In the construction industry, due to the large number and scale of risks, as well as the frequency of loss events and their financial consequences, it is crucial to have adequate insurance solutions in place. These include property, liability, life and health insurance for employees and insurance guarantees.

Mandatory vs. voluntary professional liability insurance

For individuals performing independent technical functions in the construction industry (e.g. architects, engineers), there is a statutory obligation to have professional liability insurance.  The minimum guarantee amount for this insurance is EUR 50,000. However, individual professional liability insurance policies do not cover claims addressed to their employers, i.e. design offices, general contractors or subcontracting companies. These entities are liable for damages resulting from design faults or errors in contract execution, even if caused by subcontractors. Therefore, an indispensable element of the third-party liability policies we arrange for companies in the construction industry is insurance for damage caused by subcontractors.

In our practice, we pay particular attention to properly insuring the initial stages of the construction process, especially as ‘design and build’ contracts are common. With appropriate policy triggers (temporary insurance triggers), we ensure that third-party liability insurance covers claims arising from design errors that are made during the construction process, as well as after the end of the project (as long as the statutory limitation period for claims has not expired).

Material risks in construction work

CAR/EAR (Contractor’s/Erection All Risks) insurance is used to protect property exposed to material damage during the construction process. It protects the mutual interest of the investor, general contractor and subcontractors by covering works, materials, machinery and construction facilities. This insurance protects against damage caused by fortuitous events such as fire, hurricane, flood, inundation, collapse of the building or overturning of machinery. The standard terms and conditions of insurance include a list of optional clauses extending or narrowing the scope of protection, negotiated with insurers. The specific nature of the contracts we handle, especially risks associated with the construction of large commercial buildings, road infrastructure and deep underground works, has developed the required negotiating prowess and in-depth technical knowledge at PROSPECTOR.

Contractor’s plant machinery

Construction machinery owned by clients is vulnerable to damage, destruction or loss, resulting not only from events covered by CAR/EAR insurance.  In the course of operation, machinery may break down during work, be stolen or require transport to remote construction sites. Damage arising from the above risks is covered by CPM – Contractor’s Plant & Machinery insurance, which we also arrange for our clients and assist with loss adjustment if necessary.

Accident and employee insurance

Our approach to protecting the life and health of employees on construction sites is consistent with the approach taken towards other industries. You will find a detailed discussion under here.

Insurance guarantees

Guarantees play a key role in the construction industry, providing essential financial security at every stage of a project. Insurance guarantees can be an attractive alternative to bank guarantees, as they do not burden a company’s creditworthiness.

Among the most commonly used insurance guarantees in the construction industry, we distinguish: guarantees of defects, due performance of the contract, removal of defects and faults and advance payment refund guarantees.  Prospector comprehensively supports construction companies in obtaining insurance guarantees, tailored to the specifics of the contract and the client’s requirements. Most often, we arrange guarantee lines where the insurer issues individual guarantees in a simplified procedure.

Examples of the challenges we help our clients with in terms of guarantees are:

• accumulation of guarantee sums and the guarantor’s security expectations
• obtaining a guarantee for elimination of defects and faults for a non-standard length of time
• obtaining a guarantee to which the law of another country applies

Feel free to contact us! Let’s talk over coffee or tea and see what we can offer your company.