The Importance of Construction and Erection Insurance in Maximizing Safety in the Construction Industry

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December 18, 2023

In the construction industry, safety and foresight are paramount. Projects worldwide, including those in Mexico, face various risks, from natural disasters to unforeseen on-site issues. In such a context, construction and erection insurance become essential tools to mitigate risks and ensure project success. This article explores the importance of construction and erection insurance, its key coverages, and how it can make a difference in the construction industry in Mexico.

What is Construction and Erection Insurance, and What is its Purpose?

Construction and erection insurance is a policy explicitly designed to protect all parties involved in a construction project, from investors to contractors, subcontractors, and anyone with an insurable interest in the project. Its primary purpose is to provide financial security in the event of accidents, property damage, theft, liability, and other unforeseen events that may arise during the construction process. Typically, these are All Risk policies, meaning everything not expressly excluded in the policy is covered.

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The Main Coverages of Construction and Erection Insurance

The primary coverages of construction and erection insurance are liability insurance, property damage, theft and vandalism, and equipment and machinery damage. Liability insurance covers death or injuries to third parties or damage to third-party property caused by the construction project. Property damage protects against damage to the project’s property due to fires, floods, earthquakes, and other risks. Theft and vandalism cover losses caused by the theft of equipment and materials and damage caused by vandalism at the worksite. Equipment and machinery damage protects the equipment and machinery used in the project against unexpected damages. Additional coverages provided by these policies include coverage for design errors or faulty workmanship, damage to temporary structures on-site, damages resulting from strikes and popular uprisings, vehicle collisions, and structure collapses, among other coverages.

Critical Aspects to consider for Subscribing to Construction and Erection Insurance

To obtain effective construction and erection insurance, it is essential to consider the following aspects: risk assessment and the selection of appropriate coverages. Risk assessment involves identifying the risks associated with the project and the geographic areas where it will occur. The selection of appropriate coverages allows the policy to meet the project’s unique needs.

Importance for the Construction Industry in Mexico

Sudden losses in infrastructure projects can have a devastating impact on the economy and development. For example, natural disasters such as earthquakes and hurricanes in Mexico can cause billion-dollar losses in construction projects. Without adequate construction and erection insurance, companies could face insurmountable financial challenges. According to data from the National Institute of Statistics and Geography (INEGI), uninsured losses in construction projects can delay or even halt projects, having a domino effect on the country’s economy and employment. Construction and erection insurance play an essential role by providing the necessary financial stability to continue projects despite unforeseen obstacles.

In summary, construction and erection insurance is a wise investment for any construction project in Mexico. It provides financial security in critical moments and ensures that infrastructure development continues without issues. If you wish to learn more about how construction and erection insurance can benefit your project or company, do not hesitate to contact us.

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