CONTRACTORS ALL RISKS INSURANCE IS THE BASIC POLICY
A Contractors All Risks policy is the basic policy that needs to be taken out before embarking on construction works at any building site and is comprised of three main sections:
Section A
Property
Insurance
Section B
Third Party
Liability Insurance
Section C
Employers
Liability Insurance
The different sections of a Contractors All Risks policy contains various exclusions to the insurance cover that need to be reviewed specifically after conducting an analysis the project in question.
Our first task in arranging the insurance cover for a project is to conduct an in-depth analysis of the risks and to extend the insurance cover (as far as possible) depending on the needs, the requirements and the budget of the principal.
Each construction project involves its own unique works, building inputs, equipment, subcontractors, professional consultants, contractual commitments and different types of working environments. Accordingly, each Contractors All Risks policy needs to be individually tailored based on an analysis of the risks involved in the project, the extensions required to achieve the optimal cover and numerous other variable factors.
Important information about: Reporting changes to the project, certificates of insurance.
To obtain a quotation for insurance cover tailored to your needs
Please contact me directly
Itzick Simon
972-50-5299480
we shall now explain each main section of cover in drtail:
Section A – Property Insurance
The Property Insurance section of a Contractors All Risks policy defines an insured event as sudden, accidental and unforeseen physical damage to the construction project or part of it, from the date when the project starts, until the date when the works are completed or the expiry date stated in the policy (the earlier of the two).
The name of the policy – Contractors “All Risks”, with specific reference to Section A (Property insurance) can be somewhat misleading, since the term “All Risks” creates the impression that the insurance cover is very extensive and covers all possible risks.
However, at this stage we are still dealing with a basic policy that presents various questions: Is “All Risks” really what it purports to be? What types of damage are not covered under an “All Risks” policy? What is the significance of the clauses and exclusions relating to matters that the insurance company is not prepared to cover? Is the standard “extended” policy adequately tailored to the specific works and unique characteristics of the insured project? And most importantly: How do we create a property insurance policy for contract works that provides the client with the maximum insurance cover at the lowest cost?
By definition, Third Party Liability insurance covers you for all amounts you are held legally liable to pay to a third party as compensation for property damage or bodily injury due to an accident or any other insured event at the construction site and in its immediate vicinity.
In principle, you should be covered for bodily injury or property damage to people and property in the area of the construction site. However, it is important to bear in mind that owing to the complexity of the works, the dynamic nature of the site as the works progress, the diversity of the subcontractors working at the site, the equipment being used (such as cranes, rollers of different types and sizes that can cause various levels of vibration and affect the stability of nearby buildings or underground infrastructures), and the inherent differences and unique aspects of each construction project compared to each other – the Third Party Liability section of a Contractors All Risks policy is subject to a long list of exclusions to the insurance cover and protection conditions which are imposed by the insurance company as a precondition to the insurance cover.
The cover under the Employers Liability section is defined as bodily or psychiatric injury or death to any of the insured’s employees as a result of accidents occurring during and due to their work at the insured construction site, as well as due to illness that arises during and due to such work. The insurance cover is designed to cover claims made by employees against their employer for compensation due to such events, in addition to the benefits they receive from the National Insurance Institute, as well as compensation for pain and suffering, loss of income, medical expenses and more based on a court judgement (or an out-of-court settlement).
Many contractors are satisfied (and sometimes unknowingly) with the standard “Contractors All Risks” policy. Bearing in mind that according to statistics, there are more than 6,000 injuries at construction sites in Israel every year, including around 50 deaths, it is clear that the insurance company will try to minimise its exposure as far as possible by imposing stringent preconditions and demands before confirming the insurance cover, restricting the scope of the insurance cover and in some cases demanding a very high premium.
It is also clear why a standard policy – regardless of how “extensive” it may be, is unlikely to provide you with all of the insurance covers you require and that is why we place special emphasis on the Employers Liability section of Contractors All Risks policies in an effort to obtain the widest insurance cover at the lowest possible premium, with as few exclusions and requirements as possible.
We will now address two professional tools we use (amongst others) to extend the covers and limit the exclusions and requirements imposed by the insurance companies:
For information or details about the type of insurance required,
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An adjacent buildings status survey is a precondition to the insurance cover for damage due to vibration, removal of support and weakening of third party buildings in the area of the project, or underground facilities.
This is a very important extension of cover. A status survey will document the condition of the buildings in the area of the project before the works commence in order to determine, in the event of damage to adjacent buildings, if and to what extent the project works are the cause of such damages…
Specialist construction engineers conduct surveys for insurance companies. These surveys usually contain a list of requirements that need to implemented as a precondition to the property insurance cover for the project, and other conditions as a precondition to the cover for bodily injury or property damage to third parties and employees involved the project. The survey will sometimes have an impact on the way the work is carried out due to recommendations concerning working procedures. In the event of damage, failure to comply with the recommendations in the survey can lead to avoidance of the insurance cover.
Important information for building contractors: Official Form 648 – Don’t employ subcontractors without reporting them to the National Insurance Institute!