An effective risk management program must include several key components, like safety, claims management, contractual risk transfer assistance, bid and accrual support, loss-sensitive adjustment forecasting, construction defect allegation procedures, etc.
Unfortunately, brokers with limited expertise and knowledge in building risk management and insurance may misunderstand these essential components or may not even be aware of them. The outcome can be disastrous for the contractor’s finances. Contractors should demand much more from their insurance brokers than just haggling over premiums and other program details.
We advise having a reliable expert verify your construction insurance coverage. Before an insurable occurrence, it is far better to have invested in systematic reviews.
Here are ten insurance tips to help manage construction risk.
Avoid Purchasing Insurance Until Necessary
Insurance policies are expensive and can significantly add to a construction project’s cost. Avoid buying insurance until it is essential, unless you have no other choice.
Be Specific About “Another Party”
To avoid confusion, be clear about who “another party” is. For example, if you are insuring a construction project against damage done by your employees, make sure to include language specifying that the coverage extends to third-party employees of the project’s prime contractor.
Watch out for Limit Restrictions in Endorsements for Additional Insured
Limit restrictions in endorsements for additional insured can be a problem. For example, an endorsement might state that coverage is limited to $50,000 per occurrence. If the project has more than one occurrence, the policyholder may be unable to cover the total amount of damages caused by a single event.
Keep in Mind That the Foundation of Risk Management Is the Construction Contract
The contract documents should outline the risk allocation plan and supplementary insured provisions, indemnification, and exculpation terms.
Construction Risk Insurance May Be Crucial
A broad coverage covering builders’ risk is available and typically not very expensive. It can defend against harm to the project and lost revenue by various dangers.
Subrogation Waivers Should Be Avoided
A waiver of subrogation, or the right of a policyholder to have the insurer pay benefits to a third party in place of the policyholder, is not appropriate. The policy should explicitly state that subrogation is waived and disputes should be resolved through the civil court system.
Add More Wrap-up Endorsements to Your Business Plan
Adding wrap-up endorsements to your business plan can help you cover a range of risks that your liability policy may not specifically cover. For example, adding a wrap-up endorsement covering property damage may help you cover damages caused by theft or vandalism.
Make the Project’s Risk Management Plan Appropriate
A risk management plan is vital for any project. The program should identify your project’s risks and outline how you will address those risks.
Artisan Insurance Solutions Can Help You with Your Business Needs!
A liability policy is vital to any business’s risk management plan. Make sure you understand the coverage it provides and reviews your policy regularly to ensure that it remains appropriate for the risks posed by your project. If you are looking for contractors’ insurance, then contact us at Artisan Insurance Solutions today to discuss your policy needs.