Don’t let your insurance be on shaky footing

Whether you work in the construction industry or are doing your own renovation at home, everyone has seen the effect of rising building costs. The impact is not just on the cost of the jobs you are completing – it also flows through to your insurance policies.

Having the correct insurance coverage, not just at the start of a construction project, but for the duration is imperative. Unfortunately, most people don’t realise how imperative this is until they need to make a claim and there is a significant shortfall that needs to be made up.

With rising business and personal costs, it may be tempting to try to save money and keep your premiums low. In fact, it may seem counter intuitive to pay more on your premiums now, however, the financial implication down the track may be significantly greater.

The recent adverse weather we have had in the North Island is a great example of how the unexpected can hit and have a major financial impact, with some homes now being a complete write-off and having to be rebuilt.

Here are some things to think about whether you are completing a client build or for your own property.

During the build

Many of you will be familiar with contract works insurance which covers the work in progress at the site, material transported to the site and material stored away from the site. The cover will also protect against accidental damage prior to completion, up to the practical completion date and often during the defects period.

Having the right sum insured for your contract works policy is just as important as it is for the cover for a completed residential or commercial building. Consider the following:

• Almost all construction risk policies have allowances for variation to the contract price due to increases in the cost of labour and materials during construction and during re-construction, however, there are standard limits that may not be adequate in today’s economic environment.

• As an example, a project completed over 12 months’ time could increase in cost more than the standard variation, due to changing inflationary increases, so the sum insured at the start of the policy will vary considerably over time. This can be adjusted as required by talking to your broker.

At project completion

When the build is completed make sure that you get an up-to-date valuation for the total sum insured.

The same also applies to the property you live in. Get an updated valuation each year to have confidence that the sum insured is reflective of the current cost to rebuild the property – not the market value.

Needing some reassurance?

If it’s been a while since you reviewed your insurances give BrokerWeb Risk Services Limited a call on 0800 644 444.

We are happy to have a no obligation chat to ensure that your insurance is on a stable footing rather than a shaky one.

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