Buildings, Plant and Machinery have to be erected/installed before commercial production could take place. During the construction/installation period, insurance protection is needed until the buildings/ plant and machinery are finally handed over to the Principal by the contractor.
The Principal/ Main Contractors/ Sub-contractors for their respective rights & interests.
Section I - Material Damage
This section of the insurance covers the contract works (Buildings, Plant and Machinery) of the Insured against any unforeseen and sudden physical loss or damage from any cause e.g. fire, lightning, collapse, collision, impact, malicious damage, theft/ burglary, flood, windstorm and most form of accidental damage unless specifically excluded.
Section II - Third Party Liability
This section of the insurance covers the liability of the Insured against any liability in respect of third party bodily injury or property damage arising out and in the course of the construction works.
In case of plant and machinery, the policy can be extended to cover testing and expires after the first test operation or test loading is completed, or after taking over or expiry date of the policy whichever shall be earlier.
The cover commences directly upon commencement of work or after the unloading of the property insured at the contract site and expires for parts of the insured contract works taken over or put into service or expiry date of the policy whichever shall be earlier.
- The deductible stated in the Schedule to be borne by the Insured in any one occurrence
- Loss or damage due to faulty design
- The cost of replacement, repair or rectification of defective material and/or workmanship, but this exclusion shall be limited to the items immediately affected and shall not be deemed to excluded loss of road damage to correctly executed items resulting from an accident due to such defective material and/or workmanship
- Wear and tear, corrosion, oxidation, deterioration due to lack of use and normal atmospheric conditions
- Mechanical and/or electrical breakdown or derangement of construction plant, equipment and construction machinery
- Loss of or damage to vehicles licensed for general road use or water borne vessels or aircraft
- Loss of or damage to files, drawings, accounts, bills, currency, stamps, deeds, evidences of debt, notes, securities, cheques
- Loss or damage discovered only at the time of taking inventory
- Any accidents caused by vehicles licensed for general road use or by waterborne vessel or aircraft
- Any agreement by the Insured to pay any sum by way of indemnity or otherwise unless such liability would have attached also in the absence of such agreement
Section I - Material Damage
Contract works which consists of the full value of the contract works (Buildings, Plant & Machinery) at the completion of the construction/ installation. This valuation would include freight, customs dues and construction costs. It is common practice for the principal to supply the contractor with material on "free issue" to be built into the contract works. The value of such materials would not be reflected in the contract price and so the sum insured should be appropriately increased.
Section II - Third Party Liability
Liability to third party bodily injury or property damage claim.
- Constructional plant and equipment such as site offices, site power generating equipment, scaffolding, air compressors, welding equipment, concrete silos and mixers may be included, in a separate sum insured representing the new replacement value of such equipment.
- Construction Machinery. Defined as all "plant and machinery" which renders its service only when moving and under control of an operator e.g. cranes, bulldozers, excavators, graders, loaders, pile driving & pile extracting units, trucks/lorries, site railways, concrete pumping plant. When on site, construction machinery may be insured under the policy. In such cases a complete list of these items showing the new replacement values is to be appended to the policy.
- Debris clearance. The cost of debris removal following an accident is part of the claim under the policy to the extent that it is necessary before repairs may be put in hand. General debris removal costs for site clearance may be insured as a separate item under the policy.
- Expediting. The insurance may be extended for additional premium to cover the extra cost of overtime rates of wages, express delivery, air freight, etc. in connection with repairs or replacements indemnifiable under the policy.
- Insured's surrounding property. When the insurance includes the interest of the purchaser and involves extensions to or work adjoining existing premises, there is a risk of such premises and their contents being damaged as a result of accidents arising out of the construction operations.
- Temporary works. Works constructed by the Insured on site to facilitate construction of the permanent contract works including coffer dams, shuttering, temporary diversions of waterways, etc. are exposed to the same hazards as the contract works. These temporary works may also be insured and the sum insured should be suitably increased to include their value.
- Third Party liability. Where the contract wording stipulates that the insurance is to be for joint interests (principal, contractor and subcontractors) the third party insurance is granted to each party separately. This allows one insured party to take action against another and seek indemnity under the policy. However, persons occupied on the construction site are not covered under the policy against accidents at work if they are or could have been insured under Workmen's Compensation and/or Employer's Liability insurance.
- Maintenance. Section I of the policy can be extended to cover, to a certain extent, loss of or damage to the construction/erection works occurring during this period.
- Contract Value together with its breakdown details (Buildings, plant & machinery)
- Period of Insurance
- Period of Maintenance Cover
- Name of Main Contractor
- Third Party Limit of Liability
- Work Schedule
- Details surrounding property
- Location map
- Tender documents