Insurance Policies in Construction Projects Risks in the State Of Florida

InsurancePolicies in Construction Projects Risks in the State Of Florida

In the course of the gradual andthe fragile processes of economic recovery, in some of the Europeannations, there have been radical changes in the constructionindustry. Buildings to host industries, institutions, and othercommercial entities have been put up. Residential buildings are alsoexpected to increase steadily. For instance, the United States ofAmerica estimates an increase of up to 193,900 units of residentialmortgages from the current 190,000 units (Sullivan, 2016). However,it is clear that these construction projects come with a myriad ofrisks. The risks have necessitated the establishment of specializedinsurance covers to address them.

Construction risk cover is not anew phenomenon to the builders. It is a familiar thing in theconstruction sector, and many financial organizations, which arefunding projects, have always considered having constructioninsurance cover as security cover to their loans. As the nameimplies, construction insurance is meant to cover the building, whilein progress, in the case of the losses and damages that may comeabout during the construction process. In this paper, I am going tofocus generally on the construction insurance policies in the Stateof Florida, in the United States of America.

Insurancepolicies on construction risks in Florida

Defect claims have alwaysimplicated the insurance policies (Bidden, 2013). In the State ofFlorida, however, there are numerous things that trigger one firm todetermine whether the property damage occurred during the policy spanor outside the period. One of such triggers is the manifestation.This starts on the first date the damage is discovered or the date atwhich a formal inspection is carried out. The second trigger is theinjury-in-fact this means the building is completely damaged. Incase the damage is within the policy time, then the policy will beapplied. However, in the case of manifestation, the policy that wasput in place for such an occurrence is the one that is applicable.The Florida appellate court affirmed that injury-in-fact is the mostapplicable trigger rather than manifestation.

Oneof the requirements for construction projects in the USA and in thestate of Florida, in particular, is the Commercial General Liability(CGL) policy (Bliss, 2010). The policy came into effect in 1986 toreplace the General Liability policy that was considered morecomprehensive. This standardized policy is presented to businessfirms to cover them against liability claims, like body injuries (BI)and damages on the property (PD), which may arise in the entitiesduring operations and within complete operations. The policy alsocovers advertising and personal injuries incurred in relation to theconstruction. For major construction projects in the state ofFlorida, which are worth $2000000 and above, a total of $5000000 foreach incident limit of liability with a deductible amount of not morethan $10000 is needed (Bliss, 2010). Nevertheless, per incident limitof liability can be met by combining primary and secondary politylimits. In the case of a minor project or ones that are in progress,an incident liability limit with a deductible of less than $5000 peran incident is what is required as per the policy.

Anotherpolicy in the State of policy is the issuance of insurancecertificates, which are the main indicators of compliance (Cherry,2008). The certificate must bear the names of the Construction Boardof Trustees, the name of the institution, in cases where the buildingis institution based the State of Florida, the Board of Governorswithin the state of Florida and their respective trustees, the boardof directors’ employees, and other agents in line with theconstruction. The certificate is the evidence of conformity to theGeneral Liability Policy. In such cases, the certificate makes theConstruction Manager policy the primary one and any other insurancenegotiated by the owner will be considered non-contributing. Thecertificate will endorse the explosion, collapse, and undergrounddamages for the classifications that may have been excluded from thepolicy and contract liabilities. A good example is when thecontractor is carrying out a project involving asbestos thecertificate shall contain the pollution liability.

Autoliability is also another significant policy touching on the risksposed by the construction operations (Smith, 2011). The policytargets those vehicles owned by the building owners, those that arenot- owned by them and those that have been leased. For instance, aminimum of $1000000 single for each accident that may occur with adeductible not more than $5000. Insurance certificates must also beissued to indicate that the construction has complied with thepolicy.

Theinsurance policies also cover the workers and the professional withinthe working sites. One of such policies is the workers compensationinsurance (Smith, 2011). This is a policy that is solely under thestate regulation. In the state of Florida, the policy`sresponsibility is to ensure that the medical bills and the lossesincurred from injury and to salaries are paid the workers injuriesand diseases arising from the construction sites. Certain benefitslike the medical cover, income benefits within the State limits,compensation, in cases of death, and support to the dependents areunder this policy. The Florida federal government has put up measuresto oversee the success of this policy. Administration of thecompensation law, resolving disputes involving workers claims,provision of safety working environment, and issuance of certificatesare some of the measures put in place towards this course.

Professionalliability is the most recent policy in the state of Florida (Terry2013). Although it has been noted that is extremely difficult forprofessional to take up this policy, it remains vital to theresponsibilities and success of the professional practices.Construction professionals have been asked to adhere to this policyand maintain it thoroughly in their practice. In Florida, the policyprotects the professions from any risks that may arise fromnegligence. In cases of negligence claims being filed to the legalsystems, the professional will be covered up to the total amount ofnegligence insurance cover purchased within this policy. However, ithas been argued that is not possible to prove negligence in the legalsystems. This has always been used as a justification forprofessionals not to enroll in the policy. The policy, also, protectsprofessionals in the construction sector from the risks that mayarise from inaccuracy of the advice offered, cases of good faithviolation and falsification.

Buildersrisk is also another common component of insurance policies withinthe construction sector. Also referred to as the “course ofconstruction”, the insurance’s objective is to insure buildingsor the construction projects against the costs of repairing andreplacement of items when the construction is in the process and insome unique cases for a given period of time after completion. Thepolicy usually covers building materials and equipment which play anintegral role in the construction process. Though the policy isstructured to offer a wide range of coverage, it does not cover everyproperty related to the project and every risk that may arise. Coverage is only limited to the specified varieties of property,certain locations, and possessor. The broad list of exclusionsfurther limits the policy. Being just part of the schemes ofinsurance, the policy may be acquired through endorsements or thelaid down insurance policies.

Pollutioninsurance policy is also a feature of the State of Floridaconstruction related policies. The insurance mainly coverspollution-related risks that may occur in relation to theconstruction process (Smith, 2011). Contractors’ pollutioninsurance is an example that falls under this category. It is evidentthat contractors face several risks within the construction sites.Such risks include but not limited to, contacts to contaminated soilsand unintentional emission of fuel oils, certain chemicals, and toxicgasses. Issued on the basis of non-admission, the policy insurersthird-party against cases of body harm and damages on property thatmay occur due to environmental pollution. The policy further offersremediation cover on issues arising from pollution that is related tothe contractor’s jurisdiction.


In conclusion, it is clear thatthe federal government has come up with various policies to cover therisks that arise within and around the construction sites. Suchpolicies like certification, professional liability, pollutionliability, builders risk, auto liability and the commercial generalliability have brought out the quest of the State of the State ofFlorida to address the risks.


Bidden, L. (2013) “The power ofInsurance: Changes accelerating in Construction Insurance ”.Journal of ModernInsurance, 38(45), 28–34.

Bliss, E. (2010). &quotAn idealInsurance policy: Features and Implementation”.Business Affairs Journal Millwood, 26(2),w195–w203.

Cherry, E. (2008). “InsuranceRegulation in the United States: Regulatory Federalism and theNational Association of Insurance Commissioners”.Business Insurance Affairs Journal Millwood, 26(2),w195–w203.

Smith, M. (2011) &quotInsurance:Construction risks and impacts”Insurance journal, 2,3-4, 121–134.

Sullivan, T. (2016). MitigatingDisaster Losses through InsuranceCalifornia. Northwestern University Press.

Terry, L. (2013) “Therole and powers of the Federal insurance regulatory commission in theadministration of insurance law in Florida”.Journal of ModernBusiness, 38(45), 28–34 .