issues with others. Getting them to identify with their own errors first is the task at hand. Just like intervention; one must get them to admit they have a problem before the solution can be presented.

    • Tim Varga

      Hello Mr. Stenovitch,

      The issue and discussion does not relate to any obligation for a carrier to train contractor’s employees. The carrier’s obligation is to insure that their representatives are properly trained within the responsibilities they are commanded with under the policy holder’s contract for indemnification of losses. The promise insurance companies make to their policy holders upon signing the policy contract, is that they will look for reasons to apply coverage for losses sustained and covered under the policy contract terms. The carrier’s made a promise to the insured’s not to harm them and therefore all behavior for a carrier towards their policy holders is supposed to be with the intent to apply the coverage appropriately and to insure that they are made whole in an expedient and customer supportive manner. If a carrier has this intent in mind, then they will educate their employees in a manner that demonstrates this intent to their policy holders. Unfortunately, some carrier’s do not demonstrate that they understand their responsibilities to their policy holder’s; which starts at the inception of the claim investigation. The carrier’s behavior must align with their policy and the policy holder and the carrier has no obligations, what so ever, to contractor’s. The intent of loss investigations is solely to determine if coverage exists, and then to move to make the insured whole again as expediently as possible. Educating their Staff Adjusters and Independent Adjusting Company is pinnacle to proper claims handling and investigation. The simple act of a carrier refusing to properly educate their investigators is the gateway to unfair claims settlement actions and potentially bad faith. When the carrier is provided with factual documentation from competent experts and governmental authorities; i.e. competent contractor’s and U.S. Department of Labor, they should be aligning their settlement investigations to match what the experts are telling them in a good faith effort to properly and fairly settle the losses, in an expedient manner.

      For the most part, all policies require the carrier to pay for the least amount that it actually costs to repair or replace the damaged property using like kind materials for like use. Most policies do not afford the carrier the responsibility or the right to be the entity that determines what like kind materials for like use is and for what the least amount would be required to complete the loss restitution. Most policies also do not provide the carriers with the right’s and responsibilities to determine the methods to be used in construction, materials to be used in construction, the specification of such materials, what appropriate labor is to be used, and the costs associated with all items listed above. Simply stated, the carrier is a contact and coverage expert and not within an authority to be the construction and compliance expert. I don’t mean to rant here, but our industry seems to have completely come off the rails: we have insurance companies telling contractor’s how to perform their jobs and we have contractor’s arguing coverage without a license. If everyone would just stay within their boundaries of expertise, and put the insured at the top for all concerned, then everything would go smoothly. However, most people are more worried about telling others what to do that they don’t pay attention to their own shortcomings and responsibilities; and that is where we come in as advocates for policy holders. Our responsibilities as Public Adjusters and Policy Holder Defense Lawyers, is to level the playing field and to get carrier’s to comply with their responsibilities and to encourage contractors to realign with their responsibilities.

      Any contractor that states, or puts in writing, that they will complete the work for what an insurance company writes the estimate for, is not, in my professional opinion, a professional contractor. As a retired GC, the only entities that were in a position to to tell me how to do my job were:
      1. The U.S. Department of Labor (OSHA)

      2. The State Board of Construction
      3. The local building authorities
      4. The manufacturer’s of the products and methods implored to complete the work
      5. The professional organization organization in place that support the trades being administered. I.E. NRCA, ARMA, IICRC etc.
      *just a few by example.

      Insurance companies are never listed as authorities for contractor compliance.

      All food for thought!!

      • Keith Steno

        Mr. Varga,

        A sincere Thank You for taking the time to pen such a comprehensive free lesson for us all. I am probably guilty of not clarifying that my response was intended to address the comments of someone else in the conversation and not the main article itself, but either way there’s always a nugget of wisdom to be gleaned from a careful listen.
        I view my task is to educate the carrier’s rep without his knowledge and letting them walk away believeing that I learned from the lesson I taught them.


        • Tim Varga

          I appreciate that perspective. It aligns with the definition of a “manager”. The ability to get things done through other people :) Most people conform when they believe it was their idea to start with.

  • Tim Varga

    Mr. Merlin,

    Thank you professional and personally for taking the time to entertain me and the information I provided. You are a gentleman and a scholar and I follow all of yours and your law firms blogs with great respect and admiration. I walk away from our personal and professional conversations inspired to perform my career at a higher degree of professionalism. I agree and believe that professional’s are constantly learning from others; both, what to do and what not to do. As the old saying goes: Practice makes perfect. The intent of the saying is not as it appears though as practice only makes permanent. The Great Jackie B. Cooper said one time; “practice only makes permanent, so if you do something wrong over and over again, you only get better at doing it wrong. Perfect practice makes perfect; meaning that if you are constantly working to make yourself better and by researching the facts and imploring them into your practice, you are working towards perfection”.

    Experts are those people that are constantly updating themselves to current changes within their field and imploring those changes in their careers and presenting those to others. Just because one has performed a particular duty for an extended time, does not make them an expert, it only makes them good at what they are doing. The expert confirms that the practices they are performing are in compliance with updated methods from quantifiable expert sources, and they change their duties to align with the current methods and practices in which they perform.
    Thank you for sharing the information I presented. I am more than happy to share what I know and to collect information from others that can further educate myself so that I am always growing within our industry.

    • Tim,

      Teaching others by sharing your expertise and knowledge is one of the greatest acts one can do for others. Thank you for making all of us a better at what we do by sharing your knowledge and information.

      • Tim Varga

        No, thank you Chip and your team of legal experts! If it wasn’t for you and your teams commitment to consumer advocacy and presenting this forum that affords for open communication and the sharing of questions, ideas, knowledge and opinions, we all would not benefit from everyone’s vast knowledge and perspective! The ones that believe they know it all are the ones that need the most training and help. There is always room to learn; whether it is what to do, or what not to do :)

  • Tim Varga

    I would also recommend that everyone subscribe to the OSHA newsletter. I receive great information and updates that are invaluable for the defense fight for proper estimating from the newsletter. They report fines issued to companies and contractors for violations of OSHA Safety Laws and the US Department of Labor.