Construction business owners undoubtedly have restless nights over the risks associated with running their own venture. But what these individuals often overlook are the uninsured or underinsured risks, such as professional indemnity and public liability.
It’s important to evaluate your professional exposure, the insurability of such exposure and any potential contractual problems of risk transfer. Additionally, you should weigh these elements against the profitability of the project and the impact on a design fault or error resulting in a project delay or, worse yet, starting the project from scratch.
Objections to taking the time to evaluate professional liability and protective mitigation strategies are plentiful: “It’s too costly,” “We do not have the exposure,” “We are contractually protected,” “Our architecture firm is responsible and insured,” and the list goes on. The fact, however, is that construction firms may be exposed to such risk in many ways. Examples include simple cases such as a crane collapsing that has been supplied by a project partner or perhaps even something as extreme as sinking landmass upon which your site sits. If you are a mechanical contractor or if there are mechanical elements in one of your projects’, the possibility of a claim can be more prevalent.
The professional protective insurance environment for contractors has changed vastly over the last few years with more and more companies offering professional indemnity and public liability. There are a number of firms that offer this type of protection in South Africa, thus making the environment more competitive – ultimately resulting in lower premiums and better coverage.
Most owners understand professional liability, but contractor’s professional liability is far more comprehensive, as it includes protective environmental coverage. Such coverage extensions protect against liabilities related to design errors that result in environmental loss or claims. These types of liabilities are important, but they often remain uninsured against.
Additionally, your subcontractors may lack relevant coverage on occasion, and regardless of contractual indemnity provisions agreed upon in your contract, you remain responsible to the project owner to complete the project on time. In these cases, environmental insurance can offer “first-party” coverage for mitigation of loss and rectification.
Chat to one of our expert brokers at MBI and we will be happy to supply you with any information you need on the subject.