Engineering insurance
Contractors All Risks
WHY CONTRACTORS' INSURANCE?
Contractors engaged in all types of construction work are exposed to loss from
a variety of causes, from the time of first delivery of materials to the site,
continuing while the work is in progress and until the contract is completed
and handed over.
The Contractors' Insurance Policy has been designed to respond to these various
needs and to provide very broad protection against many exposures to loss, for
the interests to be insured, for the length of time specified in the contract.
WHAT TYPE OF WORKS MAY BE INSURED?
All types of building and construction projects may be insured such as: housing
developments, warehouses, schools, hospitals, industrial buildings, offices,
water treatment plants, water supply and drainage systems, dams, roads,
railways, airports, bridges, tunnels, tanks, docks, piers and harbors, etc.
WHAT DOES THE CONTRACTORS' POLICY INSURE?
Contract requirements must be understood and related to the potential hazards
and exposures before a sound programme is designed to
provide the required protection.
However, the various sections of the policy usually include the following:
1- Contract works including cost of materials.
2- Construction plant and equipment.
3- Construction machinery.
4- Clearance of debris.
5- Existing property of the principal.
6- Liability to third parties in respect of bodily injury and property damage.
WHAT SUM INSURED?
A separate sum insured is needed for each item. Usually for the contract works
the full estimated contract price is used and the premium adjusted at the end
of the contract to reflect the actual final contract value. When materials are
supplied by the principal, their value should be added to the contract price
and the sum insured increased accordingly.
WHAT WILL IT COST?
Rates are specific to the project; they reflect the build up
of values as work progresses, the construction time schedule, data on the
construction site that affect the risk and other variables which are then
applied to the sums insured to calculate the cost. The third party liability
cover is usually included in the final rating.
WHAT DEDUCTIBLES?
It is usual to apply a deductible to all claims to contain handling costs,
minor mishaps being inevitable on construction sites and usually figured out in
the contractor's costing. Moreover, in many such instances the cost of
documenting and following up a claim could be higher than the loss amount
itself. The levels of deductible are variable at the option of the contractor;
generally the higher they are, the lower the rates.
OTHER OPTIONAL COVERAGES
1. Expediting expenses
The Policy may be extended to cover, at additional cost, such extra expenses as
overtime work, express delivery, air freight etc... in
connection with repairs or replacements recoverable under the policy, so that
the project could be completed on time.
2. Maintenance period
Coverage under the policy normally ceases when completed works are taken over
or put into service. However, some contracts require a maintenance period after
completion and coverage may be continued by special agreement.
3. Storage outside work site
If appropriate space is not available at the work site to store the insured
contract materials or plant equipment and machinery, then it is possible to
extend the policy to cover such items while being stored somewhere else and
during land transit of the said items from such other place to the work site.
4. Strikes, Riots and Civil Commotions
It is possible to extend the Contractors' Policy to cover loss or damage to the
insured items directly resulting from strikes, riots and civil commotions or as
a result of the action of a lawfully constituted authority in preventing or
suppressing