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Fire destroys $18.1m business
Photos from the General Gordon Hotel before and after the fire.
During such tragic events, the first question an owner must ask is “who is to blame?”, quickly followed by “am I covered through insurance?”. Relying on the contractor’s insurance to answer this question is a scary proposition, and the contractor having obsolete or inadequate policies could leave a business virtually worthless. The ability to resume operations can be left hanging by a thread.
When contractors are employed, particularly for large developments and construction projects, GSA recommends an Owner/ Principle Controlled Construction Insurance policy be considered.
Carlo Gentili, (Manager of GSA’s General Insurance Division) explains the Benefits of an Owner/ Principle Controlled Construction policy. “I would strongly recommend a client considers an Owner/ Principle Controlled Construction policy rather than relying on the contractors insurance programs as there is no transparency on the placement, the limits and/or conditions imposed on their insurance policy, possibly leaving the owner of the development heavily exposed”.
The Benefits of an Owner/ Principle Controlled Construction Insurance policy are;
- The quality and control of coverage obtained. Having your Insurance Broker manage the placement of this insurance, who understands your business and specific requirements is extremely valuable. The policy setup will extend to cover you as the Principle, the Project Managers, Contractors, their Sub-Contractors and any lending authorities.
- Cost Reduction. Reduce the overall cost of the insurance requirements across the entire development and provide the Principle with transparency around the true cost of insurance, removing any potential mark up by contractors.
- Claims Management. The Principle and your insurance broker have full control of any potential claims that occurs during the construction phase, allowing you to manage cost, progress payments and client expectations.
- Reduction of Administrative Duties. As the entire project forms part of one insurance program, the need to request various documentations such as contractors’ certificates of currency becomes less rigorous.
Potential Gaps in Coverage. Eliminates concerns over underinsured contractor, exhaustion of various contractors policy limits and imposed exclusions that you as the Principle would not be aware of.