Components of Project Insurance
Project insurance for large construction risks requires risk treatment on an end-to-end basis. This starts with identification of risks followed by evaluation of various insurance alternatives available and culminates in taking out the suitable insurance covers with relevant and appropriate conditions and extensions.
A typical Contractors’ All Risks insurance or Erection All Risks Insurance covers material damage to the works or the machinery being erected and includes coverage for third party liability for bodily injury or property damage to the surrounding property. The policy can be extended to include consequential losses or losses due to delay in start up following loss or damage under material damage section. This cover is also called Advanced Loss of Profit. Contractors’ Plant and Equipment insurance pays for the loss or damage to the equipments at site which are owned by the contractors and are used as a tool for the construction work.
Professional Indemnity insurance covers errors and omissions and professional negligence on the part of architects, designers and engineers who may be held liable for losses due to bad design or incorrect professional advice. Inherent Defects insurance or Decennial Liability insurance generally protects the owners against losses due to the threat of imminent collapse of the structure and includes debris removal, costs related to remedial measures and legal expenses.
Project Cargo insurance is another area which requires expertise and skilled attention as such cargoes are generally bulky, extremely expensive and crucial to the works being undertaken. Any loss or damage to such cargo may result in the delay in project completion and further consequential losses. Workmen’s compensation insurance pays for the death or bodily injury to the personnel employed at site. Motor fleet for the construction work should not only have comprehensive insurance but should also pick up losses on road as well as off road.
