Key Construction Exposures and Risks
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Public Liability

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Overall the public liability risk for this occupation is high, although the risk at the premises is fairly limited as there would be few visitors. The main risk is associated with work at the construction site including the risks of unauthorised access, attractive nuisance, excavation work, liability to sub-contractors, vicarious liability for sub-contractors, damage to customer and other third party property, business interruptions e.g. from interruption of gas or water supply and third party injuries from tools, equipment and materials.  Good risk management of on-site risks is essential. Contract Works insurance will be required.

Work away from premises is the major exposure to consider for this occupation. The principal services provided by this industry are project management and trade skills. Construction is coordinated by non-residential building contractors who may also perform some of the construction activity. The actual work of a building contractor varies depending upon the type, size and location of the project undertaken. The general contractor must plan and manage all ordering and delivery of materials as well as coordinate and supervise all phases of the construction.

Some general contractors offer building design and consultation for their customers and may contract with an architect firm or hire in-building architects. A general contractor also may remodel buildings or make additions.

In general the office staff and managers and site foreman will be involved with:

• examining and interpreting clients' plans or arranging the drawing of plans to meet building regulations;
• submission of tenders, quotes or prices for the project to clients;
• arranging submission of plans to local authorities for approval;
• arranging inspections of building work;
• organising subcontractors to carry out all stages of building and negotiating contract terms and costs
• calculating the quantities of material required for building projects;
• ordering materials from building suppliers;
• arranging delivery times of materials to coincide with various stages of the building process;
• supervising the work of subcontractors to make sure buildings are of an acceptable standard and are proceeding according to schedule;
• coordinating the activities of office staff involved in the preparation and payment of accounts; and
• meetings with lawyers and financial institutions on matters relating to loans and contracts for building projects.

General contractors may or may not be involved in projects from their beginning. Sometimes they start work on a project only after the land has been bought and the council approvals and permits granted. They may or may not be involved in land development. In some instances they may build on speculation, apart from their normal business.

Contractors will work in both occupied and unoccupied buildings. Occupied buildings may present a larger exposure, as the risk of injury to third parties and the risk of property damage will be greater.

Insurers will generally wish to establish:

• Time in business and trading/claims history
• Turnover split by types of work undertaken
• Amount of work sub-contracted out, or for which the insured acts as a sub-contractor (not requiring a warranty)
• Amount of proposed activity which is on a speculative basis
• Details of average construction cycle (construction lead time, construction phase until handover) and details of the largest products undertaken in the last 5 years
• That the builder is licensed (or has applied for a licence) in the state in which they operate.
• Financial circumstances and financial capacity including a statement of assets and liabilities for company directors and business background information.

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Product Liability

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‍The exposure for this class is high. Although claims will be rare, they could be severe. In most cases, the principal contractor is responsible for inspecting and approving all the work that goes into a project, therefore they may be held responsible for a wide range of problems that can develop with a completed structure, including those arising from errors made by subcontractors. The main risks include:

• the use of non-conforming/non-complaint or lower-quality product or materials;
• not following specifications or building codes, and
• defective work.

To reduce/control such exposure, contractors should always ensure that the product or material supplied and installed are conforming/complying with the relevant standards/laws and what is nominated in the approved plans and specifications. Although the insured typically will not be held liable for unknowingly using faulty or defective materials (claims will probably be directed at the manufacturer), it is likely that the insured could incur substantial legal defence fees if the insured or a sub-contractor performs work using such materials.

The range of projects or work in which a non-residential building contractor could be engaged is large and it is impossible to provide anything other than general guidance.

The major risks include:

• Collapse of or development of cracks in walls. These issues are most likely to be the result of either poor quality cement/motor or poor quality work. Collapse of walls (e.g. garden walls adjacent to footpaths) could result in significant personal injury claims, whilst the potential for damage to buildings and structures will depend on the nature of the work undertaken.
• Faulty installation of electrical wiring or appliances can pose both a serious fire and electrocution hazard, and a substantial bodily injury or property damage claim could be made. Sources of claims may include bodily injury from faults in power outlets, switches, fixtures, or appliances, malfunction or damage to equipment or machinery from incorrectly installed panels and circuits.
• Defective plumbing workmanship or materials resulting in water damage to customers' property, contamination of water supply by sewerage, gas explosions, leakages and fire.

Good risk management will include:

• Adequate levels of supervision and training particularly for less experienced employees and apprentices;
• Good quality control, including thorough checking of work performed by apprentices and less experienced employees, as well as sub-contractors; and
• The insured should not attempt to repair fixtures, appliances, or equipment that the insured has not been trained or authorised to repair.

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Why use Hunter Broking Group?

‍Construction Insurance Broker Brisbane:

Hunter Broking Group can assist with Construction Insurance & Construction Equipment Insurance. Through industry specific insurers, your designated advisor has access to a comprehensive range of insurance products that can be tailored to suit most construction trades and projects. We can arrange insurance for various segments in the construction industry including:

• Builders
• Property Developers
• Demolition Contractors
• Civil Engineering Contractors
• Subcontractors
• Plumbing Construction
• Electrical Construction

Hunter Broking Group pride themselves on having a local presence with a national strength, our technical product experience allows us to manage and service construction insurance products such as:

• Professional Indemnity Insurance (site supervisors, engineers, design, consultants)
• Public Liability Insurance
• Construction Equipment Insurance
• Employers Liability (non government states)
• Contract Works Insurance / Contractors All Risks Insurance
• Environmental Liability Insurance
• Breakdown Insurance
• Management Liability Insurance
• Tools of Trade
• Single Project Construction Policies
• Delay in start-up (DSU)
• Latent defects

Construction equipment is a core focus for our advisors, whether we are looking after small hand held tools or heavy construction equipment, such as scaffolding, access hire or excavators, Hunter Broking Group have the experience to provide the appropriate advice for your size and risk exposures.

Our experienced brokers can help you get the most appropriate insurance cover by assessing your specific needs and recommending the best value insurance solution for your business, whilst still maintaining the highest standard of cover.

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Information Sources

https://www.lmiriskcoach.com/industries/19469/hazard-index
https://www.lmiriskcoach.com/industries/19469/risk-assessment

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