As per the claims series clause in Construction all Risk Policy, where a series of losses or damages or bodily injuries and deaths happen due to factors that are directly or indirectly related, then claims for such losses shall be added together and treated as one claim. We consider such claims as made at a single point in time when the first claim was submitted in writing.
Key Takeaways
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The Unified Claim Principle: Under the claims series clause in a construction all-risk policy, a sequence of interrelated physical losses, bodily injuries, or deaths are legally added together and treated as one single claim.
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The Single Deductible Benefit: Aggregating a series of sequential damages under a single claim head means the deductible is applied to the aggregate amount, protecting the builder from paying multiple individual deductibles.
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The Three-Year Absolute Cutoff: Underwriters enforce a strict statutory timeline on systemic structural failures; any claims filed more than 3 years after the first claim of the series will not be covered.
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The Importance of Broad Policy Wording: Identifying and aggregating multi-party losses depends heavily on the policy text; using broad terms to describe the unifying factor or common origin expedites the claims consolidation process.
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Latent Defect Discoveries: Severe natural catastrophes often trigger a plurality of losses that surface over time, allowing late-emerging damages to be successfully backdated to the first written submission date.
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The Multi Deductible Penalty: If an independent insurance surveyor finds no common factor or structural unity to combine multiple claims, the contractor is legally bound to clear separate deductible payments for every individual incident.
A claim for a series would define as the series of two or more claims arising from a single common clause, i.e., a unifying factor of some kind, which occurs, for example.
- Due to the same fault in designing, manufacturing, or instructing for use or product labeling
- Due to the supply of the same products/services showing some defects
In those situations where the series of claims is aggregated under a single claim head, the deductible is also applied to the aggregate amount and not to the individual claims.
However, claims stemming from a single specific cause and filed more than 3 years after the first claim of the series will not be covered.
In situations where the description of the event or act is specific, aggregating the claims will not be easy. However, employing broad terms to describe unifying acts expedites the identification of the claims requiring aggregation.
Case: Claims Series Clause in Construction all Risk Policy
Incepted in 2013, L.J Work had established a name for itself in the construction sector. Since its formation, the company has successfully completed various construction projects in Delhi and Pune. Though the company always acts diligently, it has also bought a construction all-risk insurance policy to get financial coverage in case any loss or damage happens.
Last year, when the company was building a five-story building in Pune, an earthquake happened and damaged two pillars of the under-constructed building. Thankfully, there was no loss of life, and the company approached its construction all-risk insurer to get coverage for the financial losses or damages to the building.
A few weeks later, the engineer at the construction site found some cracks in the roof as well. The engineer called for an investigation and the investigation results found that the damage occurred due to the impact of earthquake.
Earlier, they were minor and therefore did not come into notice but now they became visible in few weeks period.
When L.J Work reported the second loss to the insurer, the construction all-risk insurance company treated both incidents as one claim. The first claim resulted from an earthquake, which also caused damage to other parts of the building, discovered later on. It means the peril was the same in both events and there were a series of claims.
Summary Table: Underwriting Framework of the Claims Series Clause
| Underwriting Operational Pillar | Contractual Inclusions & Aggregation Triggers | Strict Exclusions & Time Blindspots | Financial Deductible Calculations | Case Study Structural Context |
| Systemic Failure Aggregation | Multiple sequential losses arising from a single common cause (e.g., identical engineering design flaw, production error, or label fault). | Disconnected on-site accidents that lack a distinct, traceable unifying act or common origin event. | A single, unified deductible threshold is applied directly to the aggregate claim value. | An engineering firm in Pune secured its five-story building development via a CAR policy. |
| Catastrophic Event Tracking | Consecutive physical damages discovered in stages but triggered by the same initial peril (e.g., structural cracks following a tremor). | Overlapping claims without an explicit chronological or causal tie to the primary incident. | Eliminates the administrative requirement to clear separate deductibles for every individual damage report. | A major earthquake caused direct physical impact to two vital structural pillars. |
| Chronological Time Anchoring | Treats the entire combined series as a single loss made at the single point in time when the first claim was submitted in writing. | Any subsequent loss stemming from the same cause filed more than 3 years after the first claim is completely denied. | Protects the project’s liquid capital from being drained by repeating individual out-of-pocket expenses. | Minor roof fractures caused by the same seismic shifts became visible weeks later. |
L.J Work’s construction all-risk insurance policy also comes with a deductible limit of Rs 50,000. In this case, when 2 claims were aggregated under a single claim, only one deductible needed to be paid. The insurer settled the claim by deducting Rs 50,000 as a deductible, which L.J Work paid.
If there’s no common factor to combine multiple claims, the insurer will ask for deductible payment for each claim separately. In other words, if L.J Work’s claims were deemed distinct, the insurer would have requested separate deductibles for each claim.
Frequently Asked Questions (FAQs)
1. What is a claims series clause in a construction all risk insurance policy?
A) A claims series clause is a fundamental commercial underwriting provision in a Construction All Risk (CAR) policy that allows a business to combine a sequence of separate property losses, bodily injuries, or deaths into a single claim. This consolidation is permitted provided all the individual damages arise directly or indirectly from a single common cause or unifying operational factor.
2. How does a single common cause trigger the aggregation of construction insurance claims?
A) Claims aggregation is triggered when an independent insurance adjuster traces multiple physical failures back to a single common origin or act. Standard industrial examples include consecutive structural failures due to the same fault in designing, manufacturing, or instructing for use, or an ongoing series of site defects caused by the supply of identical compromised materials and services.
3. How are deductibles calculated when multiple property claims are aggregated?
A) When a series of losses are successfully combined under the claims series framework, the policyholder receives significant financial relief. Instead of paying a separate out-of-pocket deductible for every individual piece of damaged machinery or structural zone, the deductible limit is applied only once to the final aggregate claim amount.
4. What is the maximum time limit allowed to report subsequent losses under a claims series?
A) The policy enforces an absolute chronological boundary to prevent long-tail liabilities from draining general insurance capital pools. Any subsequent property damage or structural failure stemming from the original common cause that is filed more than 3 years after the first claim of the series will face automatic claim rejection.
5. How do underwriters determine the date of loss for an ongoing series of structural failures?
A) To simplify policy administration and track aggregate limits, the insurance company anchors the entire chain of events to a single timeline milestone. All subsequent damages discovered throughout the project cycle are considered as made at a single point in time when the first claim was submitted in writing to the insurer.
6. What happens if an insurance surveyor finds no common factor between two site accidents?
A) If an independent forensic survey rules that the individual losses lack a clear unity or common origin—such as an earthquake structural crack occurring in the same month as an unrelated machinery theft—the insurer will treat them as completely separate occurrences. In this scenario, the builder must pay a separate deductible for each claim out of pocket.
About The Author
Shivani
MBA Insurance and Risk
She has a passion for property insurance and a wealth of experience in the field, Shivani has been a valuable contributor to SecureNow for the past six years. As a seasoned writer, they specialize in crafting insightful articles and engaging blogs that educate and inform readers about the intricacies of property insurance. She brings a unique blend of expertise and practical knowledge to their writing, drawing from her extensive background in the insurance industry. Having worked in various capacities within the sector, she deeply understands the challenges and opportunities facing property owners and insurers alike.
