By Alain Giroux and Chris Creran
So far, most provinces haven’t shut down all construction projects across the country due to COVID-19. But in some regions, construction companies are shutting down their sites anyway. Before you shut down your construction site, it’s important to understand the challenges that go along with a vacant or unoccupied site – and plan for it appropriately.
A long-term vacancy of a construction site likely constitutes a “material change” in risk in the eyes of some insurers, which may impact both insurance rates and construction site security requirements. This means shutting down construction sites without careful planning can lead to a loss of insurance.
The truth is that there’s no consistency on vacancy clauses, so it’s critical to find out what your coverage allows. How long can you leave the site unoccupied, according to the terms of your policy? If you can’t leave it unoccupied for more than 30 days, what security measures should you put into place to ensure your coverage is not lost? Does your insurance company offer a 90-day vacancy option? And if your coverage expires partway through the shutdown, how can you guarantee renewal or extensions – despite the shutdown?
Before approaching your insurer, you need to consider all the options, including any additional relevant security measures that can be immediately implemented. Being proactive in how you are dealing with the vacancy before making any requests to an insurance company will go a long way! Your broker can be a crucial partner in this planning.
Although you certainly set up some security measures when work began on the project, a construction site that will be vacant for a long period of time requires additional, more stringent security measures. When a site is unoccupied, there’s a greater chance of break-in, including damage that may not be detected immediately.
Consider these essential security measures:
- Take steps to preserve the property. Notify police and fire departments that the property will be vacant. Turn of all non-essential utilities. Make sure any remaining utilities are secured and locked.
- Document all site conditions upon departure. Generate a photo log of all areas and inventory any valuable materials or tools left on site.
- Evaluate the site. Stabilize any temporary structures or components that are partially erected or incomplete. Ensure temporary building encapsulation is in place or that the project is water tight.
- Secure all equipment. Safely store and park construction equipment and vehicles that are to remain on site in a way that prevents theft. Any open excavations should be backfilled or covered.
- Install water alarms as necessary. Add water flow alarms on sprinklers and plumbing. Verify that high water level alarms for dewatering are online and remotely accessible. Ensure drains are clear and operational upon closing the site.
- Prepare for fire safety. Ensure all sprinkler and fire detection services are actively monitored and remotely accessible. Unplug and disconnect all temporary heating devices.
- Secure the site. Lock up the site, including repairing any fencing. Consider installing camera/video surveillance systems that can be monitored off site with presence-sensing alarm/alert capabilities. Install additional warning signage.
- Review insurance requirements. Review obligations for any existing coverages (i.e., builders risk, business interruption). Address surety considerations.
Working with your broker to proactively manage security considerations for your construction site can help you approach the insurance company from a position of confidence. By taking steps ahead of time to manage the risk, you’ll be prepared to demonstrate the extra steps you’re taking to protect your site – and their investment.
Contact HUB Risk Services to learn how to develop a plan that will help protect your business and employees from the unexpected. Get the latest information, guidance and resources on Coronavirus (COVID-19) to help you protect what matters most on our Coronavirus Resource Centre.