Understanding insurance for construction projects ...
Understanding insurance for construction projects
Insurance - protecting what’s most important to us - is a sentiment we can all understand. The vast majority of us, for example, wouldn’t buy a house without building insurance or purchase a new car without some kind of cover, in the event that anything could go wrong.
This same sentiment, of course, can be applied to all commercial businesses and industries, particularly in this instance, for the purposes of this article - the construction industry. Insurance plays a vital role in protecting, not only an owner and investors’ interests in a project, but also the wellbeing of those working on the project.
As such, in order to ensure the construction projects we manage are comprehensively and appropriately insured, we work closely with AMI Specialty - specialist brokers who arrange long-term security for organisations across multiple sectors. They have a strong focus on projects and operational facilities in the renewable energy, construction, engineering and downstream energy operations.
A hardening global market and AMI’s expertise
Over the last few years, the construction insurance global market has suffered from a hardening market [not seen for at least 15 years].
Like many heavy industries this is due to an increasing frequency and severity of claims in recent years along with the impact of COVID-19. The resulting impact on construction projects and construction companies are increased insurance premiums, less Insurers willing or able to provide alternative quotations, higher excesses and removal of covers.
However, AMI Specialty has operated for years – being a prominent name in the industry with exceptional knowledge and experience within the team - and therefore continue to navigate through these times to secure reliable insurance policies for projects and construction firms at competitive rates.
Understanding insurance solutions for constructing facilities, specifically renewable energy projects
For a lot of brokers such as AMI Specialty, the construction phase of renewable energy projects is a key broking focus. This aims to achieve the required risk transfer protection and suitable fire protection strategy considerations from the outset, as a critical factor for the subsequent operational facility insurances. AMI Specialty work with power generation and renewable energy market specialist underwriters across the broad spectrum of Bioenergy, Anerobic Digestion, and Waste to Energy (WtE) plants to Solar, wind and Battery storage facilities. Clients benefit from engaging a broker with relevant experience and knowledge who work closely with insurers who also have a strong understanding of the program requirements and operational aspects, being fundamental to ensuring appropriate cover is achieved.
But what insurance options are available?
Owner Controlled Insurance Programme
An ‘Owner Controlled Insurance Programme’ - otherwise known as an OCIP - is an insurance policy arranged and held by the owner (or employer) of a construction project to achieve an overarching ‘umbrella’ protection for ‘All Parties’ participating in the project.
An OCIP can offer an excellent solution, as it -
Reduces the admin associated with insurance
Provides a tailored policy to cover all necessary parties
Provides control of:
Claims
Scope of the cover in question
The premium
CAR/EAR insurance
CAR and EAR stand for ‘Contractors All Risk’ and ‘Erection All Risks’ insurance.
CAR is more civils driven projects and EAR being more machinery which requires testing and commissioning cover. These are particularly useful when you have multiple packages of work on any single project. For example, the client would take out the CAR/EAR Insurance and this would cover all of the contractors and consultants working on the project.
This is very beneficial to projects that we at PWCL manage as it provides overall cover to our partners working on the projects and can mitigate some of the interface risks within the EPCM approach.
This single policy cover is also referenced in standard conditions of contract, meaning it is clear and understandable for all parties.
Working with experts
Although finding the most appropriate and comprehensive insurance for construction projects - particularly renewable energy projects - may seem complex and, during this unprecedented and unpredictable time - especially difficult, we can help. Choosing the right professionals to work with, alongside and for you; professionals who have many years of experience and knowledge in their chosen field, and can therefore recommend and/or tailor policies and contracts to suit unique needs is integral to the successful completion and long term ‘health’ of a project, experts such as the team here at Paul Winter Consulting Ltd. and our insurance partners, AMI Specialty.
Our thanks go out especially to AMI Specialty’s Energy Broker Martin Harris ACII for collaborating with us on this article.
To find out more about what we do and how we can help you with your next project, please contact us -
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