Contractors often assume responsibility for arranging the construction insurances for the duration of a project. But what happens if the contractor becomes insolvent mid-project? 

The construction contract will almost certainly be terminated, meaning your multimillion-pound assets on site are now significantly exposed to losses including theft, vandalism, arson, escape of water, collapse, storm damage, and others. Finding a replacement contractor isn’t always easy, resulting in assets being exposed for a significant period of time.

You’ll also discover that the insurances of your replacement contractor will typically exclude cover for any losses to (or resulting from) the works completed by the previous contractor.

Replacement insurance

Miller can arrange rapid replacement insurance covering both the original works and the replacement contractor’s works, through to practical completion and beyond. 

Coverages include:

• contract works and property
• third-party and products liability
• plant and equipment on site
• employers’ liability
• latent defects.

We can also support your expenditure recovery, retendering, and ongoing risk management.

In conjunction with HLME and Charles Russell Speechlys, Miller’s Construction team have written two white papers, providing further insight and advice on what to do when faced with contractor insolvency. Click the buttons below to find out more. 

Preventative action - owner controlled insurance programmes

Contractor insolvency is enormously disruptive to any project; therefore we recommend taking proactive and pragmatic measures from the outset, that will substantially reduce the impact.

Our team can assist by:

• providing expert risk advice at the pre-construction project stage
• helping you to make expert-informed decisions for optimum contract selections
• implementing a resilient due diligence and risk governance regime
• advising on protection for latent structural defects risks post-completion. 

Critically, a robust owner-controlled project insurance will continue to operate even if the contractor changes due to insolvency mid-term. The owner also has full oversight and control of cover to ensure the policy evolves with changing project characteristics.