The construction insurance policy traditionally represents insurance against all risks accompanying construction, assembly, repair, reconstruction, start-up and adjustment works related to all kinds of buildings, constructions and equipment.
Besides actual labor and material costs, the coverage can include, upon agreement of the parties, construction site equipment, building machinery and mechanisms, property existing prior to the start of construction, and liability to third parties. Such a combination provides complex protection of interests for all parties involved in the project.
Along with the traditional coverage on construction risks, there are a number of extentions and modifications to the base policies. These depend first of all on the specific character of the project and work conditions (especially in case of coverage for the start-up, adjustment, and warranty-covered operation periods).
A distinctive feature of construction insurance is the variety of projects, from residential construction and office buildings to installation of large-sized or hi-tech industrial equipment. In some cases it involves complex engineering facilities that require thorough examination of technical details and recruitment of specialized experts. For example, the construction of a standard residential building in dense urban or unusual geological surroundings significantly increases inherent risks.
Therefore a decisive factor in the consideration and assessment of a specific risk is the contractor’s professionalism and experience in completing similar projects.