Understanding Construction Insurance Risks In Ireland

Building firms and contractors face a unique set of construction insurance risks, ranging from public liability claims and material damage to prolonged project delays.

If you run such a business, you must secure the correct level of coverage to mitigate against these risks and avoid significant financial and operational disruption.

In this article, we discuss insurance risks you should be aware of as a construction professional in Ireland.

 

The most common construction insurance risks in Ireland

Several areas of construction insurance are regularly misunderstood or even disregarded:

 

1. Underinsurance due to inaccurate policy limits

If you choose your policy limit based on a figure from a previous project or a rough estimate of the potential cost of cover, you’ll be exposed to serious penalties in the event of a claim.

Every project is different in scale and should therefore be subject to its evaluation in the context of insurance cover. Add to this the continuous increase in the cost of materials and labour, and an uninformed policy limit simply won’t suffice.

Where problems occur:

Underinsured businesses that find themselves facing a costly claim may have to fund the excess themselves. This will have financial repercussions and significantly impact project delivery.

The risk-free approach:

Review your policy limits annually, before submitting a tender, or before a new development begins.

Your broker will work with you to ensure all factors are accounted for, from a projected increase in the cost of materials to fluctuations in the scope of the project.

 

2. Gaps between contractors’ all risk (CAR) and public liability insurance

If you oversee and manage construction projects, it’s vital to know the difference between contractors’ all risk (CAR) insurance and public liability cover to avoid any gaps in protection.

Both are integral but serve different purposes.

While CAR insurance protects the works in progress and materials used during the development, public liability cover is vital in the event of injury or property damage claims from third parties.

Where problems occur:

Relying on just one policy or misunderstanding the scope of each entity presents the potential for significant vulnerabilities, particularly in the case of subcontracted works or joint ventures.

The risk-free approach:

Consult with your broker to learn how your CAR and public liability policies interact. This will help you to ensure all eventualities are covered, as well as to clarify which party is responsible for the various elements.

 

 

3. Overlooking relevant cover for site-specific risks

Discrepancies can also occur if an insurance policy is not tailored comprehensively to account for site-specific risks.

For example, geographic nuances play a pivotal role in shaping a policy. From the environmental traits of the area to adherence with local regulations, the location and history of the development site can significantly alter your risk profile.

Another factor that affects a policy is the scale of a project and the amount of outsourcing required to complete it effectively.

Where problems occur:

Despite this, many policies are issued without a thorough site risk assessment to identify key policy components. This can lead to higher premiums and damaging exclusions.

The risk-free approach:

Share detailed site data with your broker at the earliest stage so every possibility is covered.

They can then build a comprehensive policy and include elements that would otherwise be overlooked, such as design and construct professional indemnity, motor fleet insurance and owner-controlled insurance programs.

 

4. A poor understanding of the claims process

Understanding the construction industry claims process is as important for your business as securing a comprehensive construction insurance policy.

Without a speedy and prepared response in the event of a claim, which involves gathering necessary documentation, following claims protocols and engaging broker support, even legitimate claims can be delayed or rejected.

Where problems occur:

Slow or inadequate claims processing can severely impact your finances and reputation as a contractor or construction firm operator. This can lead to disruptions in regular business and lost contracts.

The risk-free approach:

Construction professionals can reduce delays and disputes by:

• Keeping clear records of contracts and site activities
• Regularly reviewing insurance cover to match the project scope
• Ensuring staff are trained to report incidents promptly.

Taking these proactive steps puts your business in a stronger position to secure timely support and compensation when it matters most.

 

Avoid construction insurance risks with the help of ERM Financial Services

Construction insurance is a nuanced entity, and each policy decision has real consequences for your business. Partnering with a broker with an expert understanding of your sector can help you avoid preventable losses and keep your operations moving forward.

At ERM Financial Services, we bring over 30 years of experience advising Irish contractors, site managers and construction firms on construction insurance policies. Our service goes beyond placement; we support you at every stage, from tender to claims, with reliable advice and responsive action.

We pride ourselves on offering tailored insurance solutions for construction professionals across Ireland. Whether you’re reviewing an upcoming tender or concerned about your current cover, we’re here to help you make informed, confident decisions.

Contact our team today and put your business in our capable hands.