Zurich North America is launching Construction Weather Parametric Insurance for project owners and contractors.
The coverage, according to the insurer, is designed to fill a gap created by more frequent and severe weather events, which are boosting the risk of construction delays not covered by traditional Builders Risk insurance policies.
Traditional insurance products such as Builders Risk policies offer valuable protection for financial losses related to weather events, but only when those events cause physical loss or damage to a project. Zurich explained that its Construction Weather Parametric policy doesn’t require physical loss or damage for a claim to be paid.
Instead, claim payment is based on predetermined weather events occurring in the project’s location, such as extreme rain, wind or temperatures (hot or cold). Any of these perils can cause project delays, resulting in severe financial losses, even when the project doesn’t sustain physical damage. The coverage is highly customizable for the buyer —contractor or owner — with options to help optimize cost-effectiveness for customers who face varying consequences if a project is delayed, Zurich North America said. An owner, for example, could incur heavy revenue losses from operating profits that aren’t being realized. A contractor who misses project deadlines could suffer penalties, including liquidated damages, as well as incur additional expenses.
The threshold options for each peril are based on historical weather data at the location of the project. Parametric customers can purchase coverage for one or more weather perils, and coverage duration can be tailored to peak season for the weather risk and pegged to milestones in the construction schedule.
Source: Zurich North America