Insurance Presentation to Small Contractor


Published on

This presentation was prepared for a group of small contractors who typically handle urgent works to main power distribution system in Malaysia.

Getting adequate Construction / Erection All Risk Policy cover are often difficult because of short notice to start work and short completion duration of a few days.

The presentation propose a 'premium deposit' payment to Insurer while emphasizing the need of Contractor to understand how insurance works and their obligations to work with Insurer.

Published in: Business
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide
  • You pay for insurance for your car for several reasons:Toget loan.To renew road tax.To get insurance money if car get into accident or stolen.Insurance for construction works are important for similar reason.
  • Large business usually manage procurement of insurance for construction projects:Toget project completed on time with less disputes with Contractor or 3rd parties.To get wider cover direct from insurance market though bulk procurement.To transfer accidental, sudden, unforeseen loss to insurance market though a risk management process.
  • What we are insuring are risks which have low likelihood but high impact of occurrence.Insurance cannot handle high likelihood risks.Common loss in construction projects involving laying of cables are:1. Damage to owner or third party property during HDD or digging works.2. Theft of material provided to Contractor by project owner.Cost to administer insurance policies for projects can be high because there are thousands of small projects in a typical to maintain distribution and transmission system.Insurance market will lose money insuring projects where risk management practices are not in place.
  • Owner control procurement of insurance are important because:Under COC, risk caused by Contractor to be managed by Contractor and otherwise.To get good cover, Insurance market want reasonable assurance from Project Owner that they will not lose money.With good cover in place, project can start and end on time.Getting insurance means we are sharing certain risk with Insurer but not all risks.Insurer will not want to insure projects or contractors which too often cause them to suffer loss.
  • Cost of insurance is at the end paid by Owner.Coverage need to wide enough.Cost will increase if Insurer cannot make money.Coverage will become small.Insurer can refuse to give cover to some works or Contractors.Premium need to paid to Insurer as required under Insurance Act.The policy is a contract between Insured and Insurer. Like any contract you need to follow the fine prints.To make a claim and get money fast, you need to discuss with Loss Adjuster and provide documents asked.
  • You need to let Insurer know early because Insurer need time to understand risk and issue quotation for premium.You must insure in full and to include contract cost, free issue material and any equipment given to Contractor work.You must pay premium before you can make a claim.You get insurance cover not to make a claim. In you have to make a claim, something have already gone wrong. Project Owner, Insurer and Loss Adjuster are independent parties and business partners which you need to work together, so that nobody lose money.
  • Insurer are helping society to focus on business and not on having to deal with unforeseen loss.You get insurance to get enough cover and to get claim fast.To get good cover, you need to convince insurance market that you are doing work well, are taking preventive measures and will not make Insurer suffer.
  • Share in ‘utmost good faith’ risks to be transferred to Insurer.Pay small premium in exchange for possible future big loss.Agree with Insurer to follow rules written in policy.Only ‘accidental, sudden, and unforeseen physical loss’ risks are transferred to Insurer. Large project owner can help Contractor to manage insurance because at the end project need to be completed or Owner would not be able to deliver good service to consumers.To get Insurer to share you loss with a bigger group of Contractors, you need to understand that Insurer like you are also in business.
  • Insurance Presentation to Small Contractor

    1. 1. INSURANCE FOR CONTRACT OF WORKSThe Least You Should Know
    2. 2. Why Insure Projects?For same reason you insure your car
    3. 3. How to Insure?1. Why Owner control?2. How to get cover?3. What to do?
    4. 4. What to Insure?1. Contractor’s work and material.2. Material given by TNB.3. Surrounding TNB property.4. Liability to 3rd Party.5. Injury, fatality.
    5. 5. 1. Why Owner Control?1. Comply with Condition of Contract2. Sufficient cover for project risks.3. Start and complete project on time.4. Share ‘sudden, unforeseen’ cost.5. Not ‘too risky’ to Insurer.
    6. 6. 2. How to Get Cover?1. Declare risks to Insurer.2. Ask for ‘commercially’ available cover.3. Pay premium cost to Insurer.4. Follow policy terms & conditions.5. Provide Insurer with claim evidence.
    7. 7. 3. What To Do?1. Declare early to Insurer.2. How much to insure?3. Cash Before Cover.4. Take preventive measures.5. Discuss with Loss Adjuster for claim.
    8. 8. Action1. Work with insurance market.2. Get cover and claim fast.3. Convince insurance market.
    9. 9. In Summary1. Declare project risk2. Pay premium.3. Follow rules.4. Risk transferred to Insurer.5. Insurer to share cost of loss.