There’s a quote that says “Insurance is like marriage. You pay but never get anything back”. On the contrary, insurance is not about paying without seeing results, it’s about protecting yourself from the unexpected. The construction industry is no exception. The right insurance cover could be the difference between a project’s success or failure. It is a vital tool that can be used to meet a contractual requirement, or as a safety net in case something goes wrong despite your best efforts.
You might not know where to begin when looking for the correct insurance cover because there are many alternatives. You need to understand what each option covers and how it will protect you and your company.
We’re here to help. There are typical insurance covers that apply to most construction projects. These are:
This can be taken by either the contractor or the employer/principal even though the employer is not responsible for the actual execution of the project. During the construction or erection phased, the project or physical structure(s) is exposed to risks such as fire, storm, wind damage or theft which could lead to the employer/contractor suffering heavy financial loss. For example, the project under construction can be swept away by heavy storms. Works insurance protects one against physical damage or loss to the contract works and/or including free issue material resulting from these risks.
Popularly known as third party insurance in the construction space, this cover protects you against damages/loss to third party property and/or injury to third parties arising out of the performance of the construction project. Many construction project contracts will require the contractor to take out public liability insurance to protect the contractor from claims, which could be significant. This does not include property belonging to employees or physical injury to employees as they do not fall within the definition of a third party.
This cover comes in handy when you incur income losses due to damage or delay in the construction project. For example, where the construction of a shopping mall experiences delays due to storm damages, the contractor can take up advance loss of profits/rent.
Commonly known as yellow machines, these items ought to be covered against damages or loss either while on site or even on the road. The normal contractors all risk policy does not cover damages or loss to the yellow plant/machine, therefore the need for Plant All risk cover cannot be over-emphasized. This plant can be your own plant or hired plant, and if it is hired the terms of hire must be clearly understood by the contractor and the roles and responsibilities between the parties ought be spelled out. This space also includes normal hand-held tools that are owned or even hired by the contractor. These can be insured under the plant/ hired plant insurance policy or a normal commercial policy of the company, separate from works insurance. This will give the contractor freedom to use these tools/plant on any site they work on as this coverage is not address/location specific.
The complexity and dependencies inherent in construction projects could leave you at risk for severe liability claims. It is therefore essential to pay attention to the following terms and clauses in your cover:
Whether you are just starting your project or need to switch insurance carriers, working with a company with experience and knowledge in providing construction insurance is essential. When you buy a policy, you enter a binding contract with terms and conditions attached. An insurance broker will ensure you enter this contract fully aware of what it entails. We hold your hand throughout the whole process until the fulfilment of that contract.
