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Reducing the Risk of Construction Underinsurance

Construction businesses face challenges from rising material costs and unpredictable deliveries. This means contractors are ordering larger volumes when prices are reasonable and may need to store high-value materials on site before installation. With extreme weather events increasing too, theft and flood risks have heightened.


In this climate, having adequate insurance is crucial.


+ Policy limits may no longer be sufficient as material costs rise.


+ Businesses must check cover remains adequate for the whole policy period, not just when it starts.


+ Key areas to review are contract value limits, temporary storage limits, stock sums insured, plant limits and hired plant limits.


If a loss occurs and cover is inadequate, the insurer may reduce a claim proportionately or not pay at all. The contractor would then have to cover the costs, which could be substantial.


Dealing with underinsurance also wastes management time better spent on contracts. Meeting deadlines could be jeopardised too, incurring penalties. This damages client relationships and confidence. Extra finance may be needed to cover losses, putting the business under financial pressure.


The ripple effect of underinsurance can therefore threaten an entire construction firm. To avoid this, it is essential to review policies as economic challenges continue, ensuring limits and sums insured reflect changing business conditions.


Expert broker advice can help secure adequate, tailored cover. With the right protection, construction firms can meet customer demand despite today's volatile operating environment.





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