Business & Finance

Construction and Installation Risk Insurance: Why Is This Service Needed?

Insurance has always been one of the most popular services among Indians. Currently, anything can be insured. Insurance of construction and installation risks must be formalized before starting the construction of various facilities. This kind of service protects the company against various risks that may arise during operation, repair, and reconstruction.

Why is the service needed?

Undoubtedly, the construction site is one of the most high-risk areas. There is always a chance of an accident during this activity. In addition, they can appear anytime while performing different types of work.

Accidents can occur anytime, anywhere, still only in some the insurance of construction and installation risk is mandatory. In India, it is voluntary. Responsible owners of construction companies realize it is better to avail an insurance package rather than paying a lot of funds from their reserve in an unwanted event. In addition, in each area, such services have their own different features, and they also help save taxes calculated by calculate income tax online.

Features of insurance:

Whenever a contract is formed between two parties, a construction and installation risk insurance contract is released. This kind of document includes information about the participants in the construction business: the client, the court contractor, and the general contractor.

The insurance contract clearly defines the rights and obligations of the parties involved. Usually, the insured party is the general contractor, who is considered the financially responsible entity when the site is handed over to the actual owners.

Insurance objects:

Throughout the construction of any structure, insurance of construction and installation risks is necessary. The law suggests that structure is property, which is required for the construction and installation work, and located on the construction site. Such sort of things applies to:

  • Equipment;
  • Belt objects;
  • Buildings and structures;
  • Installation of technical means.
  • Construction and installation work products;

Insurance period:

This question is essential, as it determines a lot. The insurance company provides insurance coverage for the entire period of construction. It starts from the moment equipment and construction material are unloaded for commencing the construction project.

The concept of insurance risks

Construction and installation risk insurance provides complete protection against all risks. Such kind of service allows the insured to protect their construction site from dangerous situations, as well as from:

  • incorrect estimations of designers;
  • inappropriate personnel attitude;
  • the use of low-quality materials;
  • consequences of electric current;
  • mechanical damage.

The insurance risks can be of multiple kinds. These are instances that can easily harm workers, people or objects. Insurance is the sum arising by agreement between companies and the policyholders. Such a thing includes the number of funds for installation and facilities.

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Types of risks

Usually, construction and installation risk insurance is of the following types:

Turnkey: In such type of insurance, the general contractor takes responsibility for the material’s delivery, equipment useability, construction;

Delivery Control: In such cases, the responsibility for the work stays with the customer, and the general contractor arranges, organizes, and controls the entire process.

Voluntary insurance of construction and installation risks includes securing compensation from the following risks:

  • devices;
  • falling blocks;
  • subsidence of soil;
  • shift in weather;
  • intentional actions of others;
  • errors of employees while performing various activities;
  • damage or loss of construction and installation works.

Construction and installation risks can be easily insured against the different phenomenon. However, they must be mentioned in the contract. In most cases, the company is responsible for every violation.

Sum insured

As every construction site is different, the calculation of the risk amount is carried out individually in each case. The features and characteristics of the projects are considered while calculating the risk factors. Moreover, the insured sum can also be influenced by the exposure to risks as well as the features of the object. Such factors include the path of implementation of construction and installation work, the documentation availability and a complete master plan.

The sum of insurance is calculated on the basis of estimation of the object, the contract agreement as well as the work schedule. Also, the tariff is calculated and assigned based on the type of object of a set of risks, positioning of the construction area, and the construction company’s experience.

Terms of an agreement:

It is mandatory that the contract include all insurance objectives – property, interest. Also, it is very necessary that the description should be detailed. In all types of insurance, the document contains all the features included in the policy. In addition, the contract must cover all risks that may relate to various objects.

An official agreement is necessary to be protected against different natures of hazardous situations. Comprehensive insurance of construction and installation risks includes incorporating different situations in the contract, because of which compensation transpires.

The coverage area includes a construction site, access roads, and a designated area for storing raw materials. Liability risk can be both limited or unlimited. In the latter case, it should be mentioned in the document that instances of harm caused by others during construction are considered into account. In the first option, the insured event is deemed to be damaged in the corresponding area. The time limit of the contract is defined by the arrangement of the parties and may be equal to the construction period.

A prevalent disadvantage is a classification in the documents of the starting of the construction activities that moment the document comes into force. The insurance agreement is generally valid from the moment of the transfer of the insurance premium or the conclusion of the construction activities. Payments can be initiated on installments or on a one-off basis. If the premiums are not paid regularly, the documentation cab is considered invalid. Comprehensive insurance allows construction companies to pay for losses incurred in a dangerous situation.

Benefits of Construction and Installation Risk Insurance:

Some of the most common benefits or coverage that most of these policies provide under these plans include:

  • Guaranteed protection – Most insurance companies use obligatory reinsurance programs.
  • Support for projects of any complexity – They are not afraid of high responsibility.
  • Individual approach – Dedicated risk engineers will help avoid emergencies.

Operational payments – within a few days after drawing up the insurance act.


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