Property all risk insurance plans claim to protect business owners against the loss to their property. It covers all kind of damages except those included in the exclusion list. Just like property all risk insurance Dubai, the risk is transferred from insured to the insurer. However, for undertaking this risk, the insurance company charges an amount from the policy holder called the premium. This amount can be paid annually or monthly according to the will and the policy by the policy holder to the insurance company. So, in order to find a good policy we must know how to calculate the premium in construction all risk property insurance.
Factors that decide the premium rates
- Project expense
- Amount insured
- Project type
- Project duration
- Period of testing
The amount insured plays a major role in calculating the premium amount. The amount insured should denote the complete value of the project including the value of material supplied, cost of cleaning, expected escalation, etc. The project duration also plays a major role, and it starts with the first unloading of the material on the site and ends when the project is completed.
Risk assessment is an important factor while deciding the premium amount. So, submitting accurate information to the insurance company will lead to a fair premium amount.
Factors considered for risk assessment:
- Building material used
- Construction time
- Safety factors
- Contractor’s experience
- Exposure of site to various conditions
Deductibles and premiums
Deductible is the amount that the policy holder is willing to pay at the start of the policy to get low premium rates. Choosing a construction property all risk insurance Dubai with a high deductible will lower the premium and similarly a low deductible amount will increase the premium rates.
When the period of the insurance policy exceeds twelve months, the premium amount is collected in installments. An interval is maintained between the collection of successive installments, (3 months at least). The first installment is calculated on the basis of the percentage of the total premium amount, (5% of premium). The entire premium amount is collected at least before 6 months of the expiration the policy.
Depending on the construction type and area type, the premium rates ranges from 1% to 4% up to first 3 months adding to the addition rate per month beyond 3 months.