Running a construction firm is far more than being able to complete projects in time. Construction firms need to manage their personnel, subcontractors, equipment, material, customers, and last but not least, risks which may be associated with the construction sites.
This is why having adequate insurance for your construction firm is an essential step in safeguarding your business. Properly chosen insurance broker will help you assess your risks, review existing policies and select insurance products which would fit your business needs.
But with so many insurance products and providers available, how do you find the right construction insurance broker?
What Is a Construction Insurance Broker?
The construction insurance broker is a professional in insurance who assists building firms, contractors and other construction companies in securing appropriate insurance coverage.
As opposed to merely choosing the policy with the lowest premiums, the broker takes into consideration your business activities, type of projects you are involved in, types of contracts, revenues, tools used, subcontractors and claims that have been made in the past.
Each construction company is unique. The insurance requirements of a builder will differ from those of a commercial contractor, civil contractor or a trade business.
This is why it is important to engage a construction insurance broker who understands the industry and can offer insight into various insurance policies.
Why Is Construction Insurance Important?
Construction work involves a range of potential risks. Accidents, property damage, theft, equipment damage and third-party claims can all create unexpected costs for a business.
Depending on the policy and its terms, construction insurance may help protect your business against certain financial losses.
Common areas of risk include:
● Damage to construction works
● Third-party injury or property damage
● Theft or damage to tools and equipment
● Plant and machinery risks
● Subcontractor-related risks
● Professional or design-related claims
● Contractual requirements
● Business interruption
● Employee-related risks
The cover available will depend on the policy wording, exclusions, conditions, limits and circumstances of the claim.
What Types of Insurance Might a Construction Business Need?
There is no single insurance policy that automatically covers every construction business. Your requirements will depend on the work you undertake and the risks involved.
Construction and Contract Works Insurance
Contract works insurance can provide cover for certain accidental loss or damage to construction works during a project.
The appropriate cover may depend on the project value, construction type, location, contract and other circumstances.
Public Liability Insurance
Public liability insurance may assist a company in safeguarding itself against some types of claims resulting from personal injuries or damages to third party property related to the operations of the business.
It is vital for builders and contractors operating among the clients, subcontractors, and the general public to know the extent of their liability insurance cover.
Plant and Equipment Insurance
Construction companies frequently make use of expensive plant and machinery. Excavators, forklifts, cranes, tools and other machinery can be an expensive venture.
In some cases, plant and machinery insurance might cover you against any losses or damages.
Professional Indemnity Insurance
Professional indemnity insurance may be relevant for businesses that provide professional advice, design, consulting or related services.
For example, a construction business involved in design-and-construct projects may have different insurance considerations from a contractor working strictly from another party’s plans.
Workers Compensation
Businesses with employees also need to consider their workers compensation obligations. These requirements vary between Australian states and territories, so businesses should understand the requirements applicable to their operations.
What Should You Look for in a Construction Insurance Broker?
Choosing an insurance broker is about more than getting a quote. You want someone who understands your business and can explain your insurance options clearly.
Industry Experience
Ask whether the broker regularly works with builders, contractors and construction businesses.
Industry experience can help a broker understand common construction risks and the information insurers may require when assessing your business.
Understanding of Your Business
Your insurance should reflect your actual business activities.
For example, there can be different considerations for:
● Residential builders
● Commercial builders
● Civil contractors
● Renovation businesses
● Fit-out contractors
● Demolition contractors
● Specialist trades
● Property developers
Make sure your broker understands the type of work you actually undertake.
Understanding of Construction Contracts
Construction contracts frequently have insurance specifications. The client, developer or main contractor might specify minimum levels or kinds of insurance that need to be in place prior to the start of construction.
A broker will assist in determining how well your insurance coverage meets these specifications.
Access to Insurance Options
A broker can approach insurers and insurance markets that may be suitable for your circumstances.
The availability of cover can depend on factors such as the type of construction work, project value, location, claims history and overall risk profile.
Don’t Choose Insurance Based on Price Alone
Price is naturally an important consideration for any business, but the cheapest policy is not necessarily the most suitable.
When comparing construction insurance, look beyond the premium and consider:
● Policy limits
● Excesses
● Exclusions
● Sub-limits
● Insured activities
● Contract requirements
● Optional extensions
● Claims conditions
● Subcontractor arrangements
● Hired equipment
A lower premium can sometimes come with a higher excess, narrower cover or additional exclusions.
The important question is not only “How much does the insurance cost?” but also “What protection does the policy provide?”
When Should You Review Your Construction Insurance?
Your insurance should be reviewed when your business or projects change.
Consider speaking with your broker if you:
● Take on larger projects
● Start working in new locations
● Change your business activities
● Purchase new plant or equipment
● Increase your turnover
● Employ additional workers
●Take on more subcontractors
● Start providing design services
● Change your business structure
● Enter contracts with new insurance requirements
It can also be useful to review your policies at renewal to make sure the information provided to the insurer remains accurate and relevant.
Questions to Ask a Construction Insurance Broker
Before choosing a broker, consider asking:
Do you work with construction businesses?
This can help you understand whether the broker has experience with businesses similar to yours.
What types of insurance should I consider?
Ask the broker to explain why each recommended policy may be relevant.
What exclusions or limitations should I be aware of?
Knowing what is not covered is just as important as understanding what is covered.
Can you review my existing insurance?
A review can help identify potential gaps or outdated information.
Can you help me understand my contract insurance requirements?
This can be particularly useful when working under contracts with specific insurance conditions.
Conclusion
Finding the correct insurance broker for your construction business should not be done merely by considering the cost involved. You should find someone who knows your business, your construction projects and the risks involved in your business.
Insurance policies that are suited to your business will help you to minimize your risk and provide more certainty with respect to your responsibilities and protection.
Auswide Insurance Brokers assist Australian companies to determine their insurance needs and coverage.
Whether you are a builder, contractor, developer or specialist trade business, reviewing your construction insurance can help you stay prepared as your business grows.
Speak with Auswide Insurance Brokers today to discuss your construction insurance requirements.