How to Make Lots of Money

How to Justify the Cost of Construction Insurance

30 August 2018

Renee Edwards

By its very definition, the construction industry is very dynamic. It often involves the creation of something new where nothing existed before, and this requires a certain amount of flexibility on the part of a contractor. It's little wonder that these contractors face so much uncertainty and have to build in a certain amount of financial padding because they simply have to be prepared for the unexpected. However, this type of preparation only goes so far as there are so many potential risks on the horizon. Why is it crucial for anyone involved in construction insurance to get the right amount of coverage from an underwriter?

Theft

One of the biggest risks involves theft, especially in this type of location. It's inordinately difficult to secure a construction site because it's always changing, and there may not be one specific entrance and exit point. Furthermore, costly equipment needs to be left overnight due to the hassle involved in relocating it and this type of gear can be easily sold on the black market.

Vandalism

The bad guys may not be interested in depriving you of equipment but simply damaging it for their strange gains. You need to ensure that everything on the site is included as well as the actual building itself; in the worst-case scenario, the client could turn to you for compensation.

Fire

As any building is in the process of erection or modification, then it may not have fire suppression systems yet. If they need to be immobilised during construction or simply haven't been installed yet, then it may be very difficult to contain any outbreak.

Other Exposure

While these may be the big three risks, there are others as well. For example, as the primary contractor you may be responsible for the work of your subcontractors and to be safe, you should ensure that your policy also covers this.

Why This Is Worth It

Do you worry that all of this insurance is going to add up to a pretty penny? Just remember that this will give you a competitive advantage when you have comprehensive coverage, as it shows that you are prepared and credible when you pitch for any new work. Remember also that financiers may need proof that construction insurance is in place before they lend money to the owner of the project, so if you have this available already, then you're in good shape.

Finalising the Detail

Always make sure that you tailor your policy to cover any specific risks you may face. Talk with your broker to reveal any additional insurance products that may be of interest.

Share  

Search