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Urban renewal insurance and the unique characteristics of these policies!

Insurance for Demolition and Rebuilding Projects

Insurance for

building Preservation Projects



The term “urban renewal” incorporates various construction plans such as: “National Outline Plan 38” projects, “Demolition and Rebuilding” projects, reinforcement of buildings against earthquake, preservation and restoration of old buildings.

Some years ago, the government announced grandiose plans for extensive urban renewal in Israel by restoring historical quarters, modernising run-down neighbourhoods and reinvigorating them by improving living conditions and municipal infrastructures.

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Although these grandiose plans have not fully materialised, numerous urban renewal projects have been implemented around Israel and the trend is on the rise.

Altering the social fabric – Attracting a young and dynamic population to invigorate neighbourhoods inhabited by veterans, or neighbourhoods with a history of social problems.
Building upwards – Realising the potential of medium-rise construction by adding new floors on existing buildings, reinforcing them against earthquake and renovating them in order to optimise available land.

Earthquake reinforcement – Reinforcing buildings constructed before the earthquake resistance code was introduced, with government incentives and tax concessions to make such projects an attractive proposition for contractors.

Preserving heritage and historical sites – The ongoing trend of preserving old buildings is an important part of urban renewal plans.

The “common denominator” of all urban renewal plans

There are basically three common denominators of all urban renewal projects:
All of them involve working on existing buildings: demolition and rebuilding or modernisation, reinforcement or extension works.
All of these projects involve coordinating plans with existing residents. Sometimes these works are carried out in buildings which continue to be inhabited during the works and sometimes the residents are offered alternative accommodation until the project is completed.
In general terms, most of these projects involve construction in dense built-up areas and hence create specific risks arising from such works.

All such urban renewal projects, especially those involving work on buildings which continue to be inhabited during the construction, need specially tailored Contractors All Risks policies rather than standard policies for regular construction projects.

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National outline plan 38-1 projects

National Outline Plan 38-1 projects are primarily designated to reinforce old buildings. Since these projects do not involve demolition but rather renovations, a situation arises whereby construction works take place in a building which continues to be inhabited. This naturally increases the risk and probability of claims and this has a critical impact on insurance cover for such projects. Not all insurance companies are willing to provide insurance cover, and those that do agree will impose certain protection warranties.

National outline plan 38-2 projects

Arranging insurance for National Outline Plan 38-2 urban renewal projects can be one of the most intricate tasks since they involve demolishing existing buildings and rebuilding them in dense surroundings. This fact increases the risk of insurance claims, and hence insurance companies will require various exclusions, special clauses and protection warranties. It is therefore clear that the contractor needs the widest possible cover, and so…

Insurance for earthquake reinforcement projects

Public buildings, historical buildings, monuments and the like that need to be reinforced and restored do not form part of National Outline Plan 38 but are categorised under other urban outline plans dealing with the reinforcement of buildings against earthquake. Hence, similar to other urban renewal projects, insurance companies place them in a high risk category. Therefore, the appropriate solution for insuring such projects is by arranging an extended insurance policy for reinforcing buildings against earthquake rather than a standard Contractors All Risks policy.

Insurance for "demolition and rebuilding" projects

Policies for Demolition and Rebuilding Projects are part of the portfolio of urban renewal insurance policies, which seem straightforward to arrange but are sometimes quite complex to plan, formulate and issue. The reason for this is that it is necessary to adapt the policy to the characteristics of the project, a task which demands not only expertise in the construction industry insurance but also a global view of the social environment and an in-depth and high-resolution analysis of construction processes, Gantt charts (timetables for construction projects), municipal bye-laws, safety rules and regulations and more. Furthermore…

Insurance for preservation and restoration of buildings

Projects involving the preservation and restoration of buildings are considered very carefully by the insurance companies before they agree to provide insurance cover and this is for obvious reasons. Preservation and restoration works on buildings usually involves a high risk, a high probability of claims in general and the potential for very large claims both due to the poor condition of the building (on some occasions). There is also a high risk of total or partial collapse, and so in the event of a claim, the building will need to be restored in such a way that it is brought back to its original condition, sometimes in a very precise and effortful manner.


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