Why is it important for property developers to take out contingent cover against building contractors insurance policies?
Contingent Insurance for developers is becoming more of the norm nowadays after increasing claims are failing due to contractors having inadequate insurance.
Below we have listed a host of reasons as to why this is more apparent nowadays than ever before for property developers. Not all of them apply to each OCIP but they represent the most common reasons:
- The majority of employers do not have the expertise to look over and confirm the adequacy of the main contractor’s insurance arrangements.
- Contractors insurance policies are often annual and are generic in terms of what type of works they will be carrying out during that year.
- In the event of an incident, the employer is relying on covers that have not been made with their specific risk in mind and trust that they will respond adequately. More importantly hoping that the contractor hasn’t carried out works outside ort the parameters of the policy wording.
- A policyholder’s own broker work close in conjunction with the insured and an insurer they know. They can bespoke the appropriate covers tailored to the specific needs and provide the right levels of service.
- As risks are being looked at as individual contracts rather than being under a generic annual policy, it is a lot easier to gain an in-depth knowledge which may allow for good discounts.
- Having their own broker look after a single policy designed for their specific needs means a tighter control on cover, costs and extensions.
- OCIP means ready access to the underwriters and surveyors of the risk by the employer and his broker.
- A contractor cannot arrange cover for an employer’s finances, for example: Delay in Start Up causing, Alternative Accommodation, Continuing Debt Servicing (loan interest payments) Loss of Profit, Loss of Rent, Loss of Revenue.
- Contractors can include a charge within their pricing to cover for insurances, but this should be removed if the insurances have been arranged under OCIP.
- If the Employer has taken out the insurance and has control of the policy, they can insist certain measures such as, adequate site security, specific rather than generic method statements and confirmed site management procedures.
OCIP’s can all provide cover for construction all risk and erection all risk and can also be extended to cover public liability, non negligent liability, (known as JCT 1.2.1’s or JCT6.5.1), additional cost of construction (inflation cost for un-build parts of a contract). Existing structures, own and hired in plant, lenders and multiple insured’s clauses plus additional increased cost of working (uneconomical expenditure on increased cost of working).
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