Product Recalls

An important part of an effective product risk management plan is preparing for a product recall. Although this is usually viewed as the last resort, it is best to be prepared before you need to implement the plan. The Product Recall Pre-Planning Checklist can help you measure how ready your company is for a product recall.

Completed Operations Liability 

Completed Operations liability refers to the liability that contractors or service businesses have if work they have completed is defective and causes bodily injury to another or damages another’s property. Determining when a service or a project has actually been completed can be difficult. Sometime it’s determined in accordance with terms and conditions specified in a contract. Other times it’s based on the customer’s sign-off or when the work at a jobsite has been put to its intended use or occupancy.

Proper selection, inspection, and testing of materials and equipment are vital to reduce such losses. Careful evaluation and selection of qualified subcontractors is critical. For additional ideas that will help protect your business, property, and people from completed operations losses, contact your FCCI Loss Control Representative or refer to the Completed Operations Checklist that can be found in the General Liability section of the Blueprint for Safety Online Risk Control Manual.

Premises Liability 

Premises liability hazards refer to those conditions on your property that can cause injury or property damage to others. The premise hazard of greatest concern is anything that prevents an occupant from exiting a building safely in the event of a fire or other emergency.

Emergency Evacuation Plan 

You are responsible for the safety of visitors or guests, whether you operate a huge outdoor arena or a storefront business. Where would you guide your patrons if immediate evacuation were necessary? There are a lot of little details that must come together for an emergency evacuation to be necessary. It is important to recognize that the need is rare, and because of that, readiness must come from pre-planning rather than “winging it.” There are six considerations needed in any emergency evacuation plan:
1. The decision-making process
2. The information and awareness process
3. The egress preparation process
4. The egress process
5. The return process
6. The evaluation process

The following questions associated with each of these processes can assist you in developing your emergency evacuation plan.

Decision Making

• Who is the point person who will make the decision of whether and when the evacuation is
  ordered? Who is this person’s backup?
• Who are the others needed to share in the pre-decision process, coordinating the major
  steps within the evacuation process, and communicating with the community’s fire
  department, police, and press?
• Are all the people with responsibility known and readily accessible?

Information and Awareness

• What criteria are in place for choosing to act? For example, how long before a storm is
  expected to hit should the decision be made to evacuate a jobsite or cease outdoor
  operations?
• How best can the critical information be obtained in time for that decision? For outdoor
  operations, a functional link with the local weather station for receiving and evaluating storm
  warnings in the area works well for many.
• While management can determine who is the communications link for weather problems,
  bomb threats can come to anyone. Is planning in place for managing that different source of
  threat? How about for fire or earthquake?

Egress Preparation

• Is there egress preparation planning that determines in advance how the decision maker
  can best alert the appropriate personnel that a decision to evacuate is being considered?
• Planning should provide readiness to ensure best routes of egress for the number of
  evacuees and the preferred area of refuge. It can also ensure keeping inbound lanes open
  for fire trucks and ambulances.

Egress Process

• When emergency staff has been advised of the decision to evacuate, is there a plan to
  announce directions to guide the evacuation? Pre-planned announcements (given clearly,
  calmly, and repetitively) can help minimize panic or disorderly egress. The same
  information can be posted at strategic locations.
• Are there planned sweeps to check for stragglers, persons with disabilities, and anyone
  who suffers an injury during the evacuation?
• Is there a contingency plan for those occasions in which an egress route is blocked?
  Alternative routes need to be thought through well in advance.

Return Process

• Does planning allow for emergency evacuation that is considered precautionary and
  potentially temporary? If it is, how and when is the “all-clear” to be given?
• How is this communicated first to the same staff who handled egress preparation?

Evaluation Process

• Is there a written document that is understood by all for common reference and training?
• Are there periodic communication drills and subsequent refinement based on the
  experience?
• Any plan can be improved if reviewed and tested, in part or in full, both by experts in the
  community and by the staff on which the plan relies.

More information on evacuations and the safety of building occupants can be found in the National Fire Protection Association’s (NFPA) Life Safety Code, NFPA 101*. It is the primary reference source and code for the basic requirements for ensuring safe egress from a building.

Common examples of other premises hazards include potholes in parking lots, poor lighting in stairwells, slippery floors, and “attractive nuisances,” such as unfenced ponds children may want to play in. When identifying and controlling these types of hazards, it helps to keep in mind that you are trying to minimize loss potential arising from harm or injury to anyone who visits your property - other than employees.

*You can purchase a copy of this code through the NFPA website or contact your Loss Control Representative for other options.

Operations Liability 

Operations hazards are created from the activities of your business. These activities may take place at or away from your premises. They can range from poor traffic control on or around construction jobsites to fire damage to neighboring property negligently caused by a fire while you are welding on your property.

You should survey your premises regularly. Because the weather, traffic, and customer volume change, you should perform surveys at different times of the day and on various days of the week. These impromptu surveys will help you evaluate the situations and conditions your visitors may encounter in order to conduct business with your company. For additional ideas that will help protect your business, property, and people from operations losses, consult your FCCI Loss Control Representative. You can also refer to the Premises and Operations Liability Checklist that can be found in the General Liability section of the Blueprint for Safety Online Risk Control Manual.

Visitor Accident Investigation 

To further protect business, property, and people you will want to control the cost of claims by conducting thorough accident investigations, especially when visitors are involved. Handling visitor accidents is significantly different than employee accidents, mainly because of the legal liability issues.

The areas of responsibility for customer accident investigation generally involve two groups: your employees and your management staff.

Responsibilities for all employees include:
• Show compassion and concern for the injured person.
• Never argue, assign blame, or admit fault. If asked by the injured party, tell them that your
  corporate office will be notified.
• Offer to telephone a local physician, paramedics, or a friend or relative. In general it is not
  advisable to transport an injured person in your own vehicle.

Management staff has additional responsibilities, which should include at least the following:
• Complete and submit a report of the accident to the corporate office immediately, but no
  later than 24 hours post accident.
• Write down the visitor’s statements about what happened and how it happened. As the
  manager you should also separately submit your version of the facts. When describing how
  the accident occurred, use the phrase “alleged.” When there is no witness, use statements
  like “The visitor allegedly…” or “The visitor alleges….”.
• Preserve the accident scene. After the visitor has left the premises, inspect the area and
  take photographs of the site. Each photograph needs to have the date, time, and signature
  of a management representative on the back.
• For food-related incidents, save alleged contaminated food in a plastic bag, refrigerate, or
  otherwise preserve for examination.
• Attach the photos and any documents concerning housekeeping to the report that is sent
  to the corporate office.
• Identify all witnesses and include their address, phone number, and what their relationship
  to the company is.
• Take reasonable measures to help prevent reoccurrence of the accident.

The primary purpose of an investigation is to identify the facts and not to assess blame or fault. The discovered facts often can reduce the ultimate cost of a claim. For more details and suggestions check with your Loss Control Representative and visit the General Liability section of the Blueprint for Safety Online Risk Control Manual, and review the Visitor Accident Report.

Certificates of Insurance 

It is important for you to obtain and review certificates of insurance from the businesses that perform services on your behalf either for you directly or for your customers. The contractors that you use should have insurance that is in force and (in most cases) have limits of insurance at least equal to yours.

Here are some common questions and answers about certificates of insurance.

What is a certificate of insurance?

A certificate of insurance is a form outlining the coverage provided for a named insured, by the various policies shown on it. Its purpose is to provide information to a certificate holder who requires it. The certificate itself does not provide any rights to the certificate holder.

The most widely used certificate is ACORD form 25-S, published by a corporation named Agency-Company Organized Research and Development, with 7/97 being the most recent revision date. Standard language at the top of this form clearly states that it is issued for informational purposes only, gives no rights to the certificate holder, and does not amend, extend or alter the coverage afforded by the policies shown on it.

Why do I need a certificate of insurance?

In most construction contracts there are indemnity agreements whereby the party performing the work agrees to legally defend and hold harmless the other party to the contract against claims for certain damages arising from that work. For example, an electrical subcontractor may hold harmless a general contractor (GC) he is performing work for. In this situation, the electrical subcontractor is known as the indemnitor and the GC is known as the indemnitee.

If a third party makes a claim against both the subcontractor and the GC, alleging bodily injury or property damage resulting from the subcontractor’s work, both parties may seek to rely on the subcontractor’s insurance policy to provide for their legal defense and to pay damages they are legally obligated to pay. The GC will usually want a certificate of insurance showing that the subcontractor has liability coverage, with adequate policy limits to cover payment and defense costs for claims that may arise.

Doesn’t an insurance company providing coverage at least have to inform the certificate holder when a policy is canceled either by the carrier or the insured?

No. An insurance company is under no obligation to notify certificate holders when a policy is canceled or expires. ACORD form 25-S states that the insurance company issuing a policy will endeavor to provide written notice to certificate holders named on the certificate, but will not be obligated or liable for failure to mail such notice.

It seems there are considerable limitations on the benefits afforded by a certificate of insurance. What are other limitations a certificate holder should be aware of?

• With regard to coverage, all you can really be sure of is that the policies shown on the
  certificate were in effect at the time the certificate was issued.
• Certificates of Insurance are merely evidence of insurance in lieu of an actual copy of the
  insurance policy. They are not to be used to attempt to modify the terms of the policy itself.
  No insurer or agent should issue or sign a certificate of insurance that contains terms or
  conditions that differ from those in the underlying policy.
• You should not rely upon a certificate to determine if aggregate limits (i.e. the most the
  insurance company will pay out per policy or per project during the policy period) have been
  reduced. For example, if a subcontractor has a policy with a $300,000 general aggregate
  and has already had claims totaling $250,000, there would only be $50,000 left to pay for a
  claim that might arise from work the subcontractor is performing for you.
• Discrepancies may exist between coverage shown on the certificate and the actual
  coverage provided by the policy. Often, it is the agent or broker who issues the certificate of
  insurance and not the insurance company. If they issue a certificate showing you have been
  named as an additional insured, but they have not notified the insurer or the policy has not
  been endorsed for other reasons, you may not, in fact, be an additional insured. There may
  be exclusions on the subcontractor policy (i.e. Total Pollution Exclusion) that further limit
  policy coverage, and these will not normally be shown on the certificate. The subcontractor
  policy may contain language that says that coverage is excess over coverage provided by
  your policy. Inaccurate certificates may be issued showing policies that do not exist.

I know I need certificates if I subcontract work out to others, and I know certificates are at best an imperfect means for being sure my subcontractors have insurance. What should I do?

• Speak with your agent to assess your entire certificate of insurance needs.
• Establish a written Certificate of Insurance Program to handle the certificates you receive
  from other companies.
• Assign a specific person to be accountable for implementing the certificate control process
  and for obtaining and maintaining the required certificates.
• Develop a follow-up system as part of the certificate control process to insure that the
  certificates you have on file are valid. Do this at the start of work and monitor for the
  duration of the subcontractor activities on the job.
• Include a review process to ensure that the certificates you receive show all coverages,
  limits, and additional insured status that you require.
• Accept only original certificates, or a fax that is followed shortly by an original. Do not
  accept photocopies.
• Do not allow uninsured subcontractors on the job.
• Save old certificates in case a coverage issue arises in the future.
• Check your subcontractors carefully to avoid problems.
• Document all persons brought on the job site by subcontractor

An Introduction to Certificates of Insurance – FCCI Risk Control Bulletin

For more information on general liability risk control techniques, check with your FCCI Loss Control Representative and look in the General Liability section of the Blueprint for Safety Online Risk Control Manual.

This manual is advisory only and does not attempt to list all potential hazards or identify all possible remedial actions. You are responsible for the safety of your premises, operations, and products. FCCI Insurance Group and its affiliates and subsidiaries shall not be liable for any loss, injury, death, damage, or expense arising from the use of this manual.