Typically, construction contracts require the owner or the appointed contractor of a building, proposed structure or addition to an existing building, to have insurances in place to cover the buildings during the course of construction until such time as its practical completion and handover stage.
As well as having an insurable interest in the materials used a builder/ general contractor or property owner can be held liable for any damage caused to third parties property or personal injury and may also be liable for the actions caused by any sub-contractors who are working on –site. A Construction policy would extend to cover any negligent acts of the builder/ general contractor and the negligent acts of bona fide subcontractors who are engaged in activities on their behalf.
A Construction policy or Contractors All Risks policy can name the owner, the general contractor and the subcontractors as insureds.
What does cover do to protect client/ policyholder, their business etc.?
Construction insurance usually comprises property, employer’s liability and public/ products liability cover.
If you are a builder, general contractor or property developer Construction Insurance will protect you or your organisations insurable interest in the materials used together with your legal liability for damages to third party property or personal injury.
It can also extend to cover your materials used whether on site or off site and any plant (either own plant or hired-in), tools and equipment which are used in connection with the construction or renovation of a building or structure. Cover will be provided on an insured perils basis for example perils such as fire, theft and vandalism.
The policy will also protect the insured’s legal liability to third parties for injury or damage caused in connection with the activities involved in the construction of a building/ structure (subject to policy terms and conditions).
Policies can be underwritten on a bespoke basis and can either be contract specific or on an annual basis subject to a specified limit per contract.
Extensions such as ‘delay in start-up’ cover and cover for ‘employee’s tools’ can be included and typical exclusions such as gradual pollution or defective workmanship will apply.
