Construction insurance is an insurance arrangement for companies that are found in the construction industry to cover risks and potential dangers that threaten the smooth running of their business activities, their competence, good will and their survival in the industry. This article gives you an overview of the types of covers that are available in construction insurance and the importance of getting insured.
Types of cover
Construction insurance covers construction companies against risks such as damage to buildings whilst construction is underway, business interruption as result of insurable risks, loss of income due to the project being cancelled or delayed, construction liability to third parties, cover for the construction company’s assets like motor fleet insurance, building materials and tools. For builders Other risks specific to builders are builders insurance and builders liability cover. The insurance will cover loss or damage to the building due to insurable risks such fire, water damage, flood damage and malicious damage whilst the construction is underway. The cover will expire on completion of the building. Loss or damage due to the mentioned risks of fire and water may result in loss of profits, thus business interruption cover is provided as well. Asset protection The construction company will also be covered by insurance if they suffer loss of income due to delayed or cancelled projects. Construction insurance provides cover to construction companies against loss or damage to their assets. Covering theft materials, theft of tools and fire damage to building materials which will be covered by the insurance company under the construction insurance policy. Loss or damage to the construction company’s motor vehicles and construction machinery as well as related liabilities to third parties like third party bodily injury or death and third party property damage are also covered. Construction liability is the company's legal liability to third parties as a result of their construction activities which are third party property damage and third party bodily injury or death.
Importance of taking this insurance cover
Construction insurance is important to construction companies because it enhances continuity of business activities when an unfortunate event occurs. Liability exposures like third party property damage risk will be fully covered by the insurance company, hence building a good reputation for the contractor. This insurance cover is mandatory to construction companies, especially if they want to be awarded government construction tenders. It is also relatively cheap as compared to the benefits which the contractor enjoys when a loss occurs. It is advisable for contractors and those who are in commercial construction to take this type of insurance.