Do you know, around 47 deaths and 35 injuries were reported from over 60 accidents that occurred on the construction sites of four metro projects since 2013?
A construction site is susceptible to various kinds of losses or damages. Any loss can mount from theft, pilferage, legal claims, and much more. As a contractor, it becomes necessary for you to comply with the deadlines, however, any risks can arise to disrupt the smooth functioning of the entire construction process. Here, construction all-risk insurance (also called contractors all risk policy) can play a major role.
This policy offers comprehensive cover by covering risks that may arise during construction. It comprises physical loss or damage that may happen to the property, plant, and machinery, temporary work erected on-site with the third-party liability related to the work done on the site. It means the policy covers works brought to the construction site for the purpose of the contract along with temporary work erected or constructed on-site. The policy also gives protection against losses or damages caused to property from fire under a fire insurance policy which is also covered under construction all-risk insurance.
Overall, the purpose of the policy is to give financial protection to civil engineering contracts in the event of any accident.
Construction all-risk insurance is a comprehensive insurance policy that covers various civil engineering projects, like buildings, water tanks, sewage treatment plans, flyovers, airports, etc. Unless it is specifically excluded in the insurance document, this policy also covers losses or damages to contract workers while performing civil engineering work.
Mainly, the coverage is offered in the following two sectors-
- Section 1: Material Damage= It covers losses or damages or destruction of the property.
- Section 2: Third-Party Liability= It covers the legal liability falling on the insured contractor due to losses or damages suffered by a third party.
The coverage can be further extended to cover the interests of manufacturers, suppliers, contractors, and subcontractors. Also, the policy can be expanded to cover the following events-
- Debris removal
- Damage to surrounding property
- Earthquake
- Third-party liability
- Provision for escalation
- Terrorism
- Air freight
- Escalation
- Additional custom duty
- Loss due to breakage of glass
- Maintenance visits
Further, this policy is subject to compulsory excess, which depends on the type of construction work to be carried out. It means, at the time of any loss, a part of the claim has to be paid by the policyholder and the insurer will not settle the entire claim.
Some events are not covered under the policy, like –
- Loss or damage due to willful misconduct
- Loss or damage due to faulty design
- Cessation of work, partial or total
- Deductible as mentioned in the policy document
How is the sum insured determined?
The sum insured available under the contractor’s all-risk policy is decided on the basis of the nature of the project, the sum insured, the tenure of the project along with the voluntary excess opted by the policyholder. The insurer allows paying the premium in installments if the tenure of the policy is more than one year.
Case
Established in 2012, T.S Construction enjoys its presence in different cities in India. Recently, the company has bagged a contract for constructing a flyover in Delhi. The company should buy a construction all-risk insurance policy that will help T.S Construction in case any loss or damage occurred at the construction site.
The government has given three years of time to build a flyover and T.S Construction has to comply with this deadline. However, in the case of any loss or damage, the company might find it difficult to honor the deadline. Therefore, it makes sense to go with a construction all-risk insurance policy that promises to pay compensation in case of a mishap and will ensure that the company meets deadlines and that any accident doesn’t derail its work.
