Key risks in the building and construction industry
The building and construction industry face a variety of risks that can affect the success of a project. Construction projects are complex undertakings, involving various stakeholders and challenging working conditions. Construction businesses often need to manage changes to project scope or orders, poorly written contracts, health and safety issues, unexpected increases in material costs, labour shortages, theft of tools and materials, and project management issues.
Subcontractors and suppliers can place additional stress on construction firms, as can the rising number of extreme weather events and natural disasters. Additionally, cybercrime is an increasing threat to construction businesses, which often use insecure connections from mobile workplaces, and share files and data with stakeholders outside the business. As a result, more than 40% of construction companies have already taken out a cyber insurance policy, with a further 28% planning to follow suit within the next 12 months.
What insurance should you consider – and what can it cover?
Whether you’re an owner-builder, a contractor, or a large construction company, you’ll need a range of insurance covers to protect you, your employees, and your equipment.
Plant & Equipment
Cover for material damage to tools, plant, machinery and equipment, including road liabilities arising out of the use of road registered equipment.
Contract Works (or Construction Insurance)
Protects any buildings or structures under construction, as well as construction equipment. Cover may include protection against:
- Natural disasters such as fires, earthquakes, storms, floods, wind and water damage
- Damage to property caused by defects, theft, malicious damage, vandalism or smashed glass
- Third-party personal injury and property damage.
Out of hours water damage is a significant cause of loss to buildings under construction.
Business Pack
Business Pack insurance combines various forms of coverage into one policy. Its purpose is to provide comprehensive protection for a business in a convenient and cost-effective manner. It safeguards your business premises against:
- Equipment or machinery breakdown
- Employee dishonesty
- Property or glass damage
- Legal issues, with public and products liability
- Tax audit
- Theft, and theft or loss of money.
Professional Indemnity (or Errors & Omissions Insurance)
Protects you against claims made by clients due to negligence, errors, or omissions in the performance of your services. This type of insurance is often required by building contracts.
Public Liability
Provides protection for you, your business, and your contractors against claims of third-party bodily injury or property damage.
Motor Insurance
Takes care of your valuable business vehicles with cover to:
- Help if you or your staff damage another person’s vehicle
- Repair your vehicle after an accident or replace it if it’s written off
- Replace a lost or stolen vehicle
- Safeguard you against legal liability.
Cyber
Protects your business against expenses and legal costs if your website or other systems are hacked and your system cannot be used or customers’ details are stolen.
Case Study
Simon has a small construction business, which occasionally employs subcontractors. As his regular plumber was unavailable for a job renovating a home, Simon employed a plumber who was recommended by a friend. Unfortunately, the plumber did a careless job and a pipe burst overnight, flooding the building and causing extensive water-damage to the half-completed renovations. Simon successfully claimed on his contract works, which covered the cost of the labour and materials to repair the damage.
Relevant Resource: Key insurance covers - Shop office Fitters Industry
DISCLAIMER: This article is informational only and should not be construed as individual advice as it does not consider your individual needs. You should consider if the insurance is suitable for you and read the Product Disclosure Statement or policy Wording before buying insurance.
Key risks in the building and construction industry
The building and construction industry face a variety of risks that can affect the success of a project. Construction projects are complex undertakings, involving various stakeholders and challenging working conditions. Construction businesses often need to manage changes to project scope or orders, poorly written contracts, health and safety issues, unexpected increases in material costs, labour shortages, theft of tools and materials, and project management issues.
Subcontractors and suppliers can place additional stress on construction firms, as can the rising number of extreme weather events and natural disasters. Additionally, cybercrime is an increasing threat to construction businesses, which often use insecure connections from mobile workplaces, and share files and data with stakeholders outside the business. As a result, more than 40% of construction companies have already taken out a cyber insurance policy, with a further 28% planning to follow suit within the next 12 months.
What insurance should you consider – and what can it cover?
Whether you’re an owner-builder, a contractor, or a large construction company, you’ll need a range of insurance covers to protect you, your employees, and your equipment.
Plant & Equipment
Cover for material damage to tools, plant, machinery and equipment, including road liabilities arising out of the use of road registered equipment.
Contract Works (or Construction Insurance)
Protects any buildings or structures under construction, as well as construction equipment. Cover may include protection against:
- Natural disasters such as fires, earthquakes, storms, floods, wind and water damage
- Damage to property caused by defects, theft, malicious damage, vandalism or smashed glass
- Third-party personal injury and property damage.
Out of hours water damage is a significant cause of loss to buildings under construction.
Business Pack
Business Pack insurance combines various forms of coverage into one policy. Its purpose is to provide comprehensive protection for a business in a convenient and cost-effective manner. It safeguards your business premises against:
- Equipment or machinery breakdown
- Employee dishonesty
- Property or glass damage
- Legal issues, with public and products liability
- Tax audit
- Theft, and theft or loss of money.
Professional Indemnity (or Errors & Omissions Insurance)
Protects you against claims made by clients due to negligence, errors, or omissions in the performance of your services. This type of insurance is often required by building contracts.
Public Liability
Provides protection for you, your business, and your contractors against claims of third-party bodily injury or property damage.
Motor Insurance
Takes care of your valuable business vehicles with cover to:
- Help if you or your staff damage another person’s vehicle
- Repair your vehicle after an accident or replace it if it’s written off
- Replace a lost or stolen vehicle
- Safeguard you against legal liability.
Cyber
Protects your business against expenses and legal costs if your website or other systems are hacked and your system cannot be used or customers’ details are stolen.
Case Study
Simon has a small construction business, which occasionally employs subcontractors. As his regular plumber was unavailable for a job renovating a home, Simon employed a plumber who was recommended by a friend. Unfortunately, the plumber did a careless job and a pipe burst overnight, flooding the building and causing extensive water-damage to the half-completed renovations. Simon successfully claimed on his contract works, which covered the cost of the labour and materials to repair the damage.
Relevant Resource: Key insurance covers - Shop office Fitters Industry
DISCLAIMER: This article is informational only and should not be construed as individual advice as it does not consider your individual needs. You should consider if the insurance is suitable for you and read the Product Disclosure Statement or policy Wording before buying insurance.
