A history of sector claims means that road construction insurance is not always as straight forward as may be expected. As our clients are fully aware, the risk profile of one road project can vary hugely from another due to a huge range of factors including:
- Exposure to natural catastrophe hazards and extreme weather conditions; not only heavy rainfall but extreme temperatures can cause damage and hinder progress, affect material performance, and compromise the quality of the road;
- Steep cuttings and embankments or the general topography of the alignment can bring significant landslide risks which can be difficult to remediate;
- The number of major structures along the alignment; major tunnel, bridge and under/overpass structures bring their own inherent engineering risks;
- Theft of site materials can also be a concern with storage being required over an extended and often remote site.
There is significant potential for damage or injury to third parties; projects with significant alignments often interact with existing public traffic at intersection points along the route and the works may come into close proximity to existing properties and businesses.Where road projects are awarded as part of a concession project there is often an operational section of road which needs to be factored into the insurance programme from the outset which heightens this third party exposure and adds complexity to the insurance programme to be put in place.
The actual structure of the road itself requires adequate consideration taking into account the conditions encountered. Monitoring and controlling factors like material quality, compaction, drainage, and adherence to specifications throughout the construction process can be challenging. Insurers are likely to apply a sections clause which specifies the maximum distance over which they are prepared to insure uncompleted sections of road; their concern being that a major weather event causes significant damage across the extent of the alignment.
"A history of sector claims means that road construction insurance is not always as straight forward as may be expected"
Arthur J. Gallagher (UK) Limited is authorised and regulated by the Financial Conduct Authority. Registered Office: The Walbrook Building, 25 Walbrook, London EC4N 8AW. Registered in England and Wales. Company Number: 119013.