Canadian Institute Construction Superconference

Knowing what your policy covers ‘imperative,’ insurer says

DAN O’REILLY

correspondent

While insurance is indispensable for construction projects, just having coverage isn’t enough, says a leading provider of insurance services.

With the numerous risks that are inherent in construction, it is imperative owners, contractors, designers and other industry professionals be thoroughly familiar with what their insurance covers, said Barry Smith, senior vice-president, Marsh Canada Limited.

The first step in that process is identifying those risks such as potential damage to adjacent property, losses causes by both excusable and inexcusable delays and damage to contractors’ equipment, especially for not-easily replaced machinery.

“Some equipment can be very expensive. If a large piece of equipment is damaged and the contractor can’t purchase another one, what will happen to the project?”

Barry Smith

Transit and marine cargo insurance is also important when the project requires the long-distance transport of expensive equipment from the manufacturer to the job site. An example might be the three-month ship transport of a chiller. “What happens if the ship sinks or is attacked by pirates?”

Smith was one of the speakers at the Canadian Institute’s Construction Superconference held recently in Toronto.

He also advised people to obtain transit insurance when materials and/or equipment can’t be stored at the building site.

A thorough review of both car and truck insurance, especially how it pertains to vehicles on and off site, is always a good idea. “There are a lot of heavy trucks driving around.”

Automobile insurance covers physical damage to vehicles, as well as third-party bodily injury and property damage, said Smith. “It should cover all vehicles, owned, leased or licensed and should be provided by all parties to the construction project.”

Touching on the diverse nature of building construction, Smith advised the audience to thoroughly understand the different insurance requirements for new construction versus renovations work.

In renovation projects, contractors are usually responsible for damage to the structure. They may be covered under builders’ risk policies. But insurance often becomes expensive if the building’s value is more than that of the renovation, said Smith.

Contractors “need to deal with a broker that specializes in construction insurance.”