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When should you extend the Contractors All Risks policy covering your construction project?

I have received a certificate of occupancy. Do I still need to maintain Contractors All Risks insurance?

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When should you extend the Contractors All Risks policy covering your construction project?

Answer:

The issue of completion of the project and extending the period of insurance, or allowing it to expire, is very important. It is widely believed that merely obtaining a certificate of occupancy means that there in no need to keep Contractors All Risks insurance in force and this can be a mistake.

So when does a Contractors All Risks policy need to be extended and when does it not?

1. If a certificate of occupancy has been issued and the apartment has been handed-over the purchasers – There is no need to include the value of such property in the sum insured for any extension period required. 

 

The extended maintenance period extension in the policy includes third party liability and employers liability in connection with maintenance repairs for 12-24 from completion of the project (as stated in the policy).

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2. Apartments in the process of being sold but which have not yet been handed-over – The cover should be extended and the sum insured should reflect the reconstruction value of this property.

3. Apartments in the process of being sold in which the works have not yet been completed and/or there are outstanding modification or finishing works – The cover should be extended and the sum insured should reflect the reconstruction value of this property.

4. Stocks of apartments which have not yet been sold – If a certificate of occupancy has been issued, and if work on these apartments has been completed, the Contractors All Risks policy should not be extended to cover them, and it is important to arrange a regular Extended Fire policy to cover such property.

5. Common parts which have been formally handed-over and are being used – There is no need to extend the policy to cover such property.

The extended maintenance period extension in the policy includes third party liability and employers liability in connection with maintenance repairs for 12-24 from completion of the project (as stated in the policy).

6. Common parts which have not yet been formally handed-over – The policy should be extended for the reconstruction cost of these spaces if they are still in the process of final inspections and finishing works.

The rule of thumb is that for as long as any works are still underway and workers, contractors, subcontractors, suppliers or other tradesman are still present on the site, even on an occasional basis, and if possession is more tilted in your favour during the interim period, it would be advisable to extend the Contractors All Risks policy until the final hand-over.

For your convenience, we have summarised all of the information in a dynamic form. To open the form, click here.

Do you need genuine insurance cover for your project?
Call us on 03-6951414
contact us by e-mail: itzick@simon-ins.co.il
or complete the form and we will contact you as soon as possible.

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