Risk management tips

Whilst purchasing insurance products help protect your business from financial loss there are steps you can take to help reduce risk and physical losses. The most common policies for the construction industry are shown below with some handy risk reducing tips.

Commercial Motor Vehicle

Many of you will have commercial vehicles that are provided to staff. Steps you can take to reduce risk are:

• Ensure all drivers have a current licence – remember to check this every 6 to 12 months. • Ask your employees about their driving history before allowing them to use company vehicles. • Keep all vehicles well-maintained. • Ensure all vehicles are kept secure, locked and parked off the road where possible. • When vehicles are on-site, have a designated parking area away from heavy machinery, supply deliveries and high hazard areas. • Have an immobilizer or GPS locator if possible.

Tools of Trade

Most builders we talk to have a preconceived idea that insurance for tools is cost prohibitive, even if they have never had this type of insurance before. However, the policy we offer is reasonably priced, based on your previous claims experiences and value of the tools you choose to insure. Considering your tools are required to generate turnover this policy is one that should be first on the list. Tips for protecting your tools and reducing risk are:

• Never leave tools unattended and unsecured on-site.

• When tools are in a vehicle always keep the vehicle locked and secure.

• Where possible, have tools in vehicles covered, windows tinted or in a lock box.

• If tools are kept in a trailer, keep the trailer locked and always use a wheel lock, hitch lock or other security device. • Keep a record of your tools and receipts. If you do have to claim this will make the process go much faster.

Contract Works

When building new or renovating an existing property either you as the builder or the homeowner would have arranged contract works insurance. Contract Works insurance has many areas of optional, automatic and percentage variations for levels of cover. Steps to take and tips to reduce risk are: If arranged by homeowner: • Ensure the building contract reflects that the homeowner has arranged the insurance. • Always get a copy of the policy schedule and wording from the homeowner before commencing work. Ensure that you are noted as the contractor and that all other allowances are in line with the building contract.

If arranged by the builder: • Arrange cover as soon as you know the estimated start date and before any work, including earthworks begin. • Notify the insurer or broker of the owners financial interested party at the time the contract works is arranged. • Think about what the owners are supplying and make sure the standard policy allowance is adequate (usually 10% of the contract value but this can vary). • Be realistic about the length of the build, taking into consideration delays in the supply of materials, weather and, of course, COVID-19 related issues.

Some tips for reducing risk: • Keep any materials on-site secure. • Have site fencing where possible to help protect the structure from malicious damage or theft. • Don’t leave tools unsecured or visible as this attracts unwanted attention to the site.

• Watch the weather and keep up-to-date with the forecast in order to plan and protect from weather losses. • Restrict site access to staff, contractors and professional services.

• Use a lock box for keys if they are left on-site for subcontractors or staff.

Some other important facts about Contract Works insurance are: • For new builds the cover automatically cancels if the homeowner takes possession of the home. • If the expiry date passes the policy automatically cancels.

If you need an extension you need to contact the insurer or broker at least a few days before expiry. • Make sure the policy mirrors the contract requirements. • Notify the broker or insurer of any damage or loss immediately. • Policies have a clause for cessation of work, this means if work stops for a period of usually 60 days the policy automatically cancels.

Liability

This is such a broad area and there are many different types of cover available under the liability umbrella. Some general tips are as follows:

• Always set your public liability limit at your maximum exposure or if you have entered a contract make sure the limit and cover is in line with this.

• Always ask contractors and companies you engage for a copy of their liability certificate. • Do not accept liability if an event occurs, notify your broker or insurer immediately. Quite often you feel morally responsible however, the policy only responds for legal liability. • Never delay the lodgement of a claim or incur any costs before discussing this with the insurer or broker. • Take the time to get the right advice. Uninsured liability issues often see businesses not surviving. • Check your policy schedule refers to defective workmanship, LBP cover and Statutory Liability.

Always ask contractors and companies you engage for a copy of their liability certificate.

For a review of your existing portfolio or more information on this topic, NZCB members can contact BrokerWeb Risk Services on 0800 644 444.

REDi Builders’ Insurance is administered by BrokerWeb Risk Services Limited and is exclusive to NZCB members. BrokerWeb Risk Services also operate the NZCB members’ only, Insurance helpline and can be contacted on redi@bwrs.co.nz or 0800 644 444.