Potential Impacts of New Infrastructure on Business and Insurance

As we begin to move out of a very tumultuous time, and following the passage of several significant economic relief programs, President Biden has recently proposed a massive $2 trillion plan to both reshape the economic status of the country and to rebuild infrastructure. Along with that infrastructure work will come new jobs, new opportunities, and new risks for those companies that choose to undertake some of the work. It will likely also bring about questions regarding environmental coverages, the hiring of contractors and subcontractors, and workers’ compensation issues.

Before getting into the nitty gritty of what all this could mean for businesses, it is important to go over what the infrastructure plan currently looks like and what is being proposed by the Biden administration. What the White House has said, thus far, is that a combination of tax credits and spending would eventually result in twenty thousand miles of road being rebuilt, ten massive bridge repairs to the most important bridges in the country (economically speaking), an elimination of lead pipes from carrying water in the nation, and a slew of other projects. Additionally, the plan is intended to bolster efforts to fight climate change as well through the implementation of new and cleaner energy sources. The end result of all of this is to raise wages and improve drinking water, internet service, and commute times.

A lot of things are included in the current version of the plan, many of them consisting of physical infrastructure projects. From transportation to the electric grid to housing to broadband internet to manufacturing. The bill itself has line items that could have completely filled the entire ambitions of past administrations.

To offset the cost, at least according to the plan, there would be an increase in corporate taxes over a 15-year period, with a heavy focus on the multinational corporations that are earning and booking profits outside of the United States. According to the president, these increased taxes would be a way to encourage those multinational companies to invest and produce in the United States rather than overseas.

The current version of the plan, whether it comes to fruition or not, will most certainly represent something at least resembling whatever the final bill includes. That means businesses should start preparing now for what may be coming in the future. Waiting to see how it all pans out in the end could easily mean missing out because it is too late to do the groundwork.

For companies who are considering jumping in when the contracts start going out, there are a few things to think about ahead of time:

· Government contracting inherently includes a lot of oversight and having all your “ducks in a row” before the government will sign off on any work. That will include having the business set up properly, background checks in many cases, and checking through business documents like insurance coverage.

· Infrastructure work is going to inherently include issues for the environment and pollution. This is especially true when it comes to the replacement of lead pipes with other types of piping. For that, it is important to review the related risk management and coverages before undertaking any work.

· Workers’ compensation always comes into play. It is necessary, should be reviewed yearly regardless of what projects are going on, and is veritably essential for taking on any government projects. The fact that these projects will involve construction and utility work makes it even more important.

· Most companies cannot handle every aspect of this type of work by themselves. That is where subcontractors will come into play. With subcontractors will come a number of new issues. Do they have their own insurance? Are they covered under yours? Who is liable if a subcontractor does something erroneous on a job that the company is responsible for? These are just a few of the many questions that can come up when dealing with subcontractors. Things can rapidly get out of hand from a risk management perspective.

· Another aspect to keep in mind is the security of supply lines. If something were to go wrong with a supplier, the entire project could be thrown into disarray while waiting for supplies to arrive. When one timetable changes, all the others change. Suddenly that small delay can have a ripple effect down the road.

However the actual infrastructure plan shakes out, having an insurance professional on your side is essential to success in business either way. It can easily make the difference between a business staying open and one closing down for good because of one error or overlooked risk area. Don’t let your company fall into that group. Be prepared.

For more information or to review your coverage, reach out to Wayne Nesbit at 952-746-4312 or wnesbit@nesbitagencies.com.