Mekong Re - Construction

Construction Reinsurance

Laying the Right Foundations for Builders and Engineers

Our extensive experience in the construction and engineering industries makes us well-placed to handle reinsurance risks for even the most complex, high-value projects. We can offer cover on single projects or as an ongoing business policy for contractors, developers and owners — on either a full value or excess of loss basis.

All Risks Coverage and Supporting Insurances

From start to finish, construction projects are dense with risks that, when realised, can put both teams and bottom lines in jeopardy. That’s why we’re pleased to offer all risks coverage extending to all market areas of building and engineering:

Coverage

Contractors all risks
Contractors plant & equipment
Binding authorities
Erection all risks
Electronic equipment

Market Areas

Power generation
Heavy and light industrial
Infrastructure including road, rail and water
Mining
Oil and gas
Building
Processing facilities
DSU and latent defects insurance deserve a detailed explanation, which you can read below.

What Is DSU Insurance?

Delay in Start Up (DSU) insurance protects against the financial consequences of a delay to project completion when that delay is caused by an insured physical damage event.

What You Should Know

This cover works best alongside all risks / erection all risks insurance policies covering loss or physical damage to a project
DSU insurance is usually purchased for the project owner
Project financiers or lenders might require DSU cover if finance is on a limited recourse basis. Contractors may require cover if the project is a concession contract
The project owner (or the above mentioned parties where relevant) will be entitled to claim
The indemnity under a DSU policy will reimburse the policy owner only to the extent that they have suffered a loss
Any claim settlement will consider seasonal and market fluctuations in the actual business performance. Another crucial consideration is the effect of any uninsured events (such as poor contractor performance, late delivery of equipment, etc.) which might have delayed project completion
Lastly, DSU insurance cover is only triggered by project delays due to physical damage events you’re insured for

Typical Coverage

In general, a DSU insurance policy will provide the following levels of cover:

Gross Profit

Loss of anticipated revenue — including debt service costs, fixed operating costs as well as anticipated net profit, less variable costs.

Debt Service Only

Increased cost of working is also insured under DSU to the extent that the increased expenditure reduces the insured loss. Any indemnity will be limited to the losses sustained within the policy parameters.

Debt Service & Fixed Costs

A hybrid policy that includes coverage from both of the above categories.

Latent Defects Insurance

What is Latent Defects Insurance (LDI)?

Latent Defects Insurance (or LDI) covers defects in newly-built properties discovered after the property has been sold. Without it, builders, contractors, developers and financiers can be left exposed to liability claims relating to design, workmanship and materials.

Why You Might Need LDI

A typical property all risks policy doesn’t provide protection for damage arising from a building’s inherent or latent defects. If it falls to you to reinstate such damage, it could end up on your balance sheet.

It’s possible to try to claim against the contractor’s or consultant’s professional indemnity insurance policy. However, in this situation, there may be a liability cap, which will prevent full recovery. What’s more, proving liability can be tricky. If you need to make a claim in this manner, it can take years to reach a resolution — and if the contractor is no longer in business by the time everything is settled, you may be left without recourse anyway.

How LDI Can Help

LDI indemnifies you for the cost of the repairs to, or replacement of, damaged property and/or pay to prevent imminent further damage caused by a defect up to the total sum insured, typically the full reinstatement value.

Cover can be arranged for new buildings and significant extensions to, or conversions of, existing buildings. The policy is generally available for a period of 10 to 12 years from the date of issue of final certificate of practical completion.
The insured can be any party who has an interest in the property (normally the owner or developer) and can be required by funders or incoming tenants with an obligation to repair under the terms of a lease agreement.