Woodbury, NY, April 03, 2020 — In response to the spread of the coronavirus (COVID-19) across the United States, Federal, State and local authorities have issued many emergency orders governing construction projects. These orders and other related circumstances may have an impact on your insurance coverage.
Background: Project Abandonment/Cessation and Hazard Clauses
Many construction project policies (e.g., Builders Risk) contain clauses that limit or bar coverage in the event of project cessation or abandonment. Policies may also include conditions such as an “increased hazards” clause, which require insureds to notify carriers of a project shutdown or delay and to take steps during shutdown to protect the property.
COVID-19 Shutdowns and Policy Maintenance: What SterlingRisk is Doing
We are in close contact with insurers, industry trade groups and regulators on this important issue. We are exploring whether carriers will agree that project shutdowns or delays stemming from COVID-19 do not constitute cessation or abandonment within the meaning of any clause that might restrict coverage. To date, insurers have not clarified their position on this issue. Of course, we will continue to update you on these discussions.
What You Should Do
Insureds should take all reasonable steps to protect projects during any delay or shutdown. Consult with your SterlingRisk Account Executive and your internal project management team on measures, which could include:
- Notify the insurance company of shutdowns or delays.
- Protect sites with appropriate fencing and security services.
- Deploy temporary lighting for project perimeters.
- Appropriately store and secure project equipment to protect against damage.
- Remove construction debris and address any fire hazards (e.g., combustibles).
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Questions concerning insurance and COVID-19 are complex and challenging. We at SterlingRisk are tracking all related developments. For additional resources, tools, information and links, please contact your Account Executive or visit our Coronavirus (COVID-19) Preparedness page: https://www.sterlingrisk.com/coronavirus-preparedness/.
DISCLAIMER: The materials provided are for general informational purposes only. Your specific insurance policy and individual loss circumstances will determine coverage. Please consult your SterlingRisk Account Executive concerning any policy questions you may have.
