Construction site insurance, what you need to know!

In Quebec, the construction sector is active 12 months a year. Construction involves the work of many professionals; carpenters, plumbers, electricians, engineers, architects etc. The risks of damages and accidents on construction sites are very high compared to other sectors. It is for this reason that all should have a construction site insurance.

Whether it is a residential, commercial or industrial project, small or large, it is important to know that the complexity of the project should not be overlooked.

A commercial property and casualty insurance broker will essentially provide you with the vocation of your project under construction. It can be:

• Residential
• Industrial
• Commercial
• Civil (road, tunnel, bridge, etc.)
• Institutional (school, hospital, university, etc.)
• Energy (wind, hydroelectric, etc.)

What does all-risk insurance cover?

Several coverages exist and will make-up a construction site insurance. Basically, this type of insurance covers the building under construction.

There is also a section dealing with General Construction Site Liability (RCG) and also Wrap-up Liability.

• Builder’s risk insurance.

This type of coverage offers the possibility to the contractors to ensure the structure under construction, their materials during the realization of a construction project. It covers the tools and machinery needed for projects as much as building materials. Note that the history of the contractor, subcontractor, project manager, or anyone applying for all-site risk insurance will necessarily be considered.

Fire, theft, vandalism!

Since there are often flammable materials and machinery on a construction site, it is essential to use this addendum: fire, theft and vandalism, which are usually included in the insurance of the field of construction. The materials that are in transit and are for the project will also be covered. Damages due to bad weather, wind, hail and lightning will also be covered.

Plan to reduce costs!

 It often happens that a project under construction is prolonged because of unforeseen events. A work day for a construction contractor can be very expensive depending on the value of the project. For example, the creation of a commercial spa-relaxation building can cause several losses of income for this client if the project is not delivered on time. That’s why it’s important to insure your business against anticipated loss of revenue due to previously covered claims.

Excluded from coverage

Some elements are excluded from the construction site insurance such as theft by an employee, frozen pipes, all types of penalties related to a delay of execution of the work. Also, any damage related to pollutants is not included.

However, it is possible to add coverages to your insurance policy which can be interesting depending on the nature of the project to achieve.

• Equipment breakdown;
• Pollution;
• Earthquake;
• Sewer backup;

Note: Pollution insurance should be considered if you believe your project can have serious consequences for the ecosystem. Environmental damage can be very significant, so it is essential to obtain this endorsement when needed.

• General liability insurance (RCG)

Liability is available to construction contractors, whether general or specialized, and to any professional who is required to work on the job site. They must take this insurance policy for their business. This will protect them against possible claims of property damage or bodily injury to anyone. It is therefore the entrepreneur who is insured as well as his employees. This insurance policy is usually annual and can be adjusted at the time of renewal.

Wrap-up insurance

It is common to see people injured on construction sites and many property damages. Wrap-up insurance will protect homeowners against possible claims. The advantage of this is that it covers all professionals of a project under the same policy:

• Specialized professionals
• The employees
• The owners
• The subcontractors

This policy is included for the duration of the project (s) but it is also offered with a prescribed period: products and works completed from one to two years to cover any breakage, damage and possible injuries that occur after the end of the project, on the site of construction.

Engineers and architects working on the construction site must obtain their own professional liability insurance.

However, if the project is larger, it is possible to include all specialized professionals, just mention it to your insurance broker.

Before, third parties could claim up to three to five years after the completion of construction.

Unfortunately, today, these claims can occur after 10 years as a result of the delivery of the construction of a house, for example. This is a major problem that worries insurance brokers.

Type and duration of the contract

 The type of contract needed is very personalized. It is specific for each construction and project carried out by the contractor. The contract is based on the value of the project. If, during the year, the contractor completes five projects at $ 250,000 but completes two projects worth more than $ 325,000, he can then add a policy to his contract for these last two projects in order to insure a greater value.  The same thing happens if lower value projects are added, the contract will be adjusted accordingly. Construction insurance are for the most part yearly insurance policies and can be adjusted accordingly.

What are the types of claims on a construction site?

First, let’s talk about frequent site delays. According to Encon Insurance (https://www.encon.ca/English/resources/ClaimsStatistics/Documents/Claim_Stats_COINS_E.pdf) – we can put graphic images here, in 2014,

this situation is one of the most common with complaints about non-compliance with building standards. There are also other types of popular claims:

• Falls / bodily accidents
• Water damage
• Fire
• The flight

The claims concerning water damage are relatively high, therefore it is highly recommended to include the sewer backup endorsement in case such damage occurs during the completion of your construction project.

Count on statistics, it could help you choose the right insurance for you!

Remember prevention is key!

On a construction site it is common to see children playing around it. Machineries, excavators and dug-out ground are mysterious and attractive to children. There are also thieves who are attracted to a construction site and even the homeless who find themselves there. It is important to prevent the entry of these types of people to prevent them from getting hurt.

Here are some interesting points to keep in mind in order prevent any incidents on a construction site:

• Place cameras on the site to avoid the intrusion of thieves and children.
• Put a fence all around the building site, if possible, guard dogs to keep people away.
• Keep portable fire extinguishers in case of fire.
• Hire security guards to prevent all risks on a construction site.

What are the characteristics to respect to subscribe to construction site insurance?

Before offering you all-risk insurance, the insurance broker must collect several pieces of information to analyze and understand the project in all its phases. He must also be aware of the quality of materials chosen and follow building standards.

What should a policy for a property include?

• Limits offered on properties under construction.
• For contractors’ property: equipment, tools, machinery.
• Possible weather cover: wind, flood, lightning, earthquakes.
• Coverage of specialized professionals such engineers and architects.
• Coverage of delays, anticipated losses.
• Coverage possible for the maritime transport of goods
• Combined program

Regardless of the proposed construction project, contact a professional in the field to specifically advise you according to your needs.

Inspiration from:
http://www.chad.qc.ca/fr/membres/pratique-professionnelle/industrie-enjeux-et-specialites/assurance-des-entreprises/513/assurance-de-chantier