Why use a specialist Broker to place Construction Insurances?

BY JEREMY READ | 26.5.22 | CATEGORY

Construction projects are, by their very nature, complex. Projects will typically involve multiple parties carrying risks relating to the project, these mostly being allocated within contracts/subcontracts / consultancy agreements and other forms of engagement. The parties that may be involved can be diverse and far-reaching and include principals/owners, head contractors, subcontractors, architects, engineers, project managers, other consultants, trades, suppliers and manufacturers, financiers, government agencies, and neighbouring property owners. All of these parties will be carrying some risk relating to the project and so will have an interest in the insurance arrangements.

Whether you are a party that has an involvement in a project or a broker that is acting on behalf of a party that has an involvement in a project there are a number of benefits in you utilising a specialist construction insurance broker to negotiate and effect the required insurances as well as providing advice and assistance to ensure contractual compliance.

Follows are some of the advantages for doing this:

Contractual Requirements

A broker that specialises in the construction space should have a strong understanding as to how project risks are allocated within the contractual chain and will design an insurance programme that is fit for purpose and complies with the requirements of the various contracts.  

Coverage / Wordings

Insurance Company and Insurance Agency “Off the Peg” contract works and third party liability policy wordings may not address the specific requirements of the individual needs of a client either in relation to a single project, or all of its projects where cover is being sought on an annual programme.

A specialist broker can design and agree bespoke wordings to suit the individual needs of its clients. Broker designed wordings also typically include a broader application in regard to certain aspects of the cover.    

Market Relationships and Carrier Selection

Market relationships are key in achieving optimal results. Insurers involved in construction risks have varying risk appetites. They also have varying information requirements before being in a position to offer terms.

A broker that specialises in this space will have a strong understanding of each insurer’s risk appetite and the style of the project that they can underwrite and therefore be more targeted in its market approach. Also insurers are more open to negotiation and consideration of a placement where they have built up a portfolio of business with the broker and have established a good working relationship.  

Benchmarking

A specialist broker that places a number of similar risks will be able to benchmark induvial placements against other placements for other clients that are of a similar nature. This can assist with the negotiation of premiums, deductible structures, and coverage.    

Claims negotiations    

Construction claims are often complex and very technical. It is important that the broker dealing with the claim has a good understanding of contracts as well as technical aspects of the policy coverage. A specialist broker that has designed the policy wordings and understands the allocation of risks within the construction contracts will be well placed to assist in achieving a positive outcome.