Unanticipated costs and delays are the inherited risks in every construction project. No matter the risks are associated with physical damages, lack of materials supply, or any other factor, the contracts have to face a lot of trouble to deliver the project successfully. However, the contractors and owners can use a wide variety of ways to allocate the risks for effective management.
In most of the cases, the owners and builders use the policy of risk insurance. The primary objective is to ensure the availability of funds at the time of any damage during the construction process. It helps them in repairing the damages in no time. Besides this, the builder’s risk policies help in meeting the soft costs during the construction.
However, many people confuse the property damage claims with the builder’s risk claims. So, the article is aimed to clarify the difference between the mentioned types of claims in construction. Read till the end to get some useful insights!
Elaborative overview of builder risks claims
Many people complain that the builder’s risk policies do not always work in their favor. This has two primary reasons. Firstly, the policy purchasing party has failed to ensure the coverage of the builder’s risks mainly. Secondly, the insured was unable to present the stance of a claim effectively. No doubt, both scenarios are pervasive in the construction industry.
Sometimes, the policies contain certain conflicting or imprecise terminologies that cause conflicts among the contracting parties. It often results in claims. In this way, the project may face disruption owing to claims for compensation or damages claims.
Owing to this, the contracting parties must ensure the presentation of claims comprehensively. For this, it is essential to hire construction claims management consultants in Dubai to understand the complicated terminologies. It helps in handling the disputes peacefully without going to the courts for litigation.
Difference between Builder’s Risk Claims and Property Damage Claims
Nevertheless, the builder’s risk claims are often confused with the property damage claims owing to a lack of comprehensive knowledge. It may lead to much more confusion and misunderstanding in the projects, which is not good for the overall performance of the contracting parties.
Let’s consider a comprehensive overview of key differences between the two for managing projects effectively for successful delivery.
Initial inspection of the construction site
The construction site is inspected before the construction for identifying the damages and un-damaged sections of the soil. No matter if the site is inspected for property damage or builder’s risk claims, it is imperative to make an in-depth analysis.
Generally, the people focus more on the damaged portion, the experts dealing with builder’s risks claims look for the portions that are not damaged. It is because the experts need to understand the status of the project in terms of losses. The objective is to assess the nature of delay claims for compensation based on the insured policies. In this way, the claims of property damage and builder’s risk vary in the nature of site inspection.
Besides this, the initial documents containing the damage and un-damage portions of the construction site are further evaluated to track the responsibility of owners and contractors. The un-impacted work is also documented for record-keeping as it helps in resolving the claims.
Contract status and obligations
It is imperative to understand that the builders are usually bound to comply with the terms and conditions mentioned in the contracts. It is because the project scope is already defined in the contractual drawings and other specifications, along with the costs of repairing. So, the contracting parties need to comply with the contractual clauses by zeal and zest.
On the other hand, the scope of the project is defined, but the repairing costs need to be agreed for managing the claims of property damages. In this way, the claiming parties should come to some agreed terms for resolving the claims peacefully.
Documentation of the project
It is imperative to understand that documentation in the claims of property damage differs considerably from the builder’s risk claims. It is because, in typical claims management, the construction claims experts are hired to collect the required information. The experts use the process of Request for Information (RFI) to get supporting papers from all contracting parties for compiling the file for evaluation.
However, this is not the case with the builder’s risk claim analysis. It is because the insured may get confused while seeing the requests for a huge set of papers for evaluation under the process of RFI. However, the documentation may include the general contracts as well as the evidence of project start, progress, and current status.
Additionally, the construction experts can ask for the documents containing the detail of financial matters, including the invoices, payment history, monthly reports, and much more. All this is different in the claims related to the builder’s risk.
Construction claims need solutions for the project success!
Hopefully, you have got a fair idea of how the builder’s risks and property damage claims differ in the nature, scope, and ways of resolution. It is imperative to understand the importance of resolving claims peacefully to get through the process of construction successfully.
No doubt, every project owners want to get their project delivered within the due deadline. Don’t forget to resolve the disputes through negotiations!