Are insurance companies changing the rules of the game regarding crane insurance on construction sites?
Apr 4, 2020
By: Eati Zisser, Head of Underwriting
Over 1,200 tower cranes operate regularly on construction sites in Israel. Relatively speaking, this means that tower cranes are present at about 7% of construction sites in the country. At approximately 70% of these sites, there is a single crane in operation; at 18%, there are two cranes; and some construction sites operate three to six cranes simultaneously.
Tower cranes are a familiar sight on Israeli construction sites, but unfortunately, they are considered among the most dangerous engineering tools. According to a recent review prepared by the Knesset Research and Information Center, regarding crane collapses, about 12% of incidents result in fatalities and 8% in injuries. We all remember, of course, the tragic recent case at a construction site in Yavne, where a tower crane collapse led to the deaths of four workers in a single accident.
On our website at Itzik Simon Insurance Agency, we have covered this critical topic extensively. For example, see an article in which we reviewed a case where a foreign worker received compensation of approximately one million shekels following the fall of a formwork from a tower crane (link), a piece on Amendment No. 12 to the Employment of Workers by Manpower Contractors Law (crane operators), and a text discussing insurance coverage for engineering tools and heavy equipment (link).
By: Ati Zisser, Underwriting Team Leader
Over 1,200 tower cranes are currently operating on construction sites in Israel. Relatively speaking, tower cranes are active on about 7% of construction sites in the country. About 70% of the sites have one crane operating, about 18% have two cranes operating, and there are construction sites where 3-6 cranes are working simultaneously.
Tower cranes are a part of the landscape on construction sites in Israel, and it is unfortunate to know that they are considered the most dangerous of engineering tools. According to a recent survey prepared by the Knesset Research and Information Institute, when it comes to crane collapses, about 12% of the cases end in death, and about 8% in injury. We all remember, of course, the tragic incident that occurred recently at a construction site in Yavne, where the collapse of a tower crane resulted in the deaths of four workers in one accident .
On our website at the Itzick Simon Insurance Agency, we have dealt with this important subject quite a bit. See, for example, an article in which we reviewed a case in which a foreign worker received compensation totaling approximately one million shekels following the fall of a formwork from a tower crane ( link ), an article dealing with Amendment No. 12 to the Employment of Workers by Manpower Contractors (Crane Operators) Law, and a text concerning insurance coverage for engineering tools and CMA tools ( link ).
Are insurance companies tightening the conditions?
The exposure to serious bodily harm resulting from the use of tower cranes has recently led some insurance companies in Israel to perform a type of "recalculation of the route" regarding insurance for assembly and disassembly work of these cranes at construction sites.
This is a process that began following pressure from overseas reinsurers, who provide financial support to Israeli insurance companies. Overseas reinsurers are currently demanding that insurance companies in Israel not undertake liability for the assembly and disassembly of tower cranes. This is based on the claim that the very work of dismantling and assembling the crane is "professional work," work that - in their view - is not an integral part of the work of the project itself.
What are the practical implications? Well, the meaning is that the insurance company seeks to remove its liability from the liability of the assembler/disassembler himself . That is, when a contractor or entrepreneur contracts with an external company for the purpose of renting a crane for a construction site and when he comes to sign the relevant forms for the transaction, he must pay attention to the insurance requirements that apply to him. Since the policy of insurance companies is to avoid providing coverage for the liability of tower crane assemblers/disassemblers, the contractor/entrepreneur should not sign forms that require him to insure the liability of the assembler/disassembler, when in practice he has no insurance solution for him .
The exposure to severe bodily injury risks from the use of tower cranes has recently led some insurance companies in Israel to “rethink” the way they cover assembly and disassembly work of these cranes on construction sites.
This process began following pressure from foreign reinsurers, who provide the financial backing to Israeli insurance companies. These reinsurers now require Israeli insurers not to assume liability for the assembly and disassembly of tower cranes, arguing that the very act of assembling and dismantling the crane is “specialized work” which, in their view, is not an inseparable part of the construction project itself.
What are the practical implications?
It means that the insurance company seeks to exclude its liability for the crane assembler/disassembler. In other words, when a contractor or developer hires an external company to supply a crane for a construction site and signs the relevant forms for the transaction, they must pay close attention to the insurance requirements imposed on them.
Since the policy of insurance companies is to avoid providing coverage for the liability of crane assemblers/disassemblers, a contractor or developer should not sign forms that require them to insure the assembler/disassembler’s liability if, in practice, there is no insurance solution available for this risk.
In conclusion,
If over the years, coverage for the dismantling and assembly of tower cranes was included in the contractor's policy, as the aforementioned work was seen as part of the project's execution work, today insurance companies make a distinction "between joy and sorrow." Insurance coverage for the operation of the tower crane on site? Certainly. Insurance coverage for the liability of the crane's dismantler or component? Not necessarily.
Dear contractors and developers, contracting with a crane company for work on a construction site requires compliance with both the light and the serious. Beyond the insurance aspects designed to provide you with coverage on the day of the order, everything must be done to maintain the health and safety of the workers on the site, visitors to it, and passersby in the area.
You are all probably familiar with the problematic reality in the field when inexperienced workers are required to work long hours on tower cranes, and many of them have not undergone any professional training. Sometimes they do not even have the appropriate professional training and/or certification and license.
Needless to say, these are not dry legal provisions but issues related to real personal law. A prudent and responsible contractor/entrepreneur takes care on the one hand to insure himself with appropriate insurance for tower crane operations, but at the same time ensures that he meets all the legal and regulatory requirements involved in operating such a critical, yet dangerous, engineering tool.
Over the years, coverage for the assembly and disassembly of tower cranes was included in contractors’ insurance policies, as these tasks were considered part of the project’s execution work. Today, however, insurance companies are drawing a clear distinction: insurance coverage for operating a tower crane on site? Certainly. Insurance coverage for the liability of the crane assembler/disassembler? Not necessarily.
Dear contractors and developers, engaging a crane company for work on a construction site requires strict vigilance. Beyond the insurance aspects intended to provide coverage when an incident occurs, every effort must be made to ensure the health and safety of workers on site, visitors, and passersby in the area.
You are all surely aware of the problematic reality in the field, where inexperienced workers are required to operate tower cranes for long hours, often without any professional training. Some may even lack the proper qualifications, certification, or licenses altogether.
It goes without saying that these are not mere technical legal provisions — they are matters of life and death. A prudent and responsible contractor/developer ensures, on the one hand, that they are properly insured for tower crane operations, and on the other hand, that they fully comply with all legal and regulatory requirements associated with operating such a critical yet highly dangerous piece of engineering equipment.
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