In the contract works insurance policy there is an exception for work stoppage, usually for a period exceeding 90 days. It is important to understand that the coverage is not stopped, but its scope may be affected.

In the event that the break lasts for a long period of time, for example if it is due to the bankruptcy of a contractor and the need to repair failures and organize to find a new contractor, or due to the security situation, it is essential to consult with the professional authorities, and consider freezing the policy. In such case, a separate policy should be examined to cover third-party risks, which are not within the contract insurance policy.


In practice, there are a number of steps that are important to take on construction sites that are not expected to return to activity, especially before the winter season:


Fencing the Site – Ensure that the fencing of the Site is intact around its perimeter, without breaches. If there is no permanent guard on the Site, a periodic visit must be conducted (preferably at least weekly) and the integrity of the fence must be verified. This is very important for theft/burglary and malicious damage coverage.


Maintenance – Depending on the progress of construction. If finishing works have already begun and valuable equipment is stored on Site, it is recommended to enhance the Site’s security systems or cameras, or to evacuate valuable equipment to an external storage site.


Nature Peril hazards, an emphasis on flooding – One of the issues with an inactive Site is that there is no one to detect problems promptly. In this case, the measures to be taken to mitigate the risk are:


It is recommended to close the water supply taps to the Site to prevent damage from pipeline explosions. Where this is not possible, the guard on the Site should be briefed to conduct tours to detect leaks, and make sure that he is familiar with the location of the main faucet in case of emergency.


Where pumps are kept for draining water in basements, it is recommended to make sure there are emergency generators on Site, and it is also recommended to install a flood-detection system.


It is recommended to place barriers against water on entrance ramps to basement floors, especially where it is an area down a slope, or a new neighborhood where the drainage infrastructure has not yet been fully completed and is prone to flooding.


Window openings, elevator shafts, infrastructure ducts, and unfinished stairwells must be blocked or sealed any place there is a risk of water infiltration in large quantities and causing damage to finishing works that have already been carried out.


Electrical system – Most Sites have a temporary power supply from the local network, and it must be ensured that even when the Site is inactive, the required periodic tests are performed on the electrical panels. Otherwise, if a fire breaks out due to an electrical short, you may find yourself in a predicament. Where possible, the electricity supply to the Site should be disconnected, or the guard should be briefed to conduct patrols to locate fire points in the vicinity of the electrical panels, and make sure that he is familiar with the location of the main breaker in case of an emergency. Where the electrical system remains active, the following tests must be performed in accordance with the Electrical Code:


  • Protective circuit breakers – Once a week, a button test by any person, and once every three months a device check by an electrician.


  • Main boards – An annual inspection must be carried out by a testing engineer, and it is recommended to also carry out an annual thermographic scan.


Third-party damages– As mentioned, it is necessary to verify the integrity of the fencing and that there is no access by outsiders to the construction area. It is necessary to verify the integrity of scaffolding, the presence and integrity of temporary railings, and that there is no danger of structural parts collapsing and falling into the public space at ground level.


Higher-than-usual third-party risk in projects such as the TAMA 38 type – Strengthening the skeleton and constructing additions to existing residential buildings. It is necessary to verify the integrity and completeness of fencing and cladding, and to install a closed passage door between the occupied building and the new floors above it. Periodic visits must be made to ensure that there are no safety hazards such as protruding nails, temporary pipes that were disconnected, and more.


Elevating work platforms, cranes, and elevators – It is necessary to make sure to carry out the tests according to the timeframes required by law, which varies according to the type and size of the facility, even if it is not active. Emphasis on freight elevators, construction cranes, suspended scaffolding, and lifting platforms.


Scaffolding – Especially during the winter season, it is necessary to carry out periodic inspections to prevent the collapse of scaffolding, especially before and after stormy weather, in accordance with official meteorological forecasts.


Engineering risks – Some sites are halted in the middle of carrying out critical elements, such as drilling and casting of foundations, casting of skeleton columns and ceilings, and more. If necessary, temporary supports must be implemented in accordance with the Structural Engineer’s instructions.

A classic condition in a contract works policy is to place a security guard on the site, is this the only choice? No!

But…there are conditions that must be met in order for the insurance company to agree to deviate from the policy. See a creative example from a site that is divided into several sub-areas, where the permanent guard was actually replaced by three parallel security circles:


A mechanical breakdown insurance policy is designed to insure electro-mechanical equipment in case of unexpected accidental damage, and is also used as a basis for a loss of profits policy as a result of a mechanical breakdown event. On the one hand, they insure typical systems such as pumps, compressors, air-conditioning systems and refrigeration systems, generators and transformers, and elevators and escalators; and on the other hand, industrial systems such as printing presses, production lines in factories, processing machines (CNC), turbines and water desalination facilities, etc.


The issue of distances is one of the challenges in projects that include demolition and construction works in a dense urban environment, with an emphasis on those that include excavations for the construction of basement floors. This factor determines the insurance company’s approach to the level of risk.