Contractors, Ensure You’re Insured!
Accidents, theft, negligence… the list goes on. All of these events could cost you dearly and insurance has become somewhat of a necessity in protecting companies and individuals from the harsh financial implications.
I have spent the past few days studying the various construction-related insurance products that are on offer from the many insurance companies in South Africa, as well as some of the scenarios where insurance could come into play.
Sadly, many injuries and deaths have occurred on construction sites and it is so important that contractors have insurance to cover for these unfortunate events. In one incident in South Africa this year, construction workers were hospitalised after formwork collapsed on them. In a separate incident, in 2017, a construction worker died after falling from scaffolding. Where loss, damage, injury or death has occurred as a result of a structural collapse or any other type of works failure on site, the insurer is likely to determine whether or not the structure or construction works complied with the National Building Regulations (NBR). South Africa’s National Building Regulations are a set of guidelines for construction. Failing compliance, insurance claims could be rejected.
Theft of construction equipment and machinery; damage caused by strike action, riots and violent protests as well as machinery breakdown are other examples of risks that contractors are facing. Thankfully, all of these events can be covered by insurance.
Read on to learn about a few of the insurance options that offer cover against the above-mentioned incidents.
Contractors All Risk (CAR) Insurance
CAR policies cover construction companies against loss or damage caused by fire, seasonal risks, natural disasters, vandalism, theft, liability and other possible incidents, depending on the cover that your preferred insurer offers you. It is important to note that not all CAR policies offer the same amount of cover. The duration of the cover commences at the start of the construction works and ceases when the contract is complete.
Public Liability Insurance
Public Liability Insurance can be included in CAR policies or taken out as a policy on its own, and covers against death or injuries to third parties as well as damage to the property of third parties. The main contractor assumes liability for activities carried out on site by any representatives of his company.
Plant All Risks (PAR) Insurance
This type of insurance is also referred to as Contractors’ Plant and Machinery (CPM) insurance and Contractors’ Plant and Equipment (CPE) insurance and covers construction plant, machinery and equipment against loss or damage caused by unforeseen circumstances. A CAR policy can cover plant, however, specific types of plant are only used for a small portion of the total construction period and are then moved to another site. PAR insurance would be a more suitable type of cover for these specific machines, in comparison to CAR insurance. Often, contractors will opt for a PAR policy that can be renewed on an annual basis, covering the various plant that is in operation on different sites during the course of the year.
Machinery Breakdown Insurance
Contractors can insure against unexpected mechanical and/or electrical breakdown of machinery. Under this type of cover, claims cannot be submitted for any expected breakdown arising from general maintenance requirements.
Special Risk Insurance
The South African Special Risks Insurance Association (Sasria SOC Ltd) is a state-owned entity offering short-term insurance and provides cover against loss or damage caused by violent protests, riots, terrorism and similar circumstances. SASRIA cover can only be arranged by a broker.
The aforementioned insurance policies are most-certainly not the only options that contractors have, as there are many other policies that can be taken out. That being said, contractors have a range of options to choose from in order to protect their companies and assets by ensuring they have the necessary insurance policies in place. Contacting a broker who specialises in construction insurance could pave the way for hassle-free insurance claims, should the need for a claim arise.
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