Construction Insurances

Question 1

During construction what insurance(s) are required under the terms of an ABIC contract?

Answer 1

• Public liability insurance - loss or damage of any person or property occuring directly as a result of the necessary work on or in the immediate vicinity of the site
• Conntract works insurance - loss or damage to:
  
  • works
  • fixed or unfixed materials
  • existing structures on the site
  • plant tools and equipment
• Contractor must maintain workers compensation and employer’s liability insurances
• Home Warranty Insurance (QBCC)

Question 2

Which party provides the insurance policies on the building site?

Answer 2

The party nominated by the contract must provide insurances required by the contract (typically the contractor)

Question 3

When must insurance policies be taken out for the construction site and for how long?

Answer 3

policies must be taken out prior to the contractor taking possession of the site and be maintained for the duration of the contract until 4pm on the day the architect issues final certificate.

Question 4

How do you ensure insurances are in force ?

Answer 4

• certificates of currency for insurances with correct details and recent date
• Where certificates of currency only are provided by the contractor, it is difficult to assess the adequacy or conformity with the contract requirements. The architect should recommend that the owner request the contractor to provide a certificate or written statement from the contractor’s insurance broker, to the effect that the policy meets the contract requirements.
• The contractor must declare that insurances are in force on each progress claim. (you can also add the certificate of currency to a list of documents to be provided with each progress claim in the contract schedules)

Question 5

What happens when there is a break in on site and tools to the value of say $1500 are stolen?

Answer 5

Contract works insurance may cover any stolen property due to break and entering

Question 6

During a rainstorm water gets in and damages the carpets and furniture in the parts of the residence not subject to the alteration works? Is this damage covered by the “works” insurance policy?

Answer 6

• considering this scenario the owner is likely to be holding the insurance under their name, which may be an extension to their house & contents insurance, or contract works insurance.

Question 7

What happens to insurances when practical completeion is reached ?

Answer 7

• the Contractor (unless the schedule nominates the owner) maintains public liability insurance and contract works insurance until 4pm the day final certificate is issued.
• After PC the purpose of continuing Contract works insurance is to covers loss or damage as a consequence of defective or incomplete work, and PLI to covers loss or damage as a consequence of construction activity, in particular rectification and completion of works.
• The above policies are not substitute for the property insurance and public liability insurance generally held by owners to cover the risks associated with occupancy.
• Owner to take out home insurance this typically contains public liability insurance.

Question 8

What is home warranty insurance ?

Answer 8

• Most residential building work done in Queensland valued over $3,300 (including labour and materials) must have home warranty insurance. Requirement of Queensland Building and Construction Commission Regulation 2018
• It may protect the owner where:
  
  • a licensed contractor does not complete the contracted residential construction work and you have terminated the contract
  • the contractor fails to rectify defective work
  • the building suffers from subsidence or settlement.