As a contractor, you must ensure that there’s effective insurance and risk management strategy for your projects. Construction insurance is an important part of an insurance and risk management plan. It helps to protect your financial assets in the event of an unexpected loss or damage, such as from natural disasters or accidents on the job site. It can also provide legal liability coverage in case of any legal disputes that may arise.
Here is a useful read on common types of construction insurance and the benefits of effective insurance and risk management:
Construction All Risks (CAR): CAR insurance typically covers a wide range of potential losses that can occur during the construction process, including:
- Damage to the building under construction, including damage caused by natural disasters, fire, theft, and vandalism.
- Loss or damage to materials and equipment being used on the site.
- Third-party liability, such as injury to workers or damage to neighbouring properties.
- Loss or damage to temporary structures, such as scaffolding and fencing.
- Delay in completion of the project due to unforeseen events.
- Loss or damage to the architectural and engineering plans and documents.
- Legal liabilities arising out of the contract between the contractor and the client.
- Loss or damage to underground services and equipment
- Loss or damage to the surrounding properties.
Erection All Risks (EAR): EAR insurance is a specialised type of insurance policy that provides coverage for the erection, commissioning, testing and trial runs of machinery, plants and steel structures. It is typically purchased by the contractor, supplier or owner of the machinery or equipment.
Coverage under an EAR policy typically includes:
- Loss or damage to the machinery or equipment during transportation to the site and during the erection process.
- Damage caused by natural disasters, such as floods, storms, and earthquakes.
- Loss or damage caused by faulty design, materials, or workmanship.
- Third-party liability, such as injury to workers or damage to neighbouring properties.
- Loss or damage to surrounding properties
- Loss or damage to the architectural and engineering plans and documents.
- Delay in completion of the project due to unforeseen events
- Loss or damage to the underground services and equipment
Advance Loss of Profits (ALOP): Advance Loss of Profits (ALOP) insurance is a specialised type of insurance that provides coverage for businesses that suffer a loss of income as a result of an insured event. This type of coverage is designed to help businesses recover the revenue they would have earned if the event had not occurred.
Coverage under an ALOP policy typically includes:
- Loss of revenue resulting from an interruption in the business operations caused by an insured event.
- Loss of revenue resulting from a reduction in the business’s ability to produce goods or provide services.
- Loss of revenue resulting from a reduction in the business’s ability to access its suppliers or customers.
- Loss of revenue resulting from a delay in the completion of a construction or installation project.
- Loss of revenue resulting from an increase in operating costs following an insured event.
- Extra expenses incurred to get the business back to its normal operations.
- Loss of revenue resulting from the inability to use the insured property.
Some of the benefits of effective insurance and risk management are:
- Financial protection: Insurance can help to cover the costs of expensive equipment repairs due to unexpected accidents or injuries.
- Legal protection: Insurance can also provide reimbursement for legal defence fees and settlements if a business is sued following an incident on the job.
- Improved reputation: Having a sufficient amount of insurance coverage shows customers that their well-being is a priority, resulting in better ratings and increased customer loyalty.
- Cost savings: Risk management is an integral part of any construction project, as it helps to ensure that the project runs smoothly while keeping costs down.
- Enhanced customer satisfaction: Risk management ensures construction projects are completed within budget and on time.
Are you looking for an insurance management service?
Contract Square Pvt. Ltd helps you come up with effective strategies to avoid losses and make the best possible use of the risk potential in construction. Our insurance management service to include
- Conducting evaluations of an entire insurance portfolio
- Establishing insurance priorities
- Analysing individual project needs to select right insurance solutions
- Negotiating with the insurance companies on rates of premium and comprehensive coverage
We offer custom-built and value-added solutions to secure complete risk coverage. For more information on how we help you in insurance and risk management, mail us enquiries@contractsquare.co or call +91 9903023893.
