.jpg)
The collapse of the building in George, South Africa, was a tragic event that made national and international headlines. On May 6, 2024, an apartment building under construction collapsed, resulting in the loss of 34 lives. At the time of the incident, 62 people were on-site. Many were rescued alive during a 10-day rescue and recovery operation, and the last survivor, Gabriel Guambe, was miraculously pulled from the rubble on Friday, May 10, after spending 118 hours—five days—trapped beneath the debris. We extend our sincere condolences to the families affected by this heartbreaking tragedy.
On November 6, 2024, key information regarding the building collapse still remains a secret.
This blog post does not focus on the cause of the collapse or the details surrounding the incident. Instead, we will explore the possible insurance coverage and claims that could have been lodged against insurance companies following this event.
Possible Insurance Claims
A disaster of this magnitude involves multiple layers of insurance claims, ranging from medical expenses and loss of life to property damage and liability coverage. Below are the key insurance claims that could have been made in the aftermath of the collapse.
1. Medical Aid Claims
Many individuals who survived the collapse would have required hospitalization, surgery, and ongoing medical care. Medical aid schemes or health insurance policies would have played a crucial role in covering these expenses, including:
- Emergency medical response and hospital stays.
- Surgeries and rehabilitation treatments for the injured.
- Long-term care for survivors with severe injuries or disabilities.
2. Life Insurance Claims
For the 34 individuals who tragically lost their lives, life insurance policies would have been a critical financial relief for their families. Claims would be filed to cover:
- Death benefits paid out to the beneficiaries of deceased workers or affected individuals.
- Accidental death and disability policies for those who had additional coverage.
3. Personal Injury & Workmen’s Compensation Claims
Employees working on-site, including contractors and subcontractors, would have been eligible for claims under Workmen’s Compensation. This covers:
- Compensation for injured workers unable to return to work.
- Disability benefits for those who sustained permanent injuries.
- Financial support for families of workers who lost their lives on duty.
4. Physical Loss & Property Damage Claims
The structural collapse caused significant property loss, and multiple insurance claims could have been filed under different policies:
- Contractors’ and Subcontractors’ Losses: Damage to materials, equipment, and investments in the building would be covered under contractors’ all-risk insurance.
- Third-Party Property Damage: Businesses or residences in the surrounding area affected by debris or damage could file claims for financial restitution.
- Public Liability Claims: Members of the public who suffered personal or property loss as a result of the collapse could pursue claims against the responsible parties' liability coverage.
5. Professional Indemnity Claims
In cases where professional negligence or design flaws contributed to the collapse, professional indemnity claims could be lodged against the experts responsible for various aspects of the construction. This could include:
- Architects– Responsible for the overall design and structural layout.
- Structural Engineers – Ensured the building's stability and compliance with safety regulations.
- Civil Engineers– Managed the integrity of infrastructure such as foundations and load-bearing structures.
- Geotechnical Engineers– Assessed soil and foundation conditions to ensure stability.
- Project Managers – Oversaw the project and ensured all safety and compliance measures were followed.
- Quantity Surveyors – Managed costs and materials, ensuring that appropriate resources were allocated.
- Building Inspectors – Conducted safety inspections and approved construction phases.
If any of these professionals were found liable for design flaws, miscalculations, or failure to adhere to building codes, their professional indemnity insurance would likely be called upon to cover claims made against them.
Let’s Focus on Contractors’ All-Risk Insurance
For the purposes of this blog post, we will focus on contractors’ all-risk insurance. Who decides what needs to be covered inside such a policy?
This process typically starts with the issuance of a tender to potential contractors. The tender document outlines in detail what the insurance should cover, what should be included in the policy, and who should be responsible for obtaining it.
The key parties involved in this process include:
- The owner or principal– The entity commissioning the construction.
- The main contractor– The primary company responsible for the construction work.
- Subcontractors– Companies or individuals contracted by the main contractor to complete specific tasks.
Since all of these parties could potentially suffer losses in the event of a disaster, the insurance policy must make provisions for each of them.
The tender document typically specifies:
- The sums insured– The total value of the project that needs coverage.
- The scope of the coverage – What specific risks and damages are included.
- The responsibilities of each party – Who is responsible for obtaining and maintaining coverage.
After the tender document is issued, the insurance company requires a questionnaire to be completed. This questionnaire probes into detailed information about the project to ensure that all relevant factors are considered before issuing a quote. Once the insurer reviews the responses and submits a quote, the involved parties must agree to the terms before an official insurance policy is issued.
The final contractors’ all-risk policy typically includes:
- Start and end dates – The period during which the project is covered.
- Sums insured for the main contract – The maximum payout amounts in case of claims.
- Subcontractor coverage – Specific provisions ensuring subcontractors are also protected.
- List of involved parties– Naming the principal, contractors, and other stakeholders.
- Maintenance period provisions– A timeframe after completion where the contractor remains liable for defects.
- Additional specified details– Any other terms agreed upon by the insured parties and the insurance company.
Final Conclusion
Insurance brokers still play a big role in helping to determine the cover needed in contract scenarios. They assist with the claims process, including submitting claims, following up on claim progress, and working with assessors and other involved parties. Contractors taking on contracts should carefully review what is expected of them, examine tender documents, and engage insurance brokers to help assess the scope of risk they are assuming.
Contractors' all-risk insurance is essential for any contractor stepping onto a contract site. If you are a contractor working on-site, you are most likely in need of a contractors' all-risk insurance policy to ensure adequate coverage for potential risks and liabilities.
Q&A
I asked my program to create a list of questions from all the research material I found on the incident and this is what it came up with.
What is your question regarding the incident?
Here is a comprehensive list of questions related to Contractors’ All Risks (CAR) Insurance, compiled from the online resources:
General Coverage Questions
1. What is Contractors’ All Risks (CAR) insurance?
2. What does CAR insurance cover?
3. Who needs CAR insurance?
4. What types of projects require CAR insurance?
5. What are the key components of CAR insurance?
6. What is the difference between CAR insurance and Builder’s Risk Insurance?
7. What are the benefits of CAR insurance for contractors?
8. Is CAR insurance mandatory for construction projects?
Scope and Policy Structure
9. Does CAR insurance cover only the contractor, or does it extend to other stakeholders?
10. How does CAR insurance protect the employer and contractor?
11. What is the difference between first-party and third-party coverage in CAR insurance?
12. How long does CAR insurance coverage last?
13. When does CAR insurance coverage start and end?
14. Does CAR insurance cover damage to surrounding property?
15. Can CAR insurance be customized for specific projects?
Exclusions and Limitations
16. What are the common exclusions in CAR insurance policies?
17. Does CAR insurance cover defective workmanship?
18. Does CAR insurance cover materials that are stolen from a construction site?
19. Does CAR insurance cover damage due to natural disasters like earthquakes and floods?
20. Are acts of war and terrorism covered under CAR insurance?
21. Is damage caused by subcontractors covered under CAR insurance?
22. Does CAR insurance cover wear and tear or gradual deterioration?
23. What happens if a project is delayed—does CAR insurance provide any coverage?
24. Are losses due to faulty design or engineering covered under CAR insurance?
25. Can coverage be extended to include professional indemnity?
Liability and Legal Aspects
26. Does CAR insurance include third-party liability coverage?
27. What is the difference between CAR insurance and Public Liability Insurance?
28. Who is responsible for purchasing CAR insurance—the contractor or the project owner?
29. What happens if the insured party is found negligent?
30. Can CAR insurance cover legal expenses in case of lawsuits?
31. Is environmental damage covered under CAR insurance?
32. How does CAR insurance interact with other insurance policies?
Claims and Policy Management
33. How is a claim made under a CAR insurance policy?
34. What documents are required to file a claim under CAR insurance?
35. How are claims assessed in CAR insurance?
36. What factors affect the payout of a CAR insurance claim?
37. How long does it take to process a CAR insurance claim?
38. Can a claim be denied under CAR insurance?
39. What happens if damage occurs but is not reported immediately?
40. Can a policyholder appeal if their CAR insurance claim is rejected?
41. How do insurers determine policy premiums for CAR insurance?
42. Does the location of the construction project affect the CAR insurance cost?
Policy Customisation and Enhancements
43. Can CAR insurance be extended to cover plant and machinery?
44. What additional coverage options are available in CAR insurance?
45. How does “maintenance period coverage” work in CAR insurance?
46. Can CAR insurance be extended to include consequential loss?
47. Are temporary site facilities (e.g., site offices, storage areas) covered under CAR insurance?
48. Can contractors add subcontractors to a CAR insurance policy?
49. Can CAR insurance cover business interruption for contractors?
Financial Considerations
50. How is the sum insured determined for a CAR policy?
51. What happens if the sum insured is insufficient to cover the project cost?
52. What is the deductible in CAR insurance?
53. How do policy limits affect CAR insurance coverage?
54. Does CAR insurance cover contract penalties due to delays?
55. Are there any tax benefits to purchasing CAR insurance?
56. Can a contractor pass on the cost of CAR insurance to clients?
Joint Policies and Project Ownership
57. Why should a CAR policy be in joint names?
58. Who should be named in a CAR insurance policy?
59. What happens if multiple contractors are working on the same project?
60. Can a developer or property owner take out a CAR insurance policy?
61. How do joint venture projects handle CAR insurance?
Look like there could be more questions than answers.
I have created this article with the assistance of Chat GPT, Wikipedia and other sources.
Albert Schuurman
Comments