Civil construction can have many elements which can result in loss. Having insurance for civil construction will help the contractor and project owner manage their costs. While it will not prevent incidents from occurring, it will provide a financial buffer should incidents occur which are covered by the policy. If you are looking to purchase civil construction insurance in India, understanding the risks and available policies will be key. This guide will outline the most common risks, types of insurance and how to select the correct cover for your civil construction insurance.
What is Civil Construction Insurance?
Civil construction insurance is an umbrella term used to describe insurance to cover works, materials, equipment and liabilities during construction. These can include Contractors All Risk, Construction Liability, Construction Equipment and other insurances. The aim of civil construction insurance is to provide cover so that should an incident occur which is covered by the policy you can follow the terms of the policy to manage losses. As civil construction can be high value before making any money, using construction insurance can help.
Common Risks in Civil Construction Projects
There are many risks associated with civil construction projects. Materials are exposed to the weather, heavy equipment is used in confined spaces, workers are working at heights and near excavations. Nearby buildings may also be affected by vibrations, dust and heavy vehicles. Common risks include accidental damage to the site, damage to materials and equipment, fire, storms and other natural events, incidents involving employees and third parties, damage to nearby properties and delays causing financial loss. Each policy will have limits and cover will depend on the terms, exclusions and cover you select.
Types of Insurance for Civil Construction Projects
There are various types of insurance to cover different risks.
- Construction Insurance
This is an umbrella term used to describe insurance purchased around construction.
- Contractors All Risk Insurance for Construction Projects
This is a common type of insurance used within civil construction. It will cover sudden and unforeseen physical loss or damage to the insured works. It may also cover plant and machinery belonging to the contractor on site. This will have exclusions such as design faults and wear and tear.
- Construction Project Insurance for Builders
This will be specific to the project. The length, location and contract will influence the cover.
- Contractor Insurance
This will cover the contractor’s business risks. This may include liabilities and employee related cover.
- Infrastructure Project Insurance
This is for infrastructure such as roads, bridges and commercial buildings. The terms will often be influenced by the site conditions and natural risks. This is a common choice for infrastructure construction insurance.
- Construction Equipment Insurance for Contractors
This will cover equipment such as excavators, mixers and cranes against loss or damage.
- Construction Liability Insurance for Civil Contractors
This will cover legal liabilities for third party injuries and property damage. Often there will be a minimum liability amount required for public contracts.
Each will have terms to consider.
How Civil Construction Insurance Helps Manage Financial Risk
While a construction company can manage a bad month, large amounts of uninsured loss can cause issues. Using civil construction insurance will help move the costs of repairs, replacements and claims against covered losses away from the project. Materials will be covered before they are built, expensive equipment will be covered and completed work will be covered. It will also help with third party claims. It is easier to find the correct cover before starting work.
How to Choose the Correct Construction Insurance Policy
Consider the overall value of the project. What type of work is being carried out? Building, road or dam projects will have different risks. Consider the location of the project and what the site conditions are like. Flooding, earthquakes and landslides can impact the cover you require. What equipment and machinery is being used? Consider if you need construction equipment insurance. What are your liabilities to third parties? This can be an issue if working near occupied buildings, public roads and utilities.
Consider what is excluded, what the excess is and what the limits are. Don’t just look at the premium. A low premium with a high excess could leave you with a large gap. Consider how long the project will take and if there will be a maintenance period. Consider what the contract says about insurance. To ensure you have the best construction insurance for civil projects, ensure the policy suits your risks. A contractors insurance policy should suit the work you are carrying out.
Real World Examples of Risks in Construction
A contractor is building a commercial building next to an older property. As they were digging into the ground there was some ground movement which damaged the neighbour’s boundary wall. They claimed for property damage. There was also heavy rain which caused flooding on site and damage to the cement and steel.
The contractor will now be facing costs for third party property damage and replacement of materials. If they have Contractors All Risk insurance with the correct level of liability and material damage, they may be covered for some of the losses. Excess and exclusions will still apply. Key learning points include taking pictures of the site conditions before starting work. Take pictures of nearby properties. Store materials above the expected flood level. Ensure you have the correct level of liability for the surrounding area. Insurance should not replace looking after the site. It can help stop one incident turning into a cash flow issue.
Why Choose RiskBirbal Insurance Brokers?
RiskBirbal Insurance Brokers are an IRDAI licensed direct broker. We are not an insurance company, we will help you understand the risks and find the correct cover. For construction companies we can help with engineering and construction covers such as Contractors All Risk, Erection All Risk, Contractors Plant and Machinery and third party liabilities. We can help you understand what the overall value of the project is, what work is being carried out, where it is and what the contract requires. We will explain what is covered, what is excluded, what the limits and excess are. We can help you find the best options from insurers where appropriate. We can also help with service of the policy, endorsements and claims. Claims will depend on the insurer and what is covered. A broker can help you understand what is covered.
Conclusion
There are many risks involved in civil construction and can be costly. Having civil construction insurance can help you plan for sudden losses. However it is important that you have the correct policy to suit your project. Consider the value of the project, site conditions, equipment, liabilities and what the contract requires. Speak to RiskBirbal Insurance Brokers to find the best construction insurance coverage for contractors.
FAQs
1. What is civil construction insurance?
An umbrella term for insurance to cover works, materials, equipment and liabilities during civil projects. This can include Contractors All Risk and Construction Liability.
2. Why is construction insurance important for contractors?
It can help manage costs of damage, equipment loss and third party claims. This can help protect cash flow for the project and your business funds.
3. What does Contractors All Risk insurance cover?
Usually sudden and unforeseen physical loss or damage to insured works. May also cover plant and machinery on site. There will be exclusions so please check the policy.
4. Will my equipment be covered by construction insurance?
Not always. It may be included in a Contractors All Risk policy or you may need to purchase Construction Equipment insurance. Please check the terms.
5. What is the difference between construction insurance and liability insurance?
Construction insurance often covers works and materials. Construction Liability covers legal liabilities for third party injuries and property damage.
6. How can I choose the correct construction insurance policy?
Ensure it suits the value of the project, type of work, site conditions, equipment, liabilities, length and what the contract requires. Consider exclusions, excess and limits.
7. How can I get construction insurance in India?
Speak to an IRDAI licensed broker such as RiskBirbal Insurance Brokers. Share the details of your project and we can help find the right options.