Insurance brokers and agents selling Contractors’ All Risk Policies across Malaysia are being urged to explicitly explain to their customers the importance of complying with their specific policy’s special conditions.
In a recent industry seminar in Singapore, Crawford Malaysia’s director of engineering and construction risks said non-compliance with special conditions can render the insurance policy null and void, and often insureds are not aware of certain special conditions attached to their policy.
“There are many brokers and agents who do a top job of educating their clients but unfortunately, we are seeing more and more cases where the insured has complied with some but not all of the special conditions; that’s just not enough to protect yourself and have your insurance policy respond in the case of a loss on site,” said Michael Chen.
“Some of these special conditions are very simple to comply with, such as having signage on the construction site that states ‘No Trespassing’.
“I see it, time and time again, where insureds comply with the conditions that are more complex to comply with, and yet don’t realise there is a suite of other very simple things they must also do. This tells me it’s a knowledge gap amongst insureds. But it also means, it’s a really easy win for brokers and agents to showcase their value to their clients,” he argued.
Mr. Chen said the best brokers and agents, who do education well, end up with much happier clients.
“I can assure you that the clients of brokers and agents who fully understand the policy they’re purchasing, and what they need to do to ensure they’re covered in the event of a loss, are much more likely to repeat business with the same broker or agent.”
Special conditions associated with Contractors’ All Risk Policies typically relate to things like having adequate fire-fighting equipment available and operative at all times, as well as theft prevention and security on site.
“You can imagine the devastation we see when a policyholder has had a fire on their construction site, and the loss incurred amounts to sometimes tens of thousands, and they then discover they’re not actually covered.”
Mr. Chen said the most common claims made under these types of policies are theft of materials: “Stealing of copper cables, which are expensive and have significant resale value. It happens a lot”.
“Claiming ignorance around these special conditions doesn’t often help insureds, nor does hindsight. Insurers certainly do not go out of their way to deny claims, and brokers and agents want satisfied customers. Crawford can help; we are very happy to provide training to our clients on the ins and outs of these special conditions to help protect your future business.
“I would go as far as to say that I see non-compliance with special conditions on the majority of the construction sites I visit, and that ought not be the case. There are instances where insurers will still pay even when the insured has not complied, but you don’t want to take that risk – comply and you’re covered, it’s as simple as that,” Chen concluded.
