February 12, 2024 • 13 mins
Jevon Bindman, partner at Minneapolis-based law firm Maslon LLP, answers questions and offers advice about choosing and crafting insurance policies for offsite construction projects. As a litigator, Jevon works with clients in a range of industries, with a focus on assisting policyholders in insurance coverage disputes and representing stakeholders in construction and real estate matters, as well as general business litigation.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
John McMullen (00:00):
Hello and welcome to Inside modular, the podcast
of commercial modularconstruction, brought to you by
the modular building Institute.
Welcome everyone. My name isJohn McMullen. I'm the Marketing
Director here at NBI. Today I'mtalking with Jevon Benjamin
partner in Minneapolis basedMaslin LLP. Jevon is here to
talk about the ins and outs ofproperly insuring off site
(00:21):
construction projects. Jevon,thanks for being here.
Jevon Bindman (00:26):
Thank you for having me, John.
John McMullen (00:28):
It's my pleasure.
Tell me about yourself. Jevin.
What's your background and whatgot you interested in the
offsite construction industry.
So
Jevon Bindman (00:35):
I've been an attorney at the Maslin law firm
in Minneapolis for about 10years, and I have a general
litigation practice helpingbusinesses with their disputes,
and lawsuits. And as part ofthat practice, I focused on
construction and in particular,insurance coverage issues. So so
our firm helps clients to fileclaims for insurance coverage,
(00:58):
and then file lawsuits againstinsurance companies if
necessary. You know, in theconstruction industry, insurance
is such an essential component,because there's so many
different moving parts. Sounlike insuring a painting on
your wall, which just sitsthere, you have all sorts of
activities going on in theconstruction site. And modular
and offsite construction, addsanother wave of complexity,
(01:20):
because a lot of the work isdone outside of the project site
in areas that may or may nothave insurance coverage. So, you
know, we've been seeing thenumbers and the extent to which
modular construction is becominga bigger and bigger part of the
overall construction scene.
Insurance is still catching upto that and trying to figure out
what products makes sense. Soit's a really exciting and new
(01:42):
area for insurance coveragelitigators, like myself,
John McMullen (01:47):
before we get any deeper into this, I was hoping
you could give me a quick primeron a couple of terms I've been
reading the materials you gaveme before the show, which we can
link to, of course, later on onNBS website. But for those who
haven't read that, or anythingelse pertaining really to
insurance, and for people whostruggled with insurance terms
(02:07):
like myself, I was wondering, wecould go through a couple of
things. And you could tell mewhat they mean, specifically,
when it comes to off siteconstruction. Sure, awesome. So
covered property, how was I wascovered property and offsite
construction different thantraditional construction
projects.
Jevon Bindman (02:25):
So in your, in your typical insurance policy
for construction projects,you're going to have a
definition of the coveredproperty. And that's essentially
the the property that applies tothe to the insurance policy. So
if the loss occurs at thecovered property, then the loss
will be covered, assuming thatit meets the other requirements.
(02:47):
Typically, that's going to bethe project site, and maybe some
surrounding areas, you mighthave a laydown yard or some
other ancillary spots. Thedifficulty that comes with off
site construction, is that youhave entire units that are being
constructed potentially hundredsof miles away, maybe in a
different state, even absentsome manuscript edits to the
(03:09):
policy, those are not going tobe covered by your traditional
insurance policies, such as abuilder's risk policy or a
general liability policy, untilthose products arrive at the
site. And that creates becauseof the expense, that those
products are the cost of thoseproducts before they arrive at
the site. It creates asignificant risk for the owner
(03:34):
and the general contractor thatthey would have a loss before
those items arrive on site andare covered by their insurance.
John McMullen (03:41):
Okay, so I got another one for you, goods and
services. There seems to be someconfusion about these given the
nature of offsite constructionand project delivery. How do you
typically explain this?
Jevon Bindman (03:52):
Essentially, goods are something that a
person makes in services orsomething that a person does. So
in terms of construction goodsmight be two by fours and
drywall and services are theframing contractor building a
wall? off site constructionblurs the lines between goods
and services? Because what isultimately delivered is an
(04:13):
entire unit. So for example, forbuilding an apartment complex,
you might deliver an entireapartment that is ready to be
hooked up to gas, water,electricity, etc. Is that a good
or a service? Well, certainlyit's a product that was made by
a company, but a lot of serviceswent into that as well. And it
(04:34):
can be unclear as to whetherit's a good or service and that
can make a big impact on howinsurance covers the good or the
service because there are policyexclusions that can apply for
example, there are often policyexclusions that exclude the work
(04:54):
performed by a contractor. So ifif the product or if if offsite
Construction is considered aservice that could, in some
cases preclude coverage, eventhough there are a lot of goods
that are a part of that of thatunit. Okay. And I'll just I'll
just say, I'll add one morething is that it's important,
(05:14):
it's important to try to definethose terms and make sure that
it's clear in the policy as towhether these are considered
goods and services, andimportant to have that
discussion ahead of time.
John McMullen (05:26):
Are there are there any other terms or aspects
to ensuring an off siteconstruction project that that
tend to confuse people? I know Ijust named two, but I'm sure
there's a lot.
Jevon Bindman (05:34):
Yeah, one that comes up pretty often is the
difference between design workand installation work. And
again, on an off siteconstruction project, you're
going to have design components,designing the units, and you're
going to have installationcomponents, putting it together
off site, and then alsoinstalling it when once you get
(05:54):
on site. The the insuranceproducts that respond to issues
of installation versus designare two different policies. So
you have a general liabilitypolicy, or maybe a property
policy that would deal withinstallation issues, but then
you have a professionalliability policy that applies to
design issues. So again, beingvery clear about which aspects
(06:18):
of the project apply to whichactivities is very important, so
that you don't end up at asituation where this the general
liability and professionalinsurers are pointing fingers at
each other, and you're the onewho's left holding the bag. The
other term that I wouldn'tmention is additional insured.
(06:40):
And an additional insured is isan entity that is added to
somebody else's insurancepolicy. Typically, you'll see
this where an owner or generalcontractor is added to a
subcontractors insurance policyas an additional insured, we
always highly recommend thatowners and contractors get added
(07:01):
to the to their lower tiercontractors, insurance policies.
But when you're dealing with anoff site insurer, who's building
their products off site, it canbecome a little bit murkier as
to whether that type of coverageis available. When
John McMullen (07:17):
it comes to insuring an off site
construction project what whattends to be the biggest sticking
point for insurance companies?
You mentioned that offsiteconstruction blurs the line
which it certainly does. How canmanufacturers and stakeholders
help alleviate some of thesesome of that confusion on the
front end?
Jevon Bindman (07:33):
Well, the first thing I'll mention is that
offsite construction is abenefit to insurance companies.
And a lot of ways because youhave a climate controlled site
where the construction isoccurring, you tend to have
highly skilled workers who areworking in a safer environment,
there's no weather delays,there's no safety issues
(07:55):
associated with weather,insurance companies should love
all of that, because it's makingthe job less risky. That being
said, there are a few risks thatare that tend to be greater. On
a on an off site constructionproject. The first one is
obviously transportation. Sorather than transporting goods,
like two by fours to theconstruction site, or maybe even
(08:17):
some some prefabricatedcomponents, here, you have
entire units that are beingloaded onto a train or a truck
and shipped, sometimes several100 miles to the construction
site, the risk of loss of thoseitems is going to be much
greater than losing, you know, ashipment of two by fours. So
(08:38):
that's an importantconsideration. The other
additional risk that we see isthe increased use of cranes on
the job site once the units havebeen delivered. Oftentimes,
these projects require morecrane work or cranes that can
lift heavier loads. And that isanother aspect that you'd want
to have a discussion with theinsurance company to make sure
(09:01):
that they are aware of thediffering nature of this type of
project. What
John McMullen (09:06):
are some best practices for off site
manufacturers and projectstakeholders when it comes to
arranging for Project insuranceor perhaps modifying the plans
that they have?
Jevon Bindman (09:16):
So the first one and most important I think, is
to make sure you engage yourbrokers and insurers early in
the process, explain the thedifferences between a
traditional project and thisone. And this is particularly
important for a generalcontractor who does some modular
or off site work, but it's nottheir entire practice. They
(09:38):
might have a general liabilitypolicy that covers for all sorts
of different projects and theywant to make you want to make
sure that you're not going toget caught up in one of those
exclusions that may or may notapply because of the unique
nature of offsite construction.
My next recommendation is toextend coverage to the
manufacturing facility if that'spossible. Sometimes for very
(09:59):
large projects, you'll have aninsurance policy that is
specific to that project site,it's often called the owner
controlled insurance product, itwould be worth a discussion to
see if if that policy can beextended to include loss or
damage that occurs at themanufacturing facility as well.
(10:19):
third recommendation is, if youare the off site manufacturer,
it makes sure that you havesufficient insurance not only
for building the product itself,but for transportation and any
damage or injury that that thoseproducts may cause throughout
the lifecycle of the project.
And then finally, if you're thegeneral contractor, or owner or
(10:41):
developer, make sure that theoff site manufacturer has
sufficient coverage for thosesame losses. And that, if
possible, that you can be namedas an additional insured on
their policies.
John McMullen (10:52):
Is there anything else that MBI members might need
to consider when looking forprojects insurance coverage,
Jevon Bindman (10:58):
I would say to keep abreast of changes in the
insurance marketplace. Andagain, this is why it's
important to engage with yourbroker. There are more and more
products that are specific tomodular construction that are
available every year. So keep upto date as to as to what's
available in the marketplace.
And then also just have a planfor when things go wrong. If if
(11:21):
there is a loss, who are thepeople that are going to be
helping you through thatprocess, putting together a team
that is aware of risk analysisand making sure that claims are
brought properly and timely.
John McMullen (11:40):
And lastly, you mentioned that there are more
products available for modularconstruction, offsite
construction. Is it your opinionthat insurance companies are
getting a little bit more hip tothe off site industry? They're
understanding a bit more the theins and outs of how it works?
Jevon Bindman (11:58):
Yeah, I think so.
And you know, it will take time,but and they will only grow as
as the off site constructionfootprint gets larger. The
products that are currentlyavailable tend to be for smaller
projects, such as residential ormaybe small multifamily
projects. And as we get fartherand farther along, I think we'll
(12:19):
see more larger projects thatare, you know, that have
tailored insurance productsavailable for off site
construction as well.
John McMullen (12:30):
So any any manufacturer or developer
looking at a hotel project, orlarge multifamily project,
definitely should check withtheir insurance providers first
if I if I understand youcorrectly. Right. And,
Jevon Bindman (12:43):
you know, if products aren't available at
this point, you know, maybe in acouple years, something will be
available. That makes sense.
John McMullen (12:51):
It does. Very good. Thank you, Jeff. And I
really appreciate your timetoday. If anyone's interested in
reaching out with questions. Isthat something they were able to
do? Yes,
Jevon Bindman (12:59):
definitely. i My email address is
jevin.binman@maslin.com. I'malso very active on LinkedIn.
I'd love to to connect with youthere and I keep up with issues
regarding off site constructioninsurance, as well as just
general litigation issues. I'mvery active on my account there.
(13:21):
Excellent.
John McMullen (13:22):
Well, I will I will reach out and connect after
this episode. My name is JohnMcMullen. And this has been
another episode of Insidemodular the podcast for
commercial modular construction.
Until next time,
Hello and welcome to Inside modular, the podcast
of commercial modularconstruction, brought to you by
the modular building Institute.
Welcome everyone. My name isJohn McMullen. I'm the Marketing
Director here at NBI. Today I'mtalking with Jevon Benjamin
partner in Minneapolis basedMaslin LLP. Jevon is here to
talk about the ins and outs ofproperly insuring off site
(00:21):
construction projects. Jevon,thanks for being here.
Jevon Bindman (00:26):
Thank you for having me, John.
John McMullen (00:28):
It's my pleasure.
Tell me about yourself. Jevin.
What's your background and whatgot you interested in the
offsite construction industry.
So
Jevon Bindman (00:35):
I've been an attorney at the Maslin law firm
in Minneapolis for about 10years, and I have a general
litigation practice helpingbusinesses with their disputes,
and lawsuits. And as part ofthat practice, I focused on
construction and in particular,insurance coverage issues. So so
our firm helps clients to fileclaims for insurance coverage,
(00:58):
and then file lawsuits againstinsurance companies if
necessary. You know, in theconstruction industry, insurance
is such an essential component,because there's so many
different moving parts. Sounlike insuring a painting on
your wall, which just sitsthere, you have all sorts of
activities going on in theconstruction site. And modular
and offsite construction, addsanother wave of complexity,
(01:20):
because a lot of the work isdone outside of the project site
in areas that may or may nothave insurance coverage. So, you
know, we've been seeing thenumbers and the extent to which
modular construction is becominga bigger and bigger part of the
overall construction scene.
Insurance is still catching upto that and trying to figure out
what products makes sense. Soit's a really exciting and new
(01:42):
area for insurance coveragelitigators, like myself,
John McMullen (01:47):
before we get any deeper into this, I was hoping
you could give me a quick primeron a couple of terms I've been
reading the materials you gaveme before the show, which we can
link to, of course, later on onNBS website. But for those who
haven't read that, or anythingelse pertaining really to
insurance, and for people whostruggled with insurance terms
(02:07):
like myself, I was wondering, wecould go through a couple of
things. And you could tell mewhat they mean, specifically,
when it comes to off siteconstruction. Sure, awesome. So
covered property, how was I wascovered property and offsite
construction different thantraditional construction
projects.
Jevon Bindman (02:25):
So in your, in your typical insurance policy
for construction projects,you're going to have a
definition of the coveredproperty. And that's essentially
the the property that applies tothe to the insurance policy. So
if the loss occurs at thecovered property, then the loss
will be covered, assuming thatit meets the other requirements.
(02:47):
Typically, that's going to bethe project site, and maybe some
surrounding areas, you mighthave a laydown yard or some
other ancillary spots. Thedifficulty that comes with off
site construction, is that youhave entire units that are being
constructed potentially hundredsof miles away, maybe in a
different state, even absentsome manuscript edits to the
(03:09):
policy, those are not going tobe covered by your traditional
insurance policies, such as abuilder's risk policy or a
general liability policy, untilthose products arrive at the
site. And that creates becauseof the expense, that those
products are the cost of thoseproducts before they arrive at
the site. It creates asignificant risk for the owner
(03:34):
and the general contractor thatthey would have a loss before
those items arrive on site andare covered by their insurance.
John McMullen (03:41):
Okay, so I got another one for you, goods and
services. There seems to be someconfusion about these given the
nature of offsite constructionand project delivery. How do you
typically explain this?
Jevon Bindman (03:52):
Essentially, goods are something that a
person makes in services orsomething that a person does. So
in terms of construction goodsmight be two by fours and
drywall and services are theframing contractor building a
wall? off site constructionblurs the lines between goods
and services? Because what isultimately delivered is an
(04:13):
entire unit. So for example, forbuilding an apartment complex,
you might deliver an entireapartment that is ready to be
hooked up to gas, water,electricity, etc. Is that a good
or a service? Well, certainlyit's a product that was made by
a company, but a lot of serviceswent into that as well. And it
(04:34):
can be unclear as to whetherit's a good or service and that
can make a big impact on howinsurance covers the good or the
service because there are policyexclusions that can apply for
example, there are often policyexclusions that exclude the work
(04:54):
performed by a contractor. So ifif the product or if if offsite
Construction is considered aservice that could, in some
cases preclude coverage, eventhough there are a lot of goods
that are a part of that of thatunit. Okay. And I'll just I'll
just say, I'll add one morething is that it's important,
(05:14):
it's important to try to definethose terms and make sure that
it's clear in the policy as towhether these are considered
goods and services, andimportant to have that
discussion ahead of time.
John McMullen (05:26):
Are there are there any other terms or aspects
to ensuring an off siteconstruction project that that
tend to confuse people? I know Ijust named two, but I'm sure
there's a lot.
Jevon Bindman (05:34):
Yeah, one that comes up pretty often is the
difference between design workand installation work. And
again, on an off siteconstruction project, you're
going to have design components,designing the units, and you're
going to have installationcomponents, putting it together
off site, and then alsoinstalling it when once you get
(05:54):
on site. The the insuranceproducts that respond to issues
of installation versus designare two different policies. So
you have a general liabilitypolicy, or maybe a property
policy that would deal withinstallation issues, but then
you have a professionalliability policy that applies to
design issues. So again, beingvery clear about which aspects
(06:18):
of the project apply to whichactivities is very important, so
that you don't end up at asituation where this the general
liability and professionalinsurers are pointing fingers at
each other, and you're the onewho's left holding the bag. The
other term that I wouldn'tmention is additional insured.
(06:40):
And an additional insured is isan entity that is added to
somebody else's insurancepolicy. Typically, you'll see
this where an owner or generalcontractor is added to a
subcontractors insurance policyas an additional insured, we
always highly recommend thatowners and contractors get added
(07:01):
to the to their lower tiercontractors, insurance policies.
But when you're dealing with anoff site insurer, who's building
their products off site, it canbecome a little bit murkier as
to whether that type of coverageis available. When
John McMullen (07:17):
it comes to insuring an off site
construction project what whattends to be the biggest sticking
point for insurance companies?
You mentioned that offsiteconstruction blurs the line
which it certainly does. How canmanufacturers and stakeholders
help alleviate some of thesesome of that confusion on the
front end?
Jevon Bindman (07:33):
Well, the first thing I'll mention is that
offsite construction is abenefit to insurance companies.
And a lot of ways because youhave a climate controlled site
where the construction isoccurring, you tend to have
highly skilled workers who areworking in a safer environment,
there's no weather delays,there's no safety issues
(07:55):
associated with weather,insurance companies should love
all of that, because it's makingthe job less risky. That being
said, there are a few risks thatare that tend to be greater. On
a on an off site constructionproject. The first one is
obviously transportation. Sorather than transporting goods,
like two by fours to theconstruction site, or maybe even
(08:17):
some some prefabricatedcomponents, here, you have
entire units that are beingloaded onto a train or a truck
and shipped, sometimes several100 miles to the construction
site, the risk of loss of thoseitems is going to be much
greater than losing, you know, ashipment of two by fours. So
(08:38):
that's an importantconsideration. The other
additional risk that we see isthe increased use of cranes on
the job site once the units havebeen delivered. Oftentimes,
these projects require morecrane work or cranes that can
lift heavier loads. And that isanother aspect that you'd want
to have a discussion with theinsurance company to make sure
(09:01):
that they are aware of thediffering nature of this type of
project. What
John McMullen (09:06):
are some best practices for off site
manufacturers and projectstakeholders when it comes to
arranging for Project insuranceor perhaps modifying the plans
that they have?
Jevon Bindman (09:16):
So the first one and most important I think, is
to make sure you engage yourbrokers and insurers early in
the process, explain the thedifferences between a
traditional project and thisone. And this is particularly
important for a generalcontractor who does some modular
or off site work, but it's nottheir entire practice. They
(09:38):
might have a general liabilitypolicy that covers for all sorts
of different projects and theywant to make you want to make
sure that you're not going toget caught up in one of those
exclusions that may or may notapply because of the unique
nature of offsite construction.
My next recommendation is toextend coverage to the
manufacturing facility if that'spossible. Sometimes for very
(09:59):
large projects, you'll have aninsurance policy that is
specific to that project site,it's often called the owner
controlled insurance product, itwould be worth a discussion to
see if if that policy can beextended to include loss or
damage that occurs at themanufacturing facility as well.
(10:19):
third recommendation is, if youare the off site manufacturer,
it makes sure that you havesufficient insurance not only
for building the product itself,but for transportation and any
damage or injury that that thoseproducts may cause throughout
the lifecycle of the project.
And then finally, if you're thegeneral contractor, or owner or
(10:41):
developer, make sure that theoff site manufacturer has
sufficient coverage for thosesame losses. And that, if
possible, that you can be namedas an additional insured on
their policies.
John McMullen (10:52):
Is there anything else that MBI members might need
to consider when looking forprojects insurance coverage,
Jevon Bindman (10:58):
I would say to keep abreast of changes in the
insurance marketplace. Andagain, this is why it's
important to engage with yourbroker. There are more and more
products that are specific tomodular construction that are
available every year. So keep upto date as to as to what's
available in the marketplace.
And then also just have a planfor when things go wrong. If if
(11:21):
there is a loss, who are thepeople that are going to be
helping you through thatprocess, putting together a team
that is aware of risk analysisand making sure that claims are
brought properly and timely.
John McMullen (11:40):
And lastly, you mentioned that there are more
products available for modularconstruction, offsite
construction. Is it your opinionthat insurance companies are
getting a little bit more hip tothe off site industry? They're
understanding a bit more the theins and outs of how it works?
Jevon Bindman (11:58):
Yeah, I think so.
And you know, it will take time,but and they will only grow as
as the off site constructionfootprint gets larger. The
products that are currentlyavailable tend to be for smaller
projects, such as residential ormaybe small multifamily
projects. And as we get fartherand farther along, I think we'll
(12:19):
see more larger projects thatare, you know, that have
tailored insurance productsavailable for off site
construction as well.
John McMullen (12:30):
So any any manufacturer or developer
looking at a hotel project, orlarge multifamily project,
definitely should check withtheir insurance providers first
if I if I understand youcorrectly. Right. And,
Jevon Bindman (12:43):
you know, if products aren't available at
this point, you know, maybe in acouple years, something will be
available. That makes sense.
John McMullen (12:51):
It does. Very good. Thank you, Jeff. And I
really appreciate your timetoday. If anyone's interested in
reaching out with questions. Isthat something they were able to
do? Yes,
Jevon Bindman (12:59):
definitely. i My email address is
jevin.binman@maslin.com. I'malso very active on LinkedIn.
I'd love to to connect with youthere and I keep up with issues
regarding off site constructioninsurance, as well as just
general litigation issues. I'mvery active on my account there.
(13:21):
Excellent.
John McMullen (13:22):
Well, I will I will reach out and connect after
this episode. My name is JohnMcMullen. And this has been
another episode of Insidemodular the podcast for
commercial modular construction.
Until next time,
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