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Contract Works Insurance Amid COVID-19
Now that the Government has allowed the construction industry to continue under Alert Level 3, builders, sub trades and building support services are adjusting to the protocols and changes in the way business is conducted and sites controlled.
This can slow down the building process; supplies are taking longer, certain products are unavailable, the way we purchase goods at retailers has changed, and a general increase in the time that a site will take to establish are all real factors of doing business at the moment. These are all factors to consider when arranging contract works insurance.
Single Contract Works When arranging contract works cover ensure that you are factoring in; the additional time it may take to adhere to the new protocols, the longer time it will take to get supplies on site, the change in the availability of certain products and delays with council. It is generally more cost-effective to add on a few extra months at the commencement of the policy, rather than arranging an extension to the cover when the policy expiry date is reached. If the job is a renovation and the homeowner is arranging the contract works please have a conversation with them around possible delays and a realistic expected handover date, this way they can set up the policy with their insurer for an appropriate cover period from the outset.
Annual Contract Works For those, of you with an annual contract works policy now is the time to check on the total construction months you have specified for the policy. On the policy schedule, you have received from your broker or insurer this will be specified and look something like this:
Description of Contract and Sums Insured
Contact Site(s) Various within the regions declared Contract Description Annual Contract Works Contractor XYZ Construction Limited Limit Any One Contract $500,000 Maximum Contract Period 7 Months Maximum Maintenance Period 12 Months Estimated Annual Turnover $3,000,000
It is so important that you have the maximum contract period set appropriately. With reference to the above policy example if your build went for 7 months and 2 weeks then that build is not covered by the policy, as soon as the build period exceeds the declared maximum contract period specified the policy does not cover that build. This is also applied to the ‘limit any one contract’, if the contract value exceeds the amount specified, that contract is no longer covered under the annual contract works policy.
Other Important Facts Some other important facts about contract works insurance were included in our last article however so important that we have included them again as follows:
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 insurer of any damage, potential 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.
