Construction Insurance in the Event of A Disaster is Essential

Contractors have a goal of completing a project on time and on budget. However, sources of funding a recovery after a disaster, such as Hurricane Harvey, to meet this goal may need alignment, coordination, and plan to maximize the amount and effectiveness of available dollars. Construction insurance coverage through an Insurance Agent in New Mexico, such as builders risk, is often used to help fund repairs.

Delays and cost overruns prior to a loss can also become a point of debate in the claims process. Contract clauses may also stipulate costs that are recognized under the contract where insurance doesn’t apply. FEMA financial assistance may be available for eligible project owners, but from the outset of project planning, a recovery plan should address many of these considerations.

The owner or contractor may carry insurance

In the case of insurance coverage, either an owner or contractor may hold the policy. In many cases where an owner holds the policy, communication and collaboration around claim preparation should also be done proactively under owner-purchased insurance. Most construction contracts make certain issues the contractor’s responsibility since it’s their job to deliver an undamaged, completed project.

It’s important to understand coverage application for the contractor and its subcontractors, including any rights as additional named insureds. Furthermore, allocation of deductible amounts requires careful review of the contract documents. Additionally, waivers of subrogation should be checked (while these serve to reduce the potential for disputes among project participants, waivers may not always be part of the form).

Considering that most policies include a duty to mitigate loss, which typically can include some immediate decisions and costs, this collaboration between owner and contractor and an understanding of recovery sources is underscored. Contract clauses include a definition of a contractor’s responsibilities to repair the structure to its previous state, to complete work in a timely manner, using the accurate specification of pricing, including markups, and clearly explaining any excusable or compensable delays.

Contractors and owners alike should be prepared to measure delays, repair and/or rebuild costs, and extra/expediting expense with transparency regarding causation and an understanding of where such costs may be recoverable. While recovery sources generally cover the costs to repair damage to a project and return it to its previous condition, coverage and funds typically limit or exclude overall escalation in pricing for construction due to market impacts following a catastrophe. Talk to an Insurance Agent in New Mexico that has knowledge of the construction industry.

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