Protect and Maintain Insurance Viability from Builder Voluntary Administration

Increasing instances of builders entering into Voluntary Administration (VA) are making news too often; and are a real challenge for the construction sector as clients’ projects are exposed to completion delays, financial insecurity, and need to source a new builder. 

In most construction projects, the builder is responsible for the insurance on behalf of the Principal/Developer. If they go into VA, the Principal/Developer no longer has insurance or has to rely on policies sitting with administrators.

Loss of control over a project is a worst-case scenario

When the Principal or Developer has no control over the project insurance, they essentially need to procure a new builder who’ll take over the insurance, or source new policies mid-project. Achieving this can be challenging, time-consuming and costly, in:

  • finding a builder willing to take responsibly for the previous builder’s work or liabilities; or
  • convincing an insurer to agree to take on risk mid-project.

A Principal Controlled Program can offset Builder VA risks

An efficient and effective way to protect project viability is through a Principal Controlled program. This is where the Principal or Developer takes out the insurance at project commencement, with responsibility for overseeing the policy and its management; regardless of the continuity of the builder/sub-contractors.


Benefits of a Principal Control Program:

  • This approach keeps you in control of insurance related to a project
  • It consolidates insurance arrangements into one program, with terms across a project’s duration
  • It reduces the likelihood and complexity of dual insurance
  • This provides options for higher Deductibles, with greater control over premiums
  • It aligns different contract requirements, and builds confidence by satisfying insurer criteria
  • The risk of under-insurance and gaps in cover is reduced
  • Simplified policy admin; claims handing, and insurer peace of mind re: financial security
  • Less subrogation and contribution claims
  • Reduced likelihood of uninsured claims resulting from contractual     liability exclusions.
Other points worth considering with a Principal Control Program
  • Administrating claims, and confirming policy requirements would need to be managed in-house by additional internal or outsourced resources
  • Excesses are the responsibility of the Principal or Developer
  • All Individual Contractors (Subbies) are required to pay their insurance costs, if there are claims made against multiple policies, this may increase premiums for all and may result in additional admin costs.

We’re here to help you make informed decisions on the options available to you during these challenging economic times.

Our approach also includes reviewing your current builder’s policies to ensure they have appropriate insurance in place for the project contract.


Stay in Control of your Project’s Success.

To discuss options for a Principal Controlled program, and if this is right for you and your project, please feel free to contact me and I‘d be happy to assist.



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