Off-site materials – are you covered?
Over the last year, the construction sector has experienced challenging supply chain issues, with increased lead times, product shortages and rising prices exacerbating the situation. Some contractors and developers have been looking to ease the situation by ordering in advance and storing materials off-site, thereby avoiding delays, and often buying in bulk to manage any incremental price increases.
While early ordering and delivery can help protect the project programme, it may involve materials being stored off-site for long periods, calling for suitable off-site storage facilities that are appropriate for the materials, with adequate security in place. When the materials are required on-site, there is also the question of transportation.
The ’off-site materials’ clause
Most standard contracts works policies contain an ‘off-site materials’ clause providing cover for materials stored off-site. However, given the ongoing increases in material costs, it is vitally important to ensure that the sum insured is, so that, in the event of a claim, the policyholder is sufficiently compensated.
Other insurance implications
There may be other insurance implications, too. The insurer may regard the extended storage of off-site materials as presenting a material change to the risk profile and place restrictions regarding the value of materials, location and duration of storage. The insurer will certainly require full details before providing cover, and transportation of materials may require additional goods in transit or marine cargo insurance. If materials are stored off-site prior to the start of the project, there may also be a need for the insurance to begin earlier than anticipated, which is another factor to consider.
Adequate cover
With the construction sector facing such challenging conditions and actively looking at ways to minimise delays and offset price increases, it has never been more important to ensure adequate insurance cover is in place. We have many years’ experience advising construction clients and are well aware of the current difficulties, emerging risks and the need to have the correct sum insured.
To discuss your insurance requirements and, in particular, that you have adequate ‘off-site materials’ cover in place, please get in touch. Either call us on 01992 703 000 or email: insurance@mcdonaghs.co.uk