Construction Works Insurance

There can easily be a gap in coverage if you change from a Turnover policy to a Run-Off Contract Commencing policy if a policy is changed at renewals. A thorough review of your policy type should be undertaken, if the insurer is being changed at renewal in order to ensure their are no construction projects uninsured inadvertently.

Who is insured under Contracts Works policy?

Based on a Principal Controlled Insurance Programme (PCIP) the entities or persons normally insured by a Contract Works policy that will also reflect the provisions of the construction contract in place will include:

• The Principal
• Project Manager
• Any director or employee of above
• Any contractor or sub-contractor whereby a sub-contract or sub-agreement exists for the performance of any part or parts of the Contract Works.
   

What does Contract Works insure?

The policy schedule will describe the type of property or business activities that can be insured eg. Residential New Build, Renovations or Commercial construction project builds.

The actual work itself can comprises construction or erection itself including formwork, falsework, temporary works, temporary buildings, scaffolding, hoardings, principal supplied or free-issue materials, and materials for incorporation in the works. In some policies, insurers will agree to coverage for the pre-existing buildings or structure that is having renovation work or an alternation performed on it.

Advantages of Principal Controlled Insurance Programme (PCIP)

The major advantages of a principal having control over your construction insurances in comparison to individual contractors having separate Contract Works policies are that.

These include:

• Uniform level of coverage over a complete project. Individual contractors will have different cover levels.
• As a principal, you know if the policy is still in force, and not cancelled.
• Claim monies are paid to you as Principal unless you direct otherwise.
• Building construction insurance is covering in most cases significant dollar value assets.
• As insurers cover the complete project, there is no dispute between insurers and the proportion of liability following a claim.
• Massive reduction in your administration time, by not having to review individual contractor policies.
   

Standard Benefits within a Construction insurance policy

Standard automatic benefits in a Construction policy include:

• Removal of Debris - the costs of demolition and disposal of damaged Contract Works;
• Professional Fees - Architects’, surveyors’, consulting engineers’ fees necessarily incurred
• Expediting Expenses - the costs of overtime rates of wages, the hiring of additional labour and equipment, and the costs of purchasing resources necessary to repair or replace urgently damage to the Contract Works
• Mitigation Expenses - the reasonable costs and expenses incurred in containing, mitigating, suppressing or preventing further loss or damage to the Contract Works following insured damage.
   

What is not covered by Construction Policies

Construction insurance policies have various exclusions and limitations. In some cases these exclusions can be limited or restricted by agreement with insurers. We would recommend that the exclusions.

The major exclusions under Material Loss or Damage section are: