Industrial corporations are constantly growing and this often involves the expansion of new working spaces, the assembly of new production lines or the construction of new factories.
The importance of insurance in construction, installation, assembly and expansion projects
Unfortunately, it is very common not to think about insurance when starting an extension, installation, assembly or construction project. This is a common mistake that can put companies at risk, since it not only puts the new construction site but also the existing facilities and assets, as well as the development and continuity of the company’s activity.
Key steps for comprehensive coverage of your projects
To assess a construction and assembly insurance is very important to have clear steps to follow when starting any type of work or installation and thus be able to be sure that, in case of any incident occurs, we will be covered.
Let us look at the insurance needs according to the type of project.
1) Expansion of existing facilities
Any project of expansion or installation in existing facilities entails an increase in risk for insurance companies. This means that we must notify our insurance broker immediately of the work to be done before it begins.
Examples of such projects are the assembly of production lines or industrial machinery, installation of photovoltaic panels on factory roofs or expansion of spaces, among others.
The insurance broker will be responsible for applying to the insurance company for coverage of the affected facilities while the work is ongoing. At the same time we must ensure the works to be carried out.
2) New construction
If we are going to start a new construction project it is very important to ensure the work that will be carried out, as well as all the material and machinery that will be used and, finally, the damage that may be caused to third parties.
Essential insurance is the Construction or Assembly All Risk and Construction Liability
To take out these insurances, the initial information required is: the duration of the work (even if the expected completion date is provisional), the complete project of the work, including a technical report with a description of the work and a detailed budget, and thirdly, the fire and theft protection measures to be installed.
All Risk Construction or Assembly
Construction or Assembly All Risk covers material damage that may be suffered by the works during their execution. It is very important to check that the insured value of the work is correct in the policy.
Some of the most common and indispensable coverages are material damage by fire, natural phenomena, vandalism or theft, measures taken by authorities, costs for extinguishing and rescue, overtime expenses and expenses for clearing, demolition and unloading.
Additional Considerations and Optional Coverage
The insurance company will cover not only the construction site itself, but also all equipment and machinery used to carry out it, provided that we have contracted coverage of construction or assembly equipment.
If we consider that the budget of the work may vary, it is advisable to contract automatic coverage that allows exceeding the budget of the work by a certain percentage.
If we carry out the works in existing facilities or have adjacent buildings that may be affected by the works, it is necessary to contract the coverage of pre-existing assets. It is also possible to give a first automatic extension free of charge if you have been contracted previously.
Finally, we will mention that there are other optional coverages such as strike or terrorism.
Civil liability Construction
We must be aware that work carried out during the works may cause damage to third parties.
Construction Liability Insurance covers material and personal damage caused to third parties during the works.
Strategies for good construction liability coverage
It is essential to set a maximum limit for compensation in the policy according to the size of the work carried out. We must also ensure that the sub-limit per contracted victim is sufficient.
The fundamental coverage to contract is the Civil Liability of Exploitation that insures the work carried out. However, there are other types of liability that must be addressed.
We must include the Real Estate Civil Liability in case we are the owners or the Rental Civil Liability if we carry out work on a rented space.
The Employer’s Civil Liability for workers’ accidents at work and the Subsidiary and Cross-Liability Civil Liability, for occupational accidents to subcontractors or in case the subcontracted companies cause damage to third parties.
Other important coverages are hot work, damage to pipes or adjacent, the civil liability of technicians on the job and the post.
Construction Civil Liability Risk Cases
Imagine a fire on a building site when welding is carried out. The fire spreads and causes severe damage to the adjacent building’s facade, or worse, it causes a fire in the adjacent building. These third party damages would be covered by the Construction Liability Insurance.
Other examples would be an accident during work or a pedestrian passing near the site, who stumbles because of materials lying on the ground.
It is always advisable to consult with your insurance broker about what coverage and limits should be contracted.
It is also necessary to notify the possible extensions of projects and the time when they have been completed.
When the construction project is completed, we must immediately cover new facilities through the All Material Risk Damage policy.
If the new installations imply that the company has incorporated a new activity, this must be included immediately in the company’s Civil Liability policy.
