How the building material shortage might affect your insurance cover


Material shortages are now biting the construction industry hard with cost blowouts and project delays.

The construction industry has had more than its fair share of curve balls, with limitations on the number of people on-site, additional compliance costs, and a two-speed construction market – commercial/high-rise has stalled while residential has seen significant growth.

Supply chain disruptions

COVID-19 has had a significant impact on suppliers. Extended lockdowns, increasing pressure on transport networks, less air freight capacity, and shipping disruptions have meant timber, fixtures and fittings, and structural steel are in short supply – with no relief in the immediate term. This in turn is causing delays, and in some instances, works have had to be ceased temporarily until the supply-demand for the works are met.

How does this impact your Contracts Works Insurance?

When delays are experienced in construction projects due to supply constraints or other factors, and where builders don’t attend their sites for a prolonged period of time, this can have an impact on your Contract Works policy.

Construction Works Insurance policies contain a ‘cessation of works’ clause, which excludes cover when the site has not been attended for an extended period of time. The standard cessation of works period for Construction Works Insurance is 60 days, meaning if the site has been unattended for over 60 days, the cover is likely to be impacted. After this time, if a builder is still unable to attend, the insurer must be notified, and the insurer may choose to extend the cover. If the insurer is not notified, coverage will be compromised.

What should you do?

If your contracts have been impacted due to the supply shortage and you expect that there will be a period of time where you won’t be attending your site, reach out to your broker for a chat. We can work together to establish an outcome that will see continuous cover with no unexpected gaps in coverage.

For example, if a natural disaster causes damage to your site or someone visits your site unattended and injures themselves, and your cover is compromised due to you not attending your site nor notifying your broker/insurer, you may be required to cover all costs associated out of your own pocket – yikes! No one wants that.

Want to find out more about Contract Works Insurance? Watch our helpful video here.

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