If you are into construction business or has been associated with it in any way, you might have a fair idea of how susceptible your construction site is. A construction site is vulnerable to various kinds of losses or damages which can arise from theft, legal claim, damages and more.

As a contractor, it would be your prime responsibility to ensure that you meet all the deadlines. Many times, accidents happen even at the safe place, and therefore, it makes complete sense to go with a construction all risk insurance policy which promises to give you financial protection in case of any risk or loss arises during construction.

Considering the benefits offered by construction all risk insurance policy, the policy should be purchased by all those who are involved in any construction or civil engineering project of roads, airports, flyovers, sewage treatment plans, water tanks, etc.

It means the construction all risk insurance policy should be bought by the principal contractor and sub-contractor, jointly or individually. If you have a construction business, you can buy the construction all risk insurance policy whose tenure would be equivalent to the duration of a contract.

Case: 1

Since 2000, L.J Engineering has carved a niche for itself in the engineering sector. So far, the company has successfully completed various construction projects. Though the company always follows safety regulations at its construction site, unfortunately, the company had to face a major brunt when the earthquake happened at its engineering site and damaged its machinery & equipment.

In this case, L.J Engineering had to incur a loss of Rs 10 lakh, and without any financial protection, it became difficult for the company to deal. Though the company is into engineering sector and undertakes various engineering projects overseas as well; it has never thought of buying construction all risk insurance policy.

Here the situation would have been different if L.J Engineering had bought a construction all risk insurance policy. Now taking the lesson from the incident, L.J Engineering purchased a construction all risk insurance policy from a leading insurer. Considering the nature of business activities undertaken, L.J Engineering was eligible to buy construction all risk insurance policy.

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Case: 2

From the last ten years, J.J Construction & Engineering has made a name for itself in the construction business. So far the company has successfully completed various projects. Though the company undertakes every project independently; it also hires a sub-contractor in case the project is big, and deadlines are strict.

Last year, the company bagged a contract of constructing a two-story office for L.Z Enterprises in Delhi. L.Z Enterprises wanted to shift all its employees to its new office in next two months, which was also the day when it came into existence.

Considering the stringent deadline involved in the project, J.J Construction & Engineering hired another company, MF Const. on a sub-contract basis. In this case, MF Const. was a sub-contractor and J.J Construction & Engineering was the main contractor.

J.J Construction & Engineering bought a construction all risk insurance policy as well to get complete coverage in case something went wrong at the construction site. Here, it is noted, two construction companies were involved at the construction site, but they both were doing the same work. Therefore, instead of purchasing two separate construction all risk insurance policies, both J.J Construction & Engineering and MF Const. purchased a single insurance policy. The premium was divided among both the main contractor and sub-contractor on a proportionate basis.

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It means if the loss or damage would happen at the construction site, both J.J Construction & Engineering and MF Const. would be able to approach the construction all risk insurance policy and ask for the claim settlement.

As both the contractors was working on one project, therefore, they bought one construction all risk insurance policy.

Now, as both the companies, i.e., J.J Construction & Engineering and L.Z Enterprises are involved in a construction business, they both can buy separate construction all risk insurance policies as well.