AI and Automation: The Impact on Construction Site Liability

Artificial intelligence (AI) and automation are revolutionizing the construction industry. Drones survey sites faster than ever, autonomous bulldozers grade terrain with precision, and AI-powered software helps teams coordinate complex projects in real time. While these advances boost productivity, they also introduce new risks — and raise important questions about how construction companies protect themselves through insurance.

At Tooher-Ferraris Insurance Group, we work with contractors, builders, and developers to navigate these emerging exposures. In this article, we’ll explore how autonomous equipment impacts your general liability and workers’ compensation programs — and why reviewing policy language for new technologies is essential.

Autonomous Equipment: A Double-Edged Sword

Automation promises safer sites by reducing human error and keeping workers out of hazardous conditions. For example, an autonomous excavator can dig a trench without putting an operator at risk of cave-ins or contact with underground utilities. However, these machines don’t eliminate accidents — they change how they happen.

Who’s at fault if an autonomous crane malfunctions and damages a nearby property? What if a site worker is struck by a driverless haul truck? Contractors, equipment manufacturers, software developers, and project owners could all be pulled into complex claims. Liability may be less clear-cut than with traditional human error.

Impact on General Liability

1. Bodily Injury and Property Damage

A standard Commercial General Liability (CGL) policy covers bodily injury or property damage arising from your operations. But with AI-driven equipment, questions can arise:

Was the damage due to an equipment defect or an operator’s misuse?
Does the subcontractor agreement properly transfer liability?
If an AI system “learns” new behaviors, who’s responsible for its actions?

Insurers may scrutinize whether autonomous equipment was properly maintained, calibrated, and monitored. Contractors need to ensure maintenance logs and software updates are documented — and that contracts with technology providers clearly define responsibility.

2. Product Liability Exposures

If you own or modify autonomous equipment, you may be considered part of the “product chain,” exposing you to product liability claims. Traditional CGL policies may not fully cover this risk if they exclude product failures or don’t contemplate software errors that lead to damage.

Impact on Workers’ Compensation

AI and robotics aim to reduce manual labor injuries — one of the biggest drivers of workers’ comp costs. Fewer repetitive motion injuries and less exposure to dangerous tasks are clear benefits.

However, the introduction of autonomous machinery can create new hazards:

Workers might not fully understand how to interact with robotic systems.
“Human-robot interaction” injuries, like being struck by a self-driving loader, can lead to unique claims scenarios.

While your workers’ comp policy will generally respond to employee injuries, insurers may want to see robust training programs and safety protocols for working alongside automated systems.

Policy Language Considerations for New Tech

One of the biggest pitfalls for contractors embracing automation is assuming their existing insurance policies automatically adapt to new exposures. Here are three key areas to review with your broker or risk advisor:

Definitions of “Covered Operations”:
- Does your policy clearly define your work, including any ownership or operation of autonomous equipment? An outdated description could create a gap.
Exclusions for Cyber or Tech Failures:
- Many CGL and property policies contain exclusions for damage caused by software failure, cyberattacks, or programming errors. If an autonomous machine is hacked or its AI system malfunctions, you could find your claim denied. Consider stand-alone cyber coverage or technology E&O if you’re deeply invested in smart equipment.
Contractual Risk Transfer:
- When partnering with equipment manufacturers, software vendors, or subcontractors, contracts should clearly outline who assumes responsibility for malfunctions or misuse. Well-crafted additional insured and indemnification clauses can help protect you from unexpected losses.

Future-Proof Your Risk Management

AI and automation will only continue to evolve on construction sites. Forward-thinking contractors should not only invest in safety training and robust maintenance but also work with insurance partners who understand how to adapt coverage to modern risks.

At Tooher-Ferraris Insurance Group, we help our construction clients stay ahead of emerging liabilities. From reviewing your general liability and workers’ comp policies to negotiating endorsements that address new technologies, we’re here to ensure your coverage grows with your business.

Stay Ahead of the Curve

Is your construction company prepared for the new era of smart job sites? Connect with a Tooher-Ferraris advisor today to review your insurance program and protect your business from the evolving risks of AI and automation.

Business Insurance

July 9, 2025

Pollution Liability in Heavy Construction: Why CGL Exclusions Matter More Than Ever

When you think about pollution liability, you might picture oil refineries or chemical plants — not earthmovers and grading contractors. But the reality is that heavy construction operations often carry significant pollution exposures, many of which are not covered by standard Commercial General Liability (CGL) policies.

For excavation contractors, road builders, demolition firms, or any business disturbing soil, pollution risks can be costly and complicated. One accidental spill or a hidden contaminant can trigger third-party lawsuits, regulatory fines, and cleanup costs that could sink a project.

At Tooher-Ferraris Insurance Group, we help contractors and developers understand how to protect themselves from these hidden risks. Let’s break down why CGL pollution exclusions matter, when to consider Contractors Pollution Liability (CPL), and how site-specific policies can safeguard your business.

Why Heavy Construction Has Pollution Risks

In the heavy construction world, “pollution” can come from unexpected places:

Excavation: Unearthing old fuel tanks, asbestos, or contaminated soil.
Equipment leaks: Hydraulic fluid, fuel spills, or oil leaks from heavy machinery.
Stormwater runoff: Sediment and pollutants entering local waterways.
Demolition debris: Releasing hazardous materials like lead or PCBs.

Even if your crews follow strict environmental protocols, accidents happen — and the cleanup costs can be staggering.

Why CGL Pollution Exclusions Matter

Most contractors carry a Commercial General Liability policy that protects them against bodily injury, property damage, and related legal costs. But here’s the catch: standard CGL policies almost always contain a total or absolute pollution exclusion.

What does that mean?
If your work unintentionally releases a pollutant that causes third-party damage — say, contaminating a nearby river — your CGL carrier can deny the claim.

And these exclusions aren’t always obvious. Many policies define “pollutants” broadly to include anything from chemicals to smoke or vapor. The result? Contractors who think they’re covered for an accident may find out too late that they’re on the hook for environmental damage.

Real-World Example
Picture this:
A grading contractor unknowingly uncovers contaminated soil while excavating for a new development. The soil is transported off-site but spills along the way, contaminating nearby land. The state issues an environmental cleanup order and third parties sue for property damage.

The contractor files a claim with their CGL carrier — only to have it denied due to the pollution exclusion.

When to Consider Contractors Pollution Liability (CPL)

A Contractors Pollution Liability (CPL) policy can fill these dangerous gaps. CPL insurance is designed specifically to cover:

Third-party bodily injury or property damage from pollution conditions.
Cleanup costs, legal defense, and crisis management expenses.
Both sudden and gradual pollution incidents.
Work performed by you or your subcontractors.

Who should consider CPL?

Any contractor whose operations could disturb existing contaminants or create new exposures should look at pollution liability coverage. This includes:

Excavation and grading contractors
Road and bridge builders
Demolition contractors
Utility contractors
General contractors overseeing complex sites

Site-Specific Pollution Liability

Sometimes, one project carries unique pollution risks — like working on a brownfield site or near sensitive ecosystems. In these cases, a site-specific pollution liability policy can be the better solution.

Site-specific coverage protects the project owner, general contractor, and other stakeholders for known and unknown conditions related to that site. Many lenders and project owners now require these policies as part of their risk management program.

Policy Best Practices

If you’re considering pollution coverage, keep these tips in mind:

Review Contract Requirements:
Many public and private projects require proof of CPL. Don’t wait until bid day to discover you’re missing coverage.

Assess Subcontractor Risk:
A subcontractor’s pollution mishap can still land you in court. Make sure subs carry appropriate CPL limits — and track certificates carefully.

Work with an Expert Broker:
Pollution coverage can vary widely between carriers. Work with a broker who understands environmental risks and can negotiate the right endorsements for your operations.

Protect Your Projects — and Your Balance Sheet

Heavy construction is challenging enough without unexpected environmental liabilities draining your resources. With tight profit margins and strict regulatory oversight, one uncovered pollution event can do lasting damage to your bottom line and reputation.

Tooher-Ferraris Insurance Group helps contractors assess their real exposures, find hidden coverage gaps, and implement risk transfer solutions that protect them in the field and in the boardroom.

Stay Covered and Compliant

Do you know what your CGL actually excludes? Let’s find out together. Connect with a Tooher-Ferraris advisor today to review your pollution exposures and see if Contractors Pollution Liability or site-specific coverage makes sense for your projects.

Employee Benefits

July 8, 2025

Legal Alert: Employee Benefits Provisions in the One Big Beautiful Bill Act

On July 3, 2025, Congress passed a reconciliation bill (the “Reconciliation Act”) previously named the One Big Beautiful Bill Act, but subsequently redesignated “An Act to provide for reconciliation pursuant to title II of H. Con. Res. 14.” The text of the Act can be found here.

The most notable impacts of the Reconciliation Act on health and welfare benefit plans are as follows:

The Expansion of HSA Compatibility:

Telehealth and Other Remote Care Services. The Reconciliation Act resurrects and makes permanent the pandemic-related relief previously provided under the CARES Act, which was extended by the CAA 2022 and CAA 2023, and allows HDHPs to provide first-dollar coverage of telehealth and other remote care services prior to satisfying the HDHP deductible (and regardless of whether such services were preventive services) while maintaining HSA eligibility. This provision is effective retroactively to plan years beginning after December 31, 2024 (e., when the last extension of the relief expired). Employers seeking to take advantage of this relief may amend their plans to provide for no-cost telehealth services.

Primary Care Service Arrangements. The Reconciliation Act has resolved the unsettled question relating to the viability of HSA coverage for individuals with a direct primary care service arrangement (e., a contract between an individual and one or more primary care physicians to receive certain medical care in exchange for a fixed periodic fee). Effective for months beginning after December 31, 2025, a direct primary care service arrangement will not be considered disqualifying coverage (and therefore will not preclude an employee from qualifying for HSA coverage), as long as the fixed periodic fee for the direct primary care service arrangement is no more than $150 per month for the individual, indexed for inflation (or $300 per month if the arrangement covers more than one individual, indexed for inflation). In addition to satisfying this dollar limit, the direct primary care service arrangement must not include coverage for: procedures that require the use of general anesthesia, prescription drugs (other than vaccines), or laboratory services not typically administered in an ambulatory primary care setting. Finally, the Reconciliation Act confirms that the fixed periodic fees payable for the direct primary care service arrangement are qualified medical expenses that may be paid on a tax-free basis from the individual’s HSA.

Bronze Level and Catastrophic Health Plans. In order for an individual to be HSA-eligible, the individual must be covered under a qualified high deductible health plan (HDHP). (Note: The individual also must have no other disqualifying health coverage, must not be enrolled in Medicare, and must not be able to be claimed as a dependent on someone else’s current-year tax return.) The Reconciliation Act provides that, effective for months beginning after December 31, 2025, all bronze and catastrophic level plans available on the individual market through the Exchange will be treated as HDHPs – and will, therefore, be HSA-compatible – even if those plans do not otherwise meet the standard HDHP requirements (g., by providing pre-deductible coverage of non-preventive services, failing to conform to out-of-pocket maximums, etc.).

Increase in DCAP Limit: The Reconciliation Act increases the amount that may be excluded from an employee’s taxable income for benefits paid under a dependent care assistance program (“DCAP”). For plan years beginning on or after January 1, 2026, the excludable amount will increase from $5,000 for unmarried employees and married employees filing a joint tax return ($2,500 for married employees filing separately) to $7,500 for unmarried employees and married employees filing a joint tax return ($3,750 for married employees filing separately). Like the current DCAP limit, the new limit is not indexed for inflation. Employers desiring to offer this newly available benefit increase in 2026 should work with their benefits advisors to amend their cafeteria plans and revise their benefit summaries and open enrollment materials, as necessary.

Student Loan Repayment Assistance: The Reconciliation Act extends and makes permanent the pandemic-related relief previously provided under the CARES Act and CAA 2021 that was otherwise set to expire at the end of 2025. These provisions allow an employer to pay for or reimburse up to $5,250 of an employee’s student loans on a tax-free basis under a Code Section 127 educational assistance program. Such a program must be maintained pursuant to a separate written plan document, and the employer must provide reasonable notification of the availability and terms of the program to all eligible employees. The Reconciliation Act also indexes the $5,250 limit for inflation starting after 2026.

About the Author. This alert was prepared for Tooher-Ferraris by Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act. Contact Stacy Barrow or Nicole Quinn-Gato at sbarrow@marbarlaw.com or nquinngato@marbarlaw.com.

The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers, or our clients. This is not legal advice. No client-lawyer relationship between you and our lawyers is or may be created by your use of this information. Rather, the content is intended as a general overview of the subject matter covered. Tooher-Ferraris and Barrow Weatherhead Lent LLP are not obligated to provide updates on the information presented herein. Those reading this alert are encouraged to seek direct counsel on legal questions.

Company News

June 30, 2025

Bonding with Confidence: Tooher-Ferraris Insurance Group Simplifies Surety Bond Process for Contractors

Tooher-Ferraris Insurance Group Offers Contractors a Seamless Experience by Streamlining the Surety Bond Process

[8/28/24]: Tooher-Ferraris Insurance Group, a leader in the insurance industry since 1932, is proud to announce its commitment to simplifying the surety bond process for contractors across the United States. With its widespread presence in 38 US states and a strong reputation built on trust and reliability, Tooher-Ferraris Insurance Group is easily the preferred choice for any contractor looking for simplified surety bonds.

The construction industry is no stranger to challenges. One of the most significant hurdles contractors face is obtaining surety bonds, which are essential for ensuring timely project completion and protecting stakeholders from financial loss or regulatory non-compliance.

However, the complex and time-consuming process of acquiring surety bonds becomes a headache for construction industry leaders and decision-makers. Recognizing this pain point, Tooher-Ferraris Insurance Group has developed a streamlined approach that takes the hassle out of securing surety bonds, allowing contractors to focus on what they do best: building.

Tooher-Ferraris Insurance Group leverages its extensive industry experience and deep understanding of contractors’ needs to offer personalized service, expert guidance, and fast approvals. This helps ensure that contractors can obtain the bonds they need quickly and efficiently.

“At Tooher-Ferraris, we understand the critical role surety bonds play in the construction industry. Our goal is to make the bonding process for every contractor as stress-free as possible”, a spokesperson for Tooher-Ferraris Insurance Group said, “We help our clients succeed and grow their businesses with confidence by simplifying the process for them, and being an invaluable support on their business journey.”

The Tooher-Ferraris Insurance Group stands out as a leader in the insurance industry. It offers contractors a simplified and reliable way to secure surety bonds. Their extensive experience, personalized service, and commitment to client success make them ideal for contractors seeking financial and reputational security.

People in the construction industry looking for surety bonds can refer to their contact information below to know more.

About Tooher-Ferraris Insurance Group

Tooher-Ferraris Insurance Group boasts over 90 years of industry experience, bringing extensive knowledge and insight to the surety bond process. With operations in 38 states, Tooher-Ferraris Insurance Group has a broad reach and a deep understanding of regional requirements. Their client-centric approach prioritizes personalized solutions and dedicated support, ensuring a seamless experience for businesses, and individuals alike.

Contact Information

Website: https://toofer.com/

Email: info@toofer.com

Connecticut Location: The Kent Building, 43 Danbury Road, Wilton, CT 06897

Phone: (203) 834-5900

New York Location: 845 Third Avenue, 6th Floor, New York, NY 10017

Phone: (212) 547-9587

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