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Construction Insurance Explained
Construction sites are inherently dangerous places. This is why construction insurance is an important policy to have if you own, run or manage a construction site. Also known as Builders Risk Insurance, a construction policy provides safeguards for you as an employer against your construction workers being injured on site. It does not exempt you from maintain a safe workplace. Usually, these policies only pay out if a strict set of health and safety guidelines are followed.
It also covers materials and machinery on the construction site in the event of an accident, fire or theft. Due to the high cost of building materials in the current economic climate, the theft of building materials is getting more commonplace and makes it an option for anyone wanting to protect against the chance of this occurring.
Who is a potential candidate ?
Considering the fickle nature of the construction industry, insurance can be comprehensive and cover a multitude of possible problems. The cost of solving these problems is normally many times the cost of the insurance premium. This is why many brokers advise that construction insurance is an essential part of a construction budget.
What typically does it cover?
Even on a very basic level, construction policies cover all construction equipment and property in the case of accidental damage, theft and weather. For the workers on the construction site, full liability covering medical and legal costs and subsequent workers compensation is also covered. Regardless of the size of your project and the number of people on your team, you can have peace of mind by having a complete construction package.
What typically does it not cover?
The transportation of building materials from warehouse to building site is not normally covered but some of the better insurers are now covering this as standard. Construction policies do not cover any extra costs incurred due to delayed completion of the project regardless of the reason for delay.
Additional coverage that policy holders might take out in this area
A construction policy insures the property until it is built but does not cover subsequent problems the building may experience due to errors in workmanship. If you want total security surrounding any construction you are liable for, then you may opt to take out professional indemnity insurance in the event you need to fix the property or the problems with the property have caused any injuries.
In construction, there are numerous contractors that will enter your construction site. How do you know how many are on your site at any time and are they the same contractors working from day to day? A standard policy may only cover your immediate workforce and specific contractors. Ensure your policy covers all the people who potential enter your construction site.
What will it typically cost?
Construction cover is usually a percentage of your total construction budget. The size of the percentage is wholly dependant to the scope of the project at hand. You may find that a small house may be around 1% of your total cover whereas a high rise block may be over 5%. The exact percentages are then determined by the level of coverage required and the insurer you choose to go with.
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