Insurance For Construction Companies: Are You Underinsured And At Risk?

Comprehensive insurance for construction companies is vital, and underinsurance can have dire financial, operational and reputational consequences.

Despite this, many construction firms in Ireland hold policies that don’t fully reflect their risks or the scope of their projects.

Let’s avoid these pitfalls by outlining where coverage gaps often occur and how tailored insurance can help you stay protected.

 

Common gaps in insurance for construction companies

There are several reasons why gaps occur in a company’s construction coverage:

 

1. Insufficient liability cover

Although 2024 saw a decrease, the construction industry in Ireland still accounts for a large percentage of work-related illnesses and injuries. This can lead to high-cost claims from injuries or property damage. Inadequate limits on employers’ liability or public liability insurance can result in hefty claims that could prove to be financially crippling.

To avoid this, it’s vital to regularly review liability limits, especially before taking on larger contracts or expanding your workforce.

 

2. Inadequate contractors’ all risks (CAR) insurance

If your policy underestimates the total value of the project at hand, which should include materials, machinery and temporary works, any claim settlement may fall short of actual costs. The consequences of this include disruptive delays or incomplete payouts after damage.

To avoid this, you should ensure that the value you declare includes all site assets. You should also examine your insurance policy with your broker to ensure that there are no elements hidden in the exclusions.

 

 

3. Gaps in professional indemnity insurance

If your firm provides design, project management or consulting services, even informally, professional indemnity insurance is essential. With high and mounting levels of legal costs, underinsurance in this area can be dangerous.

To avoid this, you must work with your broker to analyse the overall project team and confirm whether your policy reflects the scope and scale of your advisory roles.

 

4. An outdated policy

A policy that once fit your requirements may no longer match your operations. Exclusions in your construction insurance policy can leave you dangerously exposed, an occurrence that often coincides with changes to existing projects and the acquisition of new contracts.

To avoid this, it is crucial to update your cover annually or after any major changes, such as expanding sites, taking on new equipment or shifting project timelines.

 

Could you be underinsured?

It is vital to consider how your policy could be affected by these potential coverage gaps. You may run the risk of being underinsured if you:

• Choose a lower premium to reduce upfront costs
• Are unfamiliar with terms like the “average clause” or policy exclusions
• Give inaccurate valuations of plant, tools or works-in-progress
• Fail to adjust your cover when changes to overall operations or the scope of a project occur.

Left unaddressed, these gaps can result in rejected claims, unexpected delays or even insolvency. Keep your construction business properly insured:

• Review policies annually or after key project changes.
• Clarify limits, exclusions and clauses – don’t let critical terms get buried in the fine print.
• Provide accurate, up-to-date valuations for assets and project scale.
• Account for inflation and market volatility when estimating the cost of materials and labour.

Work with a broker who is as familiar with the construction sector as they are with insurance.

 

 

Get comprehensive insurance for construction companies with ERM

With over 30 years of supporting Irish construction businesses, ERM Financial Services offers practical, informed guidance and comprehensive construction insurance tailored to your trade. Our services include:

• Thorough policy reviews to identify hidden exposures
• Direct access to leading insurers who understand your industry
• Personalised advice based on your projects
• Consistent support throughout the claims process

Contact us today to review your current cover and explore options that align with the reality of your day-to-day operations.