Mitigating Water and Moisture Risks during Construction: Insurance Considerations

Persistent and unpredictable weather systems with heavy rainfalls increase water and moisture risks for businesses — a particular pain point for construction projects. Taking steps to avoid the negative impacts can save delays and unnecessary costs. Here we outline the key points for developing a preventative plan.

Common effects of heavy rainfall and water ingress on construction projects

The effects of heavy rain or water inundation to a construction project include but are not limited to:

• the need for improved water mitigation measures
• replacement of damaged materials
• mould remediation
• impacted electrical systems
• schedule delays.

The amount of water, what building products/systems are affected and the length of exposure can increase the impacts on construction costs and future occupants.

What are the construction insurance essentials for protection against water impacts?

The key policies for protecting construction businesses in the event of flood, storm or heavy rainfall impacts are:

• contract works cover
• plant and equipment insurance
• delay in start-up cover.

Some key aspects of these policies to be aware of in consideration of water damage are:

• material damage is typically included in contract works insurance. Check terms for works in progress to ensure all water exposures are provided for, as some policies may exclude secondary effects such as prolonged mould
• ensure the policy includes adequate cover for both contractor and principal — owned materials on site, and plant on site that is subject to water damage
• water damage claims made under contract works policies automatically trigger delay in start-up cover.

How to mitigate water damage risks on construction projects

A mitigation plan to address water damage and moisture control can substantially reduce the total cost of risk caused by water during construction. These are some key steps to take.

1. Train and assign responsible members of your team to administer and update the water damage mitigation plan through each phase of construction.
2. Identify, protect and monitor ingress points where moisture can enter and/or impact the project. Be aware that some water sources aren't environmental (eg: sprinkler lines and stand pipes).
3. Locate isolation points where water supply can be shut off. This involves clearly identifying and maintaining access to valves. Train workers on how and when to shut down the water supply in the event of accidental discharge. In existing facilities, verify valves can be opened and closed freely.
4. Locate and periodically inspect both internal and external drains to ensure they are free from obstructions and that all internal drains flow to the exterior of the building. Note that remote flow sensor devices can alert and isolate water sources in the event of an unexpected discharge.
5. Consider a storage plan for materials and plant that protects them from water absorbency issues. For example, store materials off the ground and protected from potential falling water.
6. Take steps to protect critical systems such as electrical equipment, life safety equipment and ongoing facility operations. Some projects employ night patrols or security cameras to enable rapid response when required.
7. Assure access to spill clean-up supplies and place in strategic locations on the project. Having these resources immediately available will improve response time to a water event.
8. Be prepared to document water or moisture damage and other impacts by taking photos or videos and retain documentation for any repairs undertaken.

Benefit from broker expertise and support from construction insurance specialists

To gain the right protection and insurance for a construction business or project an industry specialist broker can help ensure you have appropriate cover for your situation.

Gallagher specialist construction brokers hold a considerable portfolio of construction clients, from major works to smaller projects, and our construction insurance specialists are available to advise on key covers tailored to any construction business and project.