SA Affordable Housing November - December 2019 // ISSUE: 79 | Page 25

FEATURE
What is not covered (main exclusions):
• Road cover, other than crossing sites, unless policy
has specifically been requested
• Damage due to wear and tear
MACHINERY BREAKDOWN POLICY
This policy, as the name indicates, covers you in the event
of your machinery breaking down.
What is covered (main inclusions):
• Specified plant and machinery
• Unforeseen and sudden breakdown of plant and
machinery
What is excluded (main exclusions):
• Loss or damage due to wear and tear
• Loss or damage to consumables
• Incompatibility
• Viruses
PERFORMANCE GUARANTEES
A Performance Guarantee is issued by an insurance
company or bank (Lombardy is the major player
here) to a contractor to guarantee the full and due
performance of the contract according to the plans and
specifications.
Construction guarantees and performance
guarantees are also an important form of insurance. “In
this way you can ensure the insurer takes on the risk of
guaranteeing various terms and conditions – this will
be determined by whether or not you are a builder of
repute, have a good track record and income statement,
for example,” says Hughes.
DOS AND DON’TS
“With so many risks facing the construction industry
making sure you have all the correct covers in place can
be daunting, here are some practical ‘dos and don’ts’ to
assist,” says Hughes:
Do make sure all your construction contracts are in writing
Do make sure that any subcontractors you engage with
have adequate cover in place
Do make sure that any specialist (such as architects and
quantity surveyors) you contract with have Professional
Indemnity cover in place
Do make sure that your employees are fully trained and fit
for purpose
Do make sure your plant and equipment is well maintained
and evidenced
Do make sure the site is secure and appropriate signage is
in place
Do engage with a broker to do a full needs analysis on your
business and insurance needs
www.saaffordablehousing.co.za
Do disclose all material information.
Do read your terms and conditions as well as your schedule
and wording
Do negotiate your excesses
Don’t reduce covers to save costs. Rather shop around for
more affordable cover
Don’t hire unregistered or unskilled employees
Don’t take on more contracts than you are able to handle.
Non-delivery affects your reputation as well future
insurance contracts
Don’t start a project without cover in place
“Right at the start I mentioned the evolving landscape the
construction industry faces,” says Hughes. “Some of the
emerging trends that have been identified, both globally
and in South Africa, are:
• Green Technology – Green construction is fast
expanding. This implies that construction methods
are changing to include environmentally friendly
and sustainable materials. Some are incorporating
materials made from recycled plastics or cigarette
butts.
• Modular and prefabricated construction – This trend
is on the rise as it saves companies time and money.
Less waste is also produced.
• BIM (Building Information Modelling) – BIM manages
and generates computer representation of the
projects prior to building them. Owners can design
BIM models and maintenance schedules. This helps
to predict job costs and viability of projects.
• Project Management Software – This trend has been
in existence for some time and continues to gain
momentum. More and more construction companies
are incorporating technological advancements into
their projects.
• Drones – This is one of the fastest growing trends.
Companies are using drones to rapidly map large
areas. They can produce valuable aerial heat maps
and thermal imagery. The advances in drone
technology and software assist in providing real
time actionable data and can enable rapid decision
making. Globally, drones are also being used to
improve employee safety.
“These trends can impact insurance covers as it changes
your risk profile. Happily, the majority of them assist with
managing risks reducing insurers exposure which results
in lower insurance costs.
“Construction and Insurance are complex industries. It
is important to engage with teams that understand your
business, risks and needs. Standard Bank and Standard
Insurance Limited have these teams in place accompany
you on your journey,” concludes Hughes.
NOVEMBER - DECEMBER 2019
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