If a construction site which is covered under construction all risk insurance policy gets damaged, the policyholder needs to approach the insurer and file a claim. In the event of any loss or damage that arises under a claim under construction all risk insurance policy, the following steps should be taken=

  • Take all measures to curtail the loss
  • Inform the construction all risk insurance policy as soon as possible
  • Extend full cooperation to the surveyor as appointed by the insurer
  • Submit duly filled insurance claim form in addition to documents to compute the extent of loss or damage

Just having the construction all risk insurance policy doesn’t mean, you can act carelessly as it is necessary for you to take all steps to minimise the further losses. In case, the insurer finds out that you are not cooperating while settling the claim, it can refuse to settle your claim as well.

In case of any loss or damage, the insurer will settle the loss as per the following conditions=

If damages are repairable= In case it is feasible to repair the damaged items, the insurer will only cover those repair expenses which you have incurred in repairing the item and bringing it back to its original state.

If there is a total loss= In those situations, where there is a total loss of the items, the insurer will settle the claim on the basis of the actual value of the item before the loss. However, the insurer will settle the claim only when it receives all the necessary bills and documents.

If it is possible to repair the damages, you can go for it, however, if the repairing cost is equal or more than the value of items immediately before the loss or damage, the construction all risk insurance policy will settle only to the extent the claim has to be borne by the insured.

Read More: How does Reinstatement of Indemnity Limit Work in Construction All Risk Policy?

Case:

L.S Construction was constructing a warehouse in Pune for R.S Engineering when its machinery caught fire. The construction was at the initial stage, and the fire engulfed machine and equipments. In a matter of seconds, the construction site turned into debris.

As L.S Construction had a construction all risk insurance policy, it approached the insurer for the claim settlement. After the loss, the insurer was required to do the following things=

  • Take all the important steps to minimise the extent of loss= Though, the construction site was damaged, L.S Construction was required to take all the steps to ensure that the fire did not spread and damage the properties of a third-party. In case, fire damaged the third-party property, L.S Construction would become liable to pay the compensation, which in turn, means, liability would fall on the insurer.
  • Inform the insurance company= L.S Construction was required to immediately inform the insurance company about the loss.
  • Extend full support to the surveyor appointed by the insurer= To compute the extent of loss or damage to the construction site, the construction all risk insurance company appointed a surveyor. Here, L.S Construction was expected to cooperate with the surveyor fully.
  • Submit necessary documents= Along with a duly filled insurance claim form, L.S Construction was required to submit necessary documents, like a complete account of loss, invoice related to cost of machinery, etc.

Read More: What does 72-hour clause signify in construction all risk policy?

Though L.S Construction has covered under construction all risk insurance policy; it was necessary that it took all steps to minimise the loss and also approached the insurance company without delay. Here, the insurer settled the claim on the basis of the surveyor’s report. As damages were repairable, L.S Construction repaired them, and the insurer settled the repair damages accordingly.

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