Contractors Insurance
With the announcement of Budget 2018, construction projects worth up to RM350 billion are expected to come onstream over the next two to three years. Thus, making Contractor Insurance more vital when touching on project insurance cost to the project owners and contractors. In many ways, contractors find they are not fully protected, as scope of coverage is generally insufficient to cover losses caused by the construction site. However, the importance of contractors insurance cannot be understated regardless of the scale of the construction project. You need to find a good policy at the right price. There are various types of insurance that should be purchased by contractors upon securing a new project. However, there is 1 main insurance that should be purchased by the lead contractor with regards to this project.
Types of Insurance:
(A) Contractor All Risk
In many ways, contractors find they are not fully protected, as scope of coverage is generally insufficient to cover losses caused by the construction site. However, the importance of contract insurance cannot be understated regardless of the scale of the construction project. You need to find a good policy at the right price.There are various types of insurance that should be purchased by contractor upon securing a new project. However, there is 1 main insurance that should be purchased by the lead contractor with regards to this project.
The insurance policy is divided into two sections, which are material damage and Third-Party Liability.
- Material Damage
The insurance policy covers any untoward incidents & physical loss such as the picture on the right, equipment/machinery in the contract works
- Third Party Liability
It covers the insured in the event that any third party who are not involved in the project were to make a claim that they have suffered damages consequent of the construction works, happening on or in the immediate vicinity of the construction site
(A) Government- Principal
(B) Main Contractor
(C) Architects, Designer, Sub-Contractor
What is Insured in Contractor All Risk?
(A) Contract Works
(B) Contractor Plant Machinery & Equipment
(C) Removal Of Debris
How rates are determined.
Majority of time, the insurance premium rates are determined by the Sum Insured of the project. If the project value is below RM5 Million and does not fall under a high-risk category, the rates are pre-determined according to the contractor’s profile.
Types of High Risk Job
- Excludes demolition of building
- Excludes blasting work
- Excludes underground excavation / directional drilling
- Excludes construction of bridges/ or roads
- Excludes land reclamation work
- Excludes wet risk
- Excludes construction of retaining wall
- Excludes electrical or cable contract
- Excludes abandoned job
As with every insurance policy, the deductible cost is widely present in the contractors insurance. In the case of contractors insurance, the deductible cost plays a crucial part during the time of insurance claims. Majority of time, insurance company will charge low insurance premium in return for higher deductible pay-outs in the time of claim.
