Construction Insurance: What You Should Discuss With the Contractor
It is important for you to select construction contractors that are properly insured when you have a project. The best way to make sure that the contractor is insured is by discussing the issue with them. Below are some of the critical points that you should talk about.
The Specific Insurance Cover
You should ask the contractor to explain the specific kinds of construction insurance that he or she has. This discussion is necessary because various jurisdictions may have different policies that contractors are mandated to have, such as public liability cover. You can then agree on what additional insurance the contractor should acquire before the commencement of the construction project.
Ensure you lay out the guidelines on how you will monitor the status of the construction insurance that is held by the contractor. For instance, you can ask the contractor to generate a spreadsheet that outlines when each policy is due for renewal. You can then call and confirm that measures are underway to renew any policies that are about to expire. This monitoring mechanism is essential because some policies may expire when the project is still ongoing.
Magnitude of Cover
It is also crucial for you to discuss the suitability of the insurance cover that is carried by the construction contractor. For example, the contractor may have public liability cover that is worth $1m. Is that cover enough for the magnitude of your construction project? You can ask the contractor to upgrade such a cover when you have justifiable reasons, such as the location of the site in the middle of a busy metropolis, to believe that it is insufficient.
You could also discuss the suitability of the insurance provider from whom the contractor bought or intends to acquire construction insurance. Such a discussion can be prompted by complaints about some insurers within your area. Your discussions can then create consensus on a list of acceptable insurance providers for the duration of your project in case the contractor was insured by a provider that you are not comfortable with.
You should never assume that the contractor has sufficient construction insurance before starting work on your construction project. Be proactive by talking about the issues in the discussion above so that no foreseeable risk finds your project without the right insurance cover. You can even include clauses about insurance in the contract that you sign with that contractor before the construction begins.