SA Affordable Housing November - December 2019 // ISSUE: 79 | Page 21

WHY IS COVER SO IMPORTANT?
Construction insurance is paramount if you work on any
construction project or are a construction company. “Sites
are unpredictable, and anything can happen at any time.
Contractors are ultimately responsible for what happens
on site and it is for this reason that insurance cover is so
important. You need to make sure you have the necessary
insurance policies covering your business in the unfortunate
event something happens to someone onsite, to the building
or structure you build, or to any of your construction
equipment,” says Hughes.
Michael Stromberg of constructioncoverage.com says the
following:
“Construction Insurance is a broad categorisation of
insurance policies that provide protection during construction
projects. In reality, the term ‘construction insurance’ refers
generally to insurance that related to construction projects,
and it is not itself an actual form of insurance.”
So, which covers fall under this collective? What cover
should you purchase? Professor Tinus Maritz, Acting CEO
of the Joint Building Contracts Committee (JBCC), says that
construction insurance is one form of insurance you do not want
to DIY: “The cost of a policy can vary tremendously depending
on a variety of factors, and your insurance broker will assist
you in ensuring you have the correct cover for your unique
individual needs at the best price.” It is a highly specialised
form of insurance in which not every insurance company
is active. The primary underwriters involved are Lombard
Guarantee, AON, Hollard Insurance and Standard Insurance.
Like with any insurance, the cost of the cover depends
on a range of factors including one’s claim experience, risk
management policies and quality as a contractor, says Maritz.
“There’s no fixed rate – it changes.”
Maritz explains that legally, a contractor is required
to have the following insurances (on top of Professional
Indemnity, which is part of the short-term insurance policy of
any professional):
• Contract works (often called Contractors All Risk [CAR]):
• Transit
• Off-site storage
• Site risks
• Defects liability period
• Public liability
• SASRIA
“It is either the contractor or the employer who takes this
out, and it is enforced via the contract which spells out who
will take out the insurance,” says Maritz. In many instances
the employer will wish to do so because it may have a large
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The final fittings in a home are most at risk as workers hasten
to complete everything before deadline.
have minimum insurance policies in place when doing any
construction work.
In this tough environment, says Angela Hughes,
commercial underwriting manager at Standard Insurance
Limited, contractors face new emerging risks that need to be
identified, and if possible mitigated or avoided. “There are
however some constants: there will always be different site
conditions, contractors, sub-contractors, workers, blueprints,
construction materials and equipment involved. Fortunately,
there is insurance cover available to protect yourself when
things go unexpectedly wrong.”
Compliance standards need to be adhered to and these
can be onerous, for example if a warehouse is being built,
fire equipment, SANS standards, taking square meterage and
occupation load into account, would all need to be met.
FEATURE
The risk in projects has over the years been devolved from main
contractor to sub-contractors.
number of projects underway, of which the current is just one
of many covered in an umbrella policy and which it can get
cheaper than the contractor.
“Everyone employed on a site must have Public Liability,
as an incident can happen to anyone. This, together with
SASRIA, is part of any short-term insurance policy and we all
have it.”
Then there are some secondary insurances, which are
not always a legal requirement but are often taken out for
particular reasons:
• Contracting parties Workman’s Compensation Act
compliance
• Contracting parties common law liability compliance
• Construction equipment – All Risks cover for
contractors and sub-contractors
• Motor vehicles liability insurance
• Multilateral Motor Vehicles Accident Fund Act no.93
of 1989
• Balance third-party and passenger liability
“A big concern these days is high risk insurance: lateral support,
marine cover for imported equipment and marine advanced
loss of profits. The former is compulsory for State projects,
but otherwise is not, but covers risks where the loss can (and
has) bankrupted contractors. Contractors and developers will
sometimes take a chance on the geotechnical report, and when
things go wrong it can bankrupt them,” says Maritz.
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