Construction involves a large amount of labor and large investment of money. Workers in a construction site risk their lives working at great heights, with dangerous tools, toxic materials, heavy machinery, under tunnels, etc. Therefore, construction is associated with a large amount of risk to money and life. A slight negligence or misfortune on the part of the worker or owner can prove too costly. It can lead to a huge financial loss. These unfortunate events require tools that can get the company out of the situation. Here arises the need for ‘Construction Insurance’, the risk management tool, customized specifically for the construction industry. Construction insurance is like any other insurance, used to protect the various parties associated with the construction process.
A comprehensive construction insurance policy covers all expenses that may occur due to property damage or personal injury on the construction site. This insurance not only includes the owner of the organization, but also workers, employees, lessees, subcontractors, sole proprietors, and business partners.
Importance of Construction Insurance
As discussed above, construction involves the use of heavy equipment, materials, labor, etc. and is more prone to accidents. Since the company is responsible for any accident on the construction site, it is the owner of the company or the contractor who must pay the expenses of medical treatment of the injured or compensation to the families, in case of death of the worker.
Material costs associated with construction are very high. Any damage to the structure or materials leads to a huge financial loss. Secured with the construction insurance, one can seek financial assistance from the insurance company.
The buyers of the flats or of the built property will have every right to sue the construction company, in case of defective construction. In such cases, the construction company has to pay for the remodeling or repair of the built site. Building insurance protects builders from those claims, providing them with financial assistance.
Apart from the above circumstances, construction insurance provides extensive coverage, providing security to the business in case of unforeseen events.
Four main areas covered
Construction insurance is very significant in terms of its coverage. It is very complete and specifically designed to cover all aspects of the construction process, so that the business process is flexible. Construction insurance covers four main areas of commercial insurance. They are:
public liability insurance
Civil liability insurance is a general insurance that any company that involves interaction with customers or people in general must have. Liability insurance as part of construction insurance helps companies in the event that employees or tools used in construction cause damage to the property of third parties or individuals.
Employer Liability Insurance
Because the construction industry involves many risks, any worker can be injured or killed at any time due to faulty equipment or the negligence of supervisors or co-workers. Employers are responsible for the health and safety of their employees on the construction site. In addition, the employees will have every right to sue the owner and claim compensation. In the event of such unexpected events, the employer or homeowner can benefit from construction liability insurance, as the insurance company pays for medical costs or compensation associated with the loss.
All risk insurance for contractors
Contractors all-risk insurance is customized for construction companies. Provides assistance for works by contract for new homes, theft of materials or tools, damage to materials or tools due to unforeseen events, sudden stoppage of works in progress for new homes, own or rented plants, etc. This insurance acts as a perfect aid for the most frequent accidents in the construction process.
Personal Accident Insurance
This insurance is specifically designed for managers, sole proprietors, or business partners. This is useful in cases where the injured person cannot blame anyone else for the injury they caused. This is useful to provide assistance during the period during which the injured person is unable to earn income.
Construction insurance is very important for construction companies, as the damage or financial loss that occurred is very difficult to recover. Businesses need to realize that the cost of insurance premiums is less compared to compensation costs. Therefore, it can be concluded that construction insurance is very valuable in making the business sustainable in the long term.
