Liquidated Damages Insurance is extra cover that protects you against a specific breach of contract –if you are unable to deliver a project on time.

An Australian first, this innovative insurance solution boosts the potential value of your insurance – and provides greater certainty for you and your client’s business.

You can add it as an optional extra to your Single or Annual Construction Insurance for residential buildings.

UNDERSTANDING LIQUIDATEDDAMAGESINSURANCE

No matter how experienced and well prepared your construction company is, there are always factors beyond your control – such as bad weather or supply chain issues – which could hinder your ability to meet your timelines.

These types of delay could incur financial damages to your clients for which your company could be held contractually liable. But with Liquidated Damages Insurance, you can be protected against these costs.

Liquidated Damages is an amount specified in a contract which a builder can be liable to pay the

owner for late completion of the contract

FAST FACTS PROTECTION FOR YOU AND YOUR BUSINESS

damage to the project, Delay caused by any pollutant

industrial action,The first five days of delay beyond practical completion

intervention by, or delay caused by, authorities, Records not maintained in a site diary

late delivery of materials expected on a specified day,

the influence of weather.

Here’s an example of how Liquidated Damages Insurance can help:

Construction owner Christos and his team were employed to do a substantial renovation of a home. For the duration of the renovation, the homeowner’s family had to move out and rent temporary accommodation.

In the contract, the homeowner had stipulated liquidated damages of $2,500 each week to cover costs if the renovation was delayed.

A few days before Christos and his team completed the job, a plumbing fitting failed. The leak caused widespread water damage to both the existing structure and the renovation work. As a result, Christos and his team had to repair and replace floors, floor coverings, custom cabinetry, skirting boards, wall boards and even some ceilings.

These repairs added 42 days to the job, during which time the family had to stay in rented accommodation – and pay an unexpected six weeks of rent. Because of the liquidated damages clause in his contract, Christos was liable to cover these costs.

Fortunately, Christos had taken out MECON’s Liquidated Damages Insurance on top of his standard Construction Insurance. Five days after the agreed completion date on the contract, the cover began, and the policy covered 37 days of liquidated damages – a total of $13,214.

This product is issued by AIG Australia Limited (AIG) ABN 93 004 727 753, AFSL 381686.

This is general advice only. Please consider your own needs, financial situation and objectives and read the policy wordings available from www.mecon.com.au before deciding to buy this insurance.

www.mecon.com.au

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WHAT’S COVERED – AND WHAT’S NOT?

HOW IT WORKS

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If you’re in construction, talk to MECON Insurance today about our unique range of insurance options that can extend your cover to provide the protection you need.

Extra costs attributable to:

POLICY DETAILSThe endorsement wording provides the details, but these are the main things relating to a claim:

COVER

Maximum indemnity

Special deductible (excess) When you need to claim

POTENTIAL BENEFITS

You are covered up to the amount shown in your schedule or as agreed when you take out this insurance.

If you make a claim, you will need to pay the special deductible amount set out in your schedule.

If delay in completion of a contract means you incur Liquidated Damages.