Construction and Liability Insurance

These policies typically provide coverage for:

  • Material loss or damage to the works and
  • Legal liability to third parties.

The cover can be arranged on a project specific or an annual/floater basis to cover all work throughout the year.

Material Loss or Damage:

This policy provides indemnity for the insured parties and should reflect the complexities of the contract entered into. Among other things, the policy should specifically include the contractor, the principal, sub-contractors, financiers and other parties to the contract.

The cover arranged would normally also feature coverage for the following items:

  • professional fees
  • debris removal and cost of dewatering
  • coverage for public authorities
  • air freight and other charges
  • inland transit
  • off-site storage
  • mitigation costs
  • plans, documents and data

The contract works policy should also include an escalation provision normally set around 15 per cent to provide protection in the event that the estimated contract value is exceeded as and when the project is developed.

Advance Consequential Loss:

For larger projects Advance Consequential Loss insurance may need to be considered. This class of insurance indemnifies a contract principal for financial loss that arises from a delay in the completion of the works, where the delay is caused by insured loss or damage to the works.  Under this policy cover can be arranged for Loss of Sales, Rental Income and certain specific fixed costs of the development.

Legal Liability:

The liability aspect of the insurance cover should normally be extended to indemnify the interests of the parties named under the contract. This policy should always contain variations to specifically include a waiver of subrogation and cross liabilities and others as required by the underlying construction contract.