PROPERTY INSURANCE

MATERIAL DAMAGE

Campbell Insurance Brokers policy provides cover to repair or replace property assets that are lost or damaged. The policy can also include the following:

Capital additions
Employees tools and effects
Money on the premises
Refrigerated goods
Professional fees expended to reinstate the property
Protection costs
Seasonal stock increase

ENGINEERING PLANT & INTERRUPTIONS

Engineering plant insurance, commonly known as 'Machinery Breakdown' insurance, protects owners or operators of fixed machinery, boilers and pressure vessels by covering unbudgeted repair costs when breakdown or accidental damage occurs.

The policy can be further extended to cover:

Explosion and collapse only (boilers and/or pressure vessels)
Deterioration of stock in cold storage
Increase cost of working (for production plant).

ENGINEERING BUSINESS INTERRUPTION

Engineering Business Interruption Insurance is designed to provide cover for losses arising from interruption or interference to the business following plant or equipment failure. The policy works in conjunction with the Engineering Plant Insurance or Electronic Equipment Insurance Policies, to protect profits that would be affected by Insured Damage.
The policies are designed to interlock and complement each other. The definitions of Insured Damage are identical and a claim must be admitted under the Engineering Material Damage policy before a claim is admitted under the Business Interruption policy.

ELECTRONIC EQUIPMENT

Electronic Equipment Insurance caters for business insurance needs for computer and electronic equipment. It can be tailored to make the cover suit requirements.

The basic policy can be extended to cover:

Electronic data restoration costs
Increased cost of working
Moveable equipment.

Client Advisory: Contract Works Insurance and Exposure During Construction Projects

Why Contract Works Insurance Is Essential

Construction and renovation projects—whether large or small—carry significant risks. Damage to works in progress, theft of materials, natural disasters, or accidental damage can result in costly delays and financial loss. Contract Works Insurance is designed to protect your investment in a project, ensuring that unexpected events do not derail your plans or finances.

Who Needs Contract Works Insurance?

Contract Works Insurance is relevant for any party involved in construction or renovation, including:

Property owners commissioning new builds, renovations, or extensions
Builders, contractors, and subcontractors
Developers and project managers
Incorporated societies or charities undertaking building projects (e.g., new clubrooms, community facilities)

If you are responsible for a construction project—whether as the owner, principal, or contractor—Contract Works Insurance should be considered essential.

What Does Contract Works Insurance Cover?

Contract Works Insurance is designed to protect against physical loss or damage to the works during the construction period. The policy typically covers:

Damage to the Works: Loss or damage to the building or structure under construction, including materials and components on site.
Theft or Vandalism: Theft of building materials, tools, or equipment, and malicious damage.
Natural Disasters: Loss or damage caused by events such as fire, storm, flood, earthquake, or landslip (subject to policy terms and location).
Accidental Damage: Unforeseen events causing damage to the works, such as collapse, impact, or water ingress.
Materials in Transit or Storage: Cover for materials being transported to the site or stored off-site (if included in the policy).
Temporary Structures: Cover for scaffolding, site offices, and other temporary works.

The policy usually applies from the start of the project until practical completion or handover to the owner.

Exposure to Other Parties

Risks can arise from a variety of sources, including:

Subcontractors and Suppliers: Damage caused by third parties working on site.
Weather Events: Sudden storms, floods, or earthquakes.
Theft or Vandalism: Unauthorised access to the site.
Accidents: Mistakes or accidents during construction.
Public Liability: While Contract Works covers the works themselves, separate Public Liability insurance is needed for injury or damage to third parties.

Key Features and Exclusions to Consider

Not all Contract Works policies are the same. When reviewing your cover, pay particular attention to:

Scope of Cover: Ensure the policy covers the full value of the project, including all materials, labour, and any temporary works.
Sum Insured: The sum insured should reflect the total contract value, including variations and professional fees.
Policy Period: Confirm the cover period matches the project timeline, including any extensions for delays.
Exclusions: Common exclusions include:
- Defective workmanship or design
- Wear and tear or gradual deterioration
- Existing structures (unless specifically included)
- Consequential loss (e.g., loss of profits or delays)
- Tools and equipment (may require separate cover)
- Employee theft (covered under Fidelity/Crime insurance)
Excess/Deductible: Be aware of the excess that applies to each claim.
Owner-Arranged vs. Contractor-Arranged: Clarify who is responsible for arranging the insurance under the contract.

Special Considerations for Incorporated Societies and Charities

Volunteer Labour: If volunteers are involved in the build, confirm whether their work is covered under the policy.
Renovations to Existing Buildings: If you are renovating or extending an existing structure, check whether the policy covers both the new works and the existing building.
Multiple Parties: Ensure all relevant parties (owner, contractor, subcontractors) are named as insureds under the policy.

Recent Trends and Legal Developments

Construction projects are increasingly subject to weather-related risks, supply chain delays, and regulatory requirements. Insurers are placing greater emphasis on site security, risk management, and accurate project valuations. It is important to keep your insurer informed of any changes to the project scope or timeline.

Policy Extensions and Enhancements

Many Contract Works policies offer valuable extensions, such as:

Existing Structures Cover: Protection for the existing building during renovations or extensions.
Advanced Loss of Profits: Cover for financial losses due to project delays caused by insured events.
Principal Supplied Materials: Cover for materials supplied by the owner or principal.
Testing and Commissioning: Cover for damage during the testing phase of plant or equipment.
Professional Fees: Cover for architects’, engineers’, or surveyors’ fees incurred in reinstating damaged works.

Practical Steps for Project Owners and Contractors

Review Your Policy: Understand the scope of cover, exclusions, and sum insured.
Accurate Valuation: Ensure the sum insured reflects the full value of the project, including all materials and professional fees.
Site Security: Implement robust site security measures to prevent theft or vandalism.
Prompt Notification: Notify your insurer as soon as you become aware of any loss or damage.
Maintain Records: Keep detailed records of project progress, materials, and any incidents.
Seek Advice: If in doubt, seek professional advice to ensure your Contract Works cover is fit for purpose and reflects your current project.

Summary

Contract Works Insurance is a vital protection for anyone involved in construction or renovation projects. It safeguards your investment against the unexpected, ensuring that your project can proceed even if disaster strikes. However, coverage varies significantly between policies and insurers. A careful review of your current arrangements—and a clear understanding of your exposures during the construction period—is essential.

If you have any questions about your Contract Works insurance or would like a review of your current policy, please contact us. We are here to help you navigate these complex issues and ensure you have the right protection in place.

Client Advisory: Business Interruption Insurance and Exposure to Loss of Income

Why Business Interruption Insurance Is Essential

Unexpected events—such as fire, flood, storm, or other insured property damage—can halt your operations, disrupt your income, and threaten your organisation’s future. Even if your physical assets are insured, the financial impact of being unable to trade or operate can be devastating. Business Interruption Insurance is designed to protect your organisation’s income and help you recover quickly after a major disruption.

Who Needs Business Interruption Insurance?

Business Interruption Insurance is relevant for any organisation that:

Relies on physical premises, equipment, or stock to operate
Would suffer financially if operations were halted due to property damage
Has ongoing expenses (e.g., wages, rent, loan repayments) even when not trading
Needs to maintain service to clients, members, or the public

This includes companies, incorporated societies, charities, retailers, manufacturers, service providers, and any entity with a physical presence or critical assets.

What Does Business Interruption Insurance Cover?

Business Interruption Insurance is designed to protect against financial loss resulting from an interruption to your operations caused by insured property damage. The policy typically covers:

Loss of Gross Profit or Revenue: Compensation for lost income during the period your business is unable to operate.
Ongoing Fixed Costs: Cover for expenses that continue even when operations are suspended (e.g., wages, rent, utilities, loan repayments).
Increased Cost of Working: Additional costs incurred to minimise the interruption or resume operations (e.g., temporary premises, equipment hire, overtime).
Claims Preparation Costs: Cover for the cost of preparing and substantiating your claim.
Additional Extensions: Some policies may cover denial of access, damage to suppliers’ or customers’ premises, or utility failures.

Important: Business Interruption cover is usually triggered by physical loss or damage to insured property (e.g., fire, flood, storm) under your Material Damage or Property policy.

Exposure to Direct and Indirect Losses

Risks can arise from a variety of sources, including:

Fire, Flood, or Storm: Physical damage to your premises or equipment.
Theft or Vandalism: Loss or damage that prevents you from operating.
Utility Failure: Loss of power, water, or other essential services (if covered).
Damage to Key Suppliers or Customers: Disruption to your supply chain or customer base.
Denial of Access: Inability to access your premises due to damage in the surrounding area.

Key Features and Exclusions to Consider

Not all Business Interruption policies are the same. When reviewing your cover, pay particular attention to:

Indemnity Period: The maximum period for which the insurer will pay for lost income and extra costs. Choose a period long enough to fully recover (often 12, 18, or 24 months).
Sum Insured: Ensure the sum insured reflects your actual gross profit or revenue, including anticipated growth.
Trigger Events: Cover is usually limited to interruptions caused by insured events under your property policy. Non-damage events (e.g., pandemics, government orders) are typically excluded unless specifically added.
Exclusions: Common exclusions include:
- Gradual deterioration or wear and tear
- Voluntary closure or shutdowns
- Losses due to uninsured events (e.g., pandemics, cyber incidents unless specifically covered)
- Utility failures not caused by insured damage
Waiting Periods: Some policies have a waiting period (e.g., 48 or 72 hours) before cover begins.
Claims Preparation Costs: Check if these are included or need to be added as an extension.

Special Considerations for Incorporated Societies and Charities

Service Continuity: Societies and charities may need to maintain essential services to members or the community. Business Interruption cover can help fund temporary relocation or alternative service delivery.
Volunteer and Event Disruption: If your organisation relies on events or volunteer activities, consider whether loss of income from cancelled events is covered.
Multiple Locations: If you operate from more than one site, ensure all locations are included in your cover.

Recent Trends and Legal Developments

Recent years have seen increased scrutiny of Business Interruption policies, especially regarding coverage for non-damage events such as pandemics. Insurers are clarifying policy wordings and requiring more detailed risk assessments. Accurate record-keeping and regular reviews of sums insured are more important than ever.

Policy Extensions and Enhancements

Many Business Interruption policies offer valuable extensions, such as:

Denial of Access: Cover for loss of income if you cannot access your premises due to damage in the vicinity.
Supplier/Customer Extension: Cover for loss of income due to damage at a key supplier’s or customer’s premises.
Utility Failure: Cover for loss of income due to failure of public utilities (subject to policy terms).
Infectious Disease Extension: Limited cover for closure due to certain diseases (rare and subject to strict conditions).
Claims Preparation Costs: Cover for professional fees incurred in preparing your claim.

Practical Steps for Organisations and Leaders

Review Your Policy: Understand the scope of cover, exclusions, indemnity period, and sum insured.
Accurate Valuation: Ensure your sum insured and indemnity period reflect your actual needs and potential recovery time.
Risk Management: Implement robust risk management and business continuity plans to minimise the impact of disruptions.
Maintain Records: Keep detailed financial records and documentation to support any claim.
Prompt Notification: Notify your insurer as soon as you become aware of an event that could lead to a claim.
Seek Advice: If in doubt, seek professional advice to ensure your Business Interruption cover is fit for purpose and reflects your current operations.

Summary

Business Interruption Insurance is a vital protection for any organisation that relies on ongoing operations and income. It helps safeguard your finances and future against the impact of unexpected disruptions. However, coverage varies significantly between policies and insurers. A careful review of your current arrangements—and a clear understanding of your exposures—is essential.

If you have any questions about your Business Interruption insurance or would like a review of your current policy, please contact us. We are here to help you navigate these complex issues and ensure you have the right protection in place.

GET IN TOUCH

7 Turvey Street, Pegasus, New Zealand

offfice@campbellinsurance.co.nz

021521651