Construction Claims: How to avoid common pitfalls

17 October 2018

Efficient claims management could reduce your construction insurance spend

How would you describe your company’s approach to construction claims management and resolution? These processes could have a dramatic effect on its insurance spend, come renewals time. Globally, insurers are increasing their focus towards insureds’ claims performance. A proactive approach to losses is crucial when it’s time to renew construction insurance policies.

Insurers have always placed weight on a client’s claims experience as their insurance programme approaches renewal. In particular, their large and complex claims record will be scrutinised. 

To achieve the optimum outcome, it’s important that risk or insurance managers join forces with their brokers. Working closely with your broker will help you ensure your company’s claims reserves accurately reflect your expected loss profile. You also need to prove that losses, when they happen, are appropriately managed and lessons are learned.

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Three steps to a smoother claims process

In the event of a claim, contact your specialist construction insurance broker as soon as possible. They’ll ensure your insurance carrier is notified, allowing you to maximise your settlement and finalise the claim in the most expedient manner. 

In the absence of a claim, don’t allow complacency to set in. Set aside time to establish processes that will be set in motion should a claim arise.

Consider the following:


Putting effective plans into place now is the key to getting the payment you expect should the worst happen. Ask your construction broker for advice on claims scenario testing and the development of claims protocols.

Claims Scenario Testing: To avoid uncertainty, you need to confirm and clarify your interpretation of the policy coverage. Undertake scenario testing to ensure the cover reflects your understanding. Such testing lets you examine how different policies will respond and interact, ensuring gaps are minimised. Disclosure requirements can also be highlighted via this process.

Claims Protocols: It is crucial to establish and document the process and responsibilities of all parties in the event of an incident or loss; doing so will provide clarity and structure for those involved. Protocols normally cover the following: initial steps; the claim information that’ll be required; the means by which it will be gathered and documented; the individual responsible for these processes.


Businesses need systems in place that inform insurance managers (or other nominated representatives) of claims or related circumstances. Identify the parties likely to experience claims. And devise protocols for ensuring claims are reported to those individuals and that they are made aware of incidents.

Often, errors are made early in the claims process. You will have to provide evidence to support your claim so ensure all relevant information is collected and the initial actions do not prejudice your case. It is best practice to ensure the insurance manager oversees all communications in relation to the loss.

Develop and deliver education programmes around what is covered under the insurance programme and what to do in the event of a claim. Making claims protocols easily accessible throughout the business will support your approach.

You need to be able to provide evidence of the claim effectively and efficiently. A defined data capture procedure eases this process. It will enable you to work with your broker, insurer(s), and appointed experts to help confirm the cause and quantum of any loss and to facilitate the payment process.


Again, it is important to know and understand the obligations you must comply with to avoid jeopardising your right to recovery under a construction insurance policy. It is vital that this is understood not only by your company’s insurance team but by those onsite who are likely to be the first responders.

Typically (though not exhaustively), claims conditions will include:

  • Your obligations regarding the notification of a claim
  • Your obligations regarding the notification of a circumstance
  • Time limits regarding the notification of claims or circumstances
  • The nature of the information that must be notified
  • To whom the notification must be given
  • The insurers’ rights in respect of a claim

Note that all relevant provisions are clearly identified as Claims Conditions. And be aware that they might appear in other parts of the policy such as the Insuring Clause or the Definitions.

Developing a compliant list of first actions for those on site - and making this information readily available - will assist with ensuring your rights of recovery are not put at risk.

How a construction broker can help

Large and complex claims are rare, but having a process in place is a crucial element of managing construction risk. A mismanaged process could have a significant financial impact. Ensure your broker has the expertise needed to prepare and settle such claims successfully. 

Find out more about reducing your construction insurance spend


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