Property Insurance

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Construction is vulnerable to various losses or damages. As a contractor, it is necessary for you to meet the client’s deadline. Here construction all-risk insurance policy can help you by covering various risks during construction. Mainly, it offers coverage for physical loss or damage to the property, tools, plant & machinery, along with the third-party liability related to work. It also includes a fire insurance policy that covered losses or damages that may happen due to fire.

In the event of any loss or damage, the loss is settled under construction all risk insurance policies as the following –

  • Those damages which can be repaired – Here the insurer will cover those costs of repairs that are incurred to restore the items back to their original conditions immediately before the occurrence of the loss or damage, or


  • If there is a total loss – The actual value of the item before the damage is less salvage. However, only to the extent, the cost of a claim has to be borne by the policyholder, and to the extent, they are included in the sum insured, provided all the provisions and conditions have been met.


In this case, the insurer will make payment only when it gets all the necessary bills and documents that the repairs or replacements have taken place.


All those damages which are repairable shall be repaired, but if the repairing cost is equal to or more than the value of the items immediately before the occurrence of the damage, the insurer will settle the loss only to the extent the cost claim has to be borne by the policyholder.

After that, any cost incurred on the provisional repairs shall be paid by the insurance company, if such repairs are included in the final repairs as well and do not increase the total repairing expenses.

Note, the insurer will not settle a claim related to any addition, alterations, and/or improvements under construction of all risk insurance policies.

Further, the valid claim under this policy shall be settled by the insurer as soon as possible and not later than three months after written notification of such loss has been received by the insurer along with the supporting documents.

Case: 1

T.L Construction Company got a big contract of manufacturing two warehouses for K.L Associates in Chennai. The work was going on in full swing when suddenly, an earthquake occurred and damaged a substantial part of the plant & machinery.

Luckily, T.L Construction had a construction all-risk insurance policy, and they approached the insurer for the loss settlement within a week of the loss.

In this case, the insurer appointed a surveyor who came to inspect the site and compute the extent of the damages. After the initial investigation, the insurer found the loss to be genuine and submitted the report to the insurer.

In this case, the major losses happened with plant & machinery, which were repairable. T.L Construction informed the insurer and went ahead with its repair. The company incurred expenses of nearly Rs 2 lakh in its repair.

The construction all-risk insurance company agreed to settle the repair expenses which T.L Construction incurred to restore the item back to its original state.

T.L Construction submitted the original repair bills which were closely reviewed by the insurer before settling the loss.

Case: 2

R.J Construction was building a school in Pune when in a matter of seconds, its machinery caught fire due to short-circuit. Though workers at the site tried to douse the flames; the machinery got completely burnt and damaged.

Though no one was physically hurt, the fire caused a loss of Rs 5 lakh as the entire machinery got damaged beyond repair. In this case, R.J Construction had a construction all-risk insurance policy, and the company approached the insurer.

The insurer appointed a surveyor to calculate the extent of losses or damages. Here, the surveyor found that the machinery got completely damaged following the fire and it was not possible to repair and restore it to its previous state.

Considering it as a total loss, the insurer agreed to share the loss or damage and asked for the necessary bills from R.J Construction to know the actual cost of the machinery. The insured submitted the claim form along with necessary documents and the insurer after deducting depreciation, settled the remaining loss amount.