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By John Tuohy
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Construction projects do not always move in a straight line. Even with careful planning, shifting requirements, changes in scope, evolving funder expectations and changing insurer appetites can create challenges that require specialist support. Contract reviews and arrangements such as owner-controlled insurance programmes (OCIP's) can also introduce additional complexity. Specialist guidance and access to the right markets can help construction firms navigate these issues effectively.
The three examples below, highlight real situations where construction projects encountered eleventh hour insurance challenges. Each case required a clear understanding of the situation, strategic engagement with insurers specialising in construction risks and a structured and concise approach to provide solutions.
- Arranging Latent Defects Insurance Post Practical Completion
Our client, a large developer and property owner, achieved practical completion on a commercial property development. Post completion the need arose for Latent Defects Insurance to be put in place. Securing this cover after works have been completed can be particularly difficult because this insurance is predicated on completion of technical audits during the build.
Our Latent Defects Insurance specialists were mobilised and together with the client we coordinated, designed and executed the plan to achieve the objective of procuring the Latent Defects Insurance. We identified the critical underwriting information that would be needed, coordinated and arranged a post completion technical inspection, liaised with the relevant stakeholders to achieve that and negotiated with select insurers with whom we have long standing relationships to deliver the result. The execution of the plan at every stage had to be precise and flawless as otherwise securing cover without any qualifications would have been compromised. Delivering the solution was hugely valuable to our client as it provided them with comfort and broadened multiple options for their business plans.
- Resolving Late Changes in Construction All Risks Cover
Following an insurer survey a building contractor nearing completion on a residential apartment block faced an abrupt change in their Construction All Risks cover. Their insurer was uncomfortable with elements of the build and withdrew all cover for the development. Our office was approached to assist.
We engaged with the insurer to understand the issues and concerns they had. After isolating their areas of concern, we were able to limit the withdrawal of cover solely to those specific areas and reinstate the remaining Construction All Risks cover without any gap in cover for those elements. We did this while also negotiating specific cover with an alternative insurer for the part of the risk that was outside the appetite of the incumbent insurer. This was achieved on the basis that the additional insurer would underwrite the entire risk post construction. We turned this around very promptly and our approach allowed the works to continue and complete with the backing of full and appropriate insurance.
- Securing a Surety Bond to Protect Programme Timelines
We were asked to assist a sub-contractor who was having difficulties arranging an Advanced Payment Bond. We mobilised our bonding specialists who engaged with preferred partners in the surety market. We quickly identified a carrier willing to support the requirement and delivered the bond in wording and form acceptable to the employer, allowing procurement to proceed as planned and aiding project timelines. Careful risk presentation and trusted market relationships ensured the bond met each stakeholder’s requirements and provided considerable value and benefit to the project.
Across all three cases it is clear that construction projects can encounter unexpected issues and challenges as works progress. Specialist guidance supported by long-standing insurer relationships is often essential when late-stage insurance issues arise. The Arachas Construction Practice has considerable experience and knowledge of how such issues can arise and how to provide solutions when they do.
With decades of experience working with insurers who specialise in construction risks, the team can draw on strong long-standing market relationships to quickly consider, explore and deliver practical solutions to clients
For expert guidance on construction insurance solutions, contact our Arachas Construction Practice team to see how we can help protect and support your projects.
Arachas Corporate Brokers Limited t/a Arachas is regulated by the Central Bank of Ireland. Company registration number: 379157.