Asuransi Konstruksi

Why is Insurance Broker essential in Construction Consultant Team?

Liga Asuransi – Dear readers, how are you? On this occasion, we wish you a happy new year 2023. Hopefully, your business will continue to advance this year.

One of our disappointing experiences during 2022 was several rejections of insurance claims for damage and loss suffered by contractors. Unfortunately, these claims were not reimbursed by the insurance company. The amount of the claim was millions of USD dollars.

After trying for months to deal directly with the insurer and having not heard back, they finally asked our company if we could help them get the claim paid as they expected.

After studying the insurance policy and the correspondence between the insurance company and this client, we understand that the insurance policy imposes explicitly several requirements and exclusions that make a claim not covered by the insurance policy.

Technically, the accidents they experienced could be covered by a construction insurance policy or CAR / EAR. But unfortunately, this insurance policy excludes it.

The client did not realize that there were provisions for the adverse insurance policy. 

It must be admitted that not everyone can understand exactly the coverage and guarantees of an insurance policy. Even though they have been taking care of project insurance for decades, they still need a view from the insurance expert to understand the policy coverage fully.

Understanding insurance coverage requires special education, training, and experience in managing insurance policies and settling insurance claims.

This is the critical function of an insurance broker company that is also a risk management and insurance consultant for a construction project.

Insurance brokers are insurance experts who have passed special education and have an official insurance expert certificate recognized by the Financial Services Authority (OJK) 

Please note that the risk management and insurance issues should have been discussed before the project started and included in the project development proposal. 

The insurance broker is supposed to be included in the Construction Consultant Team, as are architects, quantity surveyors, financing, legal, and others. 

Its function is to provide insight into potential risks that can occur, the type of insurance required, the extent of the guarantee, and provide an estimate of insurance costs for the project.

For this article, we want to discuss the importance of the services of an insurance brokerage company being involved before the project starts, and how it works. 

We hope that this article will be useful for you. If you are interested, please share it with your colleagues, so they also understand like you.


Why do you need Project Consultants?

When you are about to start a building project, do you have to deal with quantity surveyors, civil engineers, architects, accountants, and the design team, sourcing, insurance brokers, and purchasing the materials? You would act as full project manager. 

A construction consultant is a professional hired to offer expertise toward a project’s successful and timely completion. 

They are tasked with assessing the building costs and contracts for construction projects. They work with building contractors and site engineers to draw up plans and implement the design on the site.

They are advocates for the project manager and ensure that contractors fulfill the conditions outlined in the contract documents. They act as quality assurance and verify the quality of materials and services, including insurance purchased for a project.

Construction consultants do not only estimate budgets and spending but then follow on with a complete estimate and cost planning. They can provide property advice and valuations of projects through site visits.

Construction consultants often provide general and technical assistance to the project, evaluating environmental issues and potential hazards on the site. They also assist in formulating and respecting contracts between contractors, subcontractors, and clients.

Clients hire construction consultants for different reasons. Some want the consultant to help reduce the costs and timeline for completing the project. Others hire them to help streamline the project and ensure best practices on the construction site.

Construction consultants are specialists with a wealth of experience and knowledge in different fields. They have a background in construction engineering, construction management, and risk management. Professionals such as architects, designers, site engineers, structural engineers, insurance brokers, and project managers can work as consultants on construction projects.

What Do Construction Consultants Do?

Companies hire construction consultants to perform duties and responsibilities such as:

  • Determine Project Feasibility

Construction consultants are technically project consultants. They must visit potential worksites and research to determine the project’s feasibility. They are then expected to report their findings to the client. This duty might require them to travel to different cities and countries.

  • Determine Costs for Labour and Insurance

They are expected to determine the costs of labor and insurance needed for the project, such as Surety Bond, Bank Guarantee, Construction/Erection All Risks Insurance, Comprehensive General Liability, and others. By carrying out this task, they help the decision-making of the clients and construction firm regarding budgets and expenses.

  • Liaise With Vendors to Know Potential Material Costs

Construction firms often hire construction cost consultants who would work directly with vendors. The consultants must liaise with the vendors or suppliers to know the potential costs of inputs needed to complete the construction project.

  • Determine Regulatory Issues

Construction health and safety consultants would determine regulation approvals required on the worksite and ensure that they are met for the smooth running of the project. They would also find out about the costs of the mandatory permits and ensure that the client pays for them.

  • Oversee The Project

Construction management consultants also play the role of project managers. They are expected to oversee the project from start to finish, provide business and general expertise to the contractors, and work with other professionals to ensure that the project is delivered on time and without exceeding its budget.

  • Present Reports to Clients

Construction consultants must present their findings to clients and stakeholders through reports. These reports would aid the clients in their decision-making process. The information should answer questions such as whether the project is a good investment, possible challenges, and how much should be budgeted for the project.

  • The Role of Insurance Brokers 

As project managers, you’re expected to do whatever it takes to keep the company pipeline going. What protections do you have if something goes wrong?

When the unexpected thing happens, and you find yourself left holding the bag, project managers’ insurance can help ensure you have the coverage and protection you need. 

It’s not always possible to predict outcomes. As such, you have no way of knowing whether your next project or your last project could be the one that prompts someone to file a lawsuit.

An insurance broker may be able to give you protection in situations such as:

A miscommunication occurs during a project you’re working on, resulting in a client’s project being delayed. However, the client lost money due to the delay and wants compensation.

You set a construction project timeline with a speedy turnaround time. To meet this deadline, the company pushes the pace, and due to flaws in the finished building, the client is forced to pay for repairs and has filed a statement of claim.

While you usually keep a meticulous project spreadsheet, due to all your work during a hectic period, you overlook an essential detail that impacts a product manufacturing run. A customer gets hurt while using a substandard product. 

The most troubling aspect of liability exposure is that you may not even be at fault when all is said and done in court. But the legal bills you’re expected to pay to get there can be costly. Insurance can make it possible for project managers to protect themselves even in a worst-case scenario. 

What is Project Manager Needs from Their Insurance Broker?

You want an insurance broker who will work with you to ensure that you’re getting the coverage you need at a level that makes sense for you. The last thing you want as a policyholder is to find out too late that you’re underinsured or that your broker is nowhere to be found when you need to cash in your insurance policy. 

That’s why working with an insurance broker who will take the time to understand you and your insurance needs as a project management professional is essential. 

As a project manager, you know more than just about anyone about the importance of managing risk. The business processes you oversee daily are becoming more complex, with more moving parts and more opportunities for liability.

Which insurance broker is reliable for project insurance in Indonesia? 

Not many insurance broker companies have extensive knowledge and experience in construction risks due to the project’s unique risks and relatively high value.

L&G Insurance Broker is a leading insurance broker in Indonesia with extensive experience in construction insurance. 

L&G has successfully provided all the guarantees and insurance needed by a project, ranging from surety bonds, implementation guarantees, and down payment guarantees. 

L&G has also successfully placed project insurance with a significant value of even hundreds of millions of dollars with various projects throughout Indonesia.

For all your project needs, contact L&G now!



24 HOURS L&G HOTLINE: 0811-8507-773 (CALL – WHATSAPP – SMS)



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