If you’re about to embark on a new construction project, there is a long list of formalities and procedures that need to be completed. While taking a look at the loan, acquiring machinery and foremen to use, and deciding upon the investors can be a huge part of this process, there is another aspect to it that cannot be ignored. Considering getting a construction project insurance can safeguard you from incurring unexpected losses while protecting your project, workers, and all the assets invested. Today, we are going to explore the benefits of getting construction project insurance for more clarity. Want to know more? Read below!
The Advantages of Construction Project Insurance
As the civil industry is full of risks and unforeseeable circumstances, we highly recommend that every contractor invests in an all-encompassing cover. A contractor can protect his interests and that of his project on the occasion of any seeable and unforeseeable damage. Listed below are the benefits of investing in a construction project insurance policy.
1. Material Damage
In a construction project policy, any losses incurred for reasons not excluded from the policy terms will be covered by the company. Most of the insurers pay for the damage cost up to an amount that does not exceed a certain predetermined limit which has been mentioned against each asset and item as well as the total insurance claim amount.
2. Third-party Liability
The third-party liability for a construction project insurance covers a few perils and legal liabilities towards:
- The legal liability of payment for accidental losses or damages suffered due to the negligence or action of a third party.
- The legal liability to cover for any fatal and non-fatal injuries suffered by the third person due to the construction project. This excludes the insured contractor themselves and their workers.
- The liability to pay for damages caused due to perils of disasters caused by:
- Fires and related damages
- Collapse of property
- Earthquakes, fires, or shocks to the land.
- Erroneous construction
- Storms, cyclones, or tempests
- Any damages due to water
- Damages due to human negligence and error
3. Scope for Additional Coverage
The construction project policyholder can extend the purview of their policy to other aspects such as:
- Damage to the area surrounding their property.
- Instruments used in construction such as scaffolding and shuttering material.
- Costs for maintenance visits and maintenance cover.
- Any original defects and faults rectification during the construction process.
- Any damage or accidental loss while processing the rectifications during maintenance before handing over the property to the buyer.
Who Can Apply for a Construction Project Insurance?
The construction project insurance policies are highly recommended no matter how small the project is. In many states of the US, it is mandatory to get an insurance cover for an all-risk construction project insurance that covers any and all potential losses that can be suffered by the contractor during the process of project building. These parties include:
- Contractors or builders
- The property owner or buyer
- Any company or organization investing in and financing the construction
- Companies that are commissioned to complete the job
In short, any party who is involved in the construction business can avail of a construction all-risk insurance policy. Also Read – 5 Reasons Why Screening Employees is Essential For Your Company
What is Not Covered Under This Insurance Policy?
Since the all-risk covering construction insurance policy protects the insured against losses and damages incurred due to foreseen and unforeseen events, there also need to be barriers to stop fraud or deceit. The following are not covered under the all-risk insurance policy:
- Willful negligence or any such act by the insured party
- Nuclear war and war risks
- Part or complete stoppage of construction activities
- Using substandard or poor quality of material and skill
- Contractual debts and liability
- Normal wear and tear of the site and machinery
- Normal maintenance or enhancements and modifications
- Damages and losses suffered due to a design and structural fault
- Loss of inventory due to shortage and/or disappearance
How Can the Insured Claim Their Policy for Rebate?
Explained below is the procedure to report a petition to claim the insured amount for the construction project or site. Depending upon the event that has transpired, it is necessary to keep records of such happenings at all times, in print or paper.
- As soon as the event occurs, call up the insurance company and inform them of the loss or damage that was suffered. The agent will record the particulars and details and ask you to send a few details.
- As soon as the call is done, send an email as a written intimation about the said event and what damages and losses had been incurred. The written notice should have the monetary estimate of the extent of losses suffered.
- In the event of losses and damages suffered due to theft and vandalism, the insured is required to inform the police department and register an official complaint.
- The insurance company will send its insurance agent or legal representative to survey the extent of damage and property and complete the necessary paperwork. It is important that the insured party keeps all the retained parts post damage for this process to show as proof.
- The final formality consists of the insured filing a due claim for reimbursement. This form will require the following documents to be attached:
- Written testimony of the event and the losses suffered.
- A technical damage report in case there are machinery losses to be reported for claims.
- A purchase invoice or delivery note.
- Police report copy, if applicable.
- The estimate of the losses suffered which are applicable for reimbursement.
A project construction insurance will cover the insured party from all the risks of a contract including damage to themselves or the machinery and the aforementioned. It is a wise decision to make sure that the contractor consults more than one insured to get the most out of their policy. Since these types of insurance protect the insured from the time of material storage to the completion of construction and its handover to the rightful owner, they cover a broad spectrum of expected and unexpected damages.