The social utility of insurance of facilities under construction and assembly is indisputable. It is reflected in intensive improvement of the protection of participants in this field as well as enabling more efficient compensation for damage. Namely, during the implementation of construction projects, construction companies encounter a specific type of risk, which both the investor and the contractor must take into account to prevent unwanted scenarios and eliminate all possible patterns of potential damage. When talking about the damage that may occur, it is clear that we are talking about material damage to both buildings and the entire electro-mechanical equipment, installation materials, devices or added costs. In addition, we should definitely take into account the damage that can be reflected in delayed works, as well as possible penalties. Bearing in mind the above, it is clear that the insurance of buildings under construction can be a strong economic support in the entire construction project and construction process. According to its purpose, it is intended to protect all participants of the specific project, in particular, the investor and the main contractor as well as any possible subcontractors, and in most cases through the entire implementation process in order to ultimately achieve the desired result, i.e. timely fulfillment of the obligation with the planned, i.e. contracted quality, and especially bearing in mind that such insurance generally lasts during the execution of the works, then during the trial period and the warranty period.
Insurance of buildings under construction falls under property insurance, which is also categorized by the Decision on types of insurance of the Insurance Agency of the Republic of Srpska based on Articles 9 and 30 of the Law on Insurance Companies, as well as Articles 8 and 16 of the Agency’s Articles of Association and the Instruction for the application of the decision on types of insurance, which regulates the application of the said decision in more detail, and it also made the classification of types of risks into types of insurance as well as the clasification of types of insurance into insurance groups. In addition it is determined that the insurance of buildings under construction belongs to the group of non-life insurance, i.e., to the subgroup of insurance from other property damage.
Like all other forms of insurance, this insurance differs in its subject matter, which varies from case to case, but it is most often accepted that the subject of insurance of objects under construction can be a building under construction, which include new construction, reconstruction, upgrading, repairs and the like, then construction works and material, as well as all equipment intended for installation in the building, but also construction equipment and auxiliary facilities intended for construction. Very often, if a separate contract is made, the subject of the contract can be existing building on which reconstructions, additions, upgrades and the like are performed, part of the building under construction, then auxiliary construction materials and tools in use for construction, as well as costs and business-technical documentation.
The most common risks insured endure are the following: the storm and hail, manifestations and demonstrations, spills of water, frost, snow and ice, snow avalanches, landslides and collapse of the ground, subsidence, construction accidents, floods, torrents, excessive and underground water, landslides, liability from the activity of the construction contractor within the warranty period and contractual liability of the contractor within the warranty period. Considering it is a classic insurance contract, only with a specific subject and risks, it should be borne in mind that the premium is also one of the main elements of the contract. The premium varies with insurance companies, and it implies the value of the entire construction project, the insurance sum, the duration of construction as and scope of coverage.
Due to the fact that the construction industry in our region is constantly on the rise, as a completely logical sequence of events, an institute, which has long been known in highly developed countries, began to appear on our market. It is about “Contractors All Risks” or more popularly abbreviated “CAR”, and it usually provides maximum protection of the entire construction project and the insured has the possibility to match the scope of insurance to his needs and capabilities. In this sense, CAR Insurance helps interested parties in the construction industry to ensure that the project, i.e. construction facilities, are completed in a timely manner, with high quality and without any unpredictable and unexpected situations.
Bearing in mind all of the above and due to the importance of the insurance of buildings under construction, as well as the considerable value of the subject of insurance, we can conclude that the insurance of buildings under construction singled out as a separate issue in relation to the rules that are adapted to the priori of this type of insurance. This was particularly reflected in the field of international construction projects, where insurance of facilities that are under construction and assembly is imperative and a practical inevitability.
Author Nikolina Zubac
E-mail: [email protected]
