Insurance options for builders are plentiful, but one that stands out is Design and Construction Insurance. This type of insurance provides protection for builders, particularly during times when they have projects involving design and construction. It may also cover other broader business activities while ensuring proper protection for assets and liability.
What is Design and Construction Insurance?
Let’s delve a little deeper.
Design and Construction (D&C) Professional Indemnity Insurance is specifically designed for contractors with projects under the following delivery or contract models:
- Construction Management
- Project Management
- Design and Construct
This insurance type is comprehensive, with protection for assets while the contractor during the construction period. If you are a builder, you need this cover for protection against legal liability claims for any ongoing construction projects.
Design and Construction Insurance policy typically has two sections:
- The first section covers your assets and property. Therefore, you get protection against accidental damage, theft, or asset loss on-site. Most materials or assets are insured, including your tools, plant and machinery, and other equipment. This first section is beneficial for builders and contractors like you for the following reasons:
- Get extended cover for property loss and damage while the asset is in transit or located in off-site storage
- Receive extended insurance period of insurance for coverage on testing and commissions
- Add cover for materials from the principal, apart from the contract value
- Include cover for existing structures at the site before work commences
- Protect plant, tools, and equipment
- Get sum insured benefit for costs of various nature, including inflation
- Be protected following an insured event, which may involve tasks such as debris removal
- In case of damaged property, D&C insurance includes protection against professional fees incurred for its restoration or replacement
Remember that the coverage is only applicable while you are still on the construction period. It also includes Management Liability.
- For the second section, coverage is provided for legal liabilities. Claims may arise during and after your construction activities due to errors, omission, or breach. With your D&C insurance, you can have a comprehensive policy that may also extend protection to liability concerning completed operations. It is essential because you may not be directly at fault in such cases of disgruntled clients.
Your consultant or a subcontractor may be responsible for the error. However, you are held liable for their mistakes. In this situation, it is always better to be safe than sorry. The key features here include cover for the following:
- Automatic reinstatement
- Confidentiality breaches
- Employee dishonesty
- Contractual liability
- Claims preparation costs
- Continuous cover
- Consumer protection legislation
- Joint venture liability
- Lost documents
- Libel or slander
- Statutory liability
- Infringement of intellectual property
Your construction activities include professional services you provide, which may include:
- Town planning
- Creating feasibility studies
- Offering technical advice
- Surveying, including quantity, building, land, and aerial surveys
- Providing technical specifications
- Inspecting site
- Programming and managing time flow
- Project and Construction Management
Different Types of D&C Professional Indemnity Policy
Many D&C PI policies exist depending on the insurer. Here are the most common ones:
- Annual Policies: If you perform any of the mentioned services above, you may have to maintain a yearly policy. It is designed to cover your civil liabilities on all projects, including previous ones unless they are explicitly excluded.
- Project-Specific: As the name suggests, this policy applies to a specific project. Principals and investors prefer builders with this insurance, especially for expensive projects, as well as government infrastructure developments. As a contractor, this policy may benefit you, mainly if you take on unfamiliar or complicated projects. If you’re operating in a joint venture with another business, it may also prove to be worthwhile.
- Limit of Liability: Insurers are liable to indemnify you for amounts not exceeding the limit of indemnity for all claims stated in the policy’s schedule. It means that there is always a cap on the amount the insurer will pay for all claims during a specific insurance period. If you cannot find the limits on the policy schedule, they are usually worded as “reinstatements” in the policy itself.
- Policy Extensions: Policy wordings can differ significantly depending on your insurer. However, they all have automatic and optional cover extensions. Be sure to read the inclusions regarding policy extension since it does not necessarily mean your insurer will include broader coverage. Extensions, in most cases, are writebacks. If something is not covered, a write-back clause replaces it at a later time or after the policy was written. In other words, insurers “write it back” into the policy.
Do You Need Design and Construction Insurance?
Builders and design and construction firms should have the right risk cover. It helps avoid catastrophic consequences, especially financially. High-quality insurance for builders is a result of years of experience in specialised underwriting and understanding risks and claims in this industry.
If you are a contractor or builder, you’re responsible for carrying out a variety of jobs on the project site. Therefore, you need protection if a client, staff or team member, or other businesses decide to sue you. A D&C insurance policy provides all-risk coverage for contractors like you. Having this insurance gives you peace of mind, primarily if asset loss or damage occurs on-site for the duration of the project.
D&C professional indemnity insurance is not created equal. Grace Insurance is here to help you find the right solution that meets your needs. Contact us today for assistance.