Photo by Gene Gallin on Unsplash

Demolition –  the tearing-down of buildings and other structures. Demolition contrasts with deconstruction, which involves taking a building apart while carefully preserving valuable elements for re-use. Source: Wikipedia

Wrecking or demolition contractors tear down buildings, structures, machinery or equipment. Techniques employed vary according to local codes, the type of building or structure being demolished, and the exposure to adjacent properties. Limited demolition work used for remodeling projects may be done with only hand tools (called “tear-out”). On a larger scale, work may be done with a wrecking ball swung from a crane or with explosives. Rough sorting of material may take place, particularly if the insured engages in salvage operations on the equipment, machinery, or building materials.  One very major concern is the exposure to and the removal or containment of asbestos and lead from older buildings, requiring the wrecking operation to be carefully done in compliance environmental standards to remove and dispose of those hazardous items.

Who Needs Demolition and Deconstruction Insurance?

Demolition and Deconstruction insurance provides contractors with protection against a broad range of potential common claims, including bodily injury, property damage or personal injury.

Examples of those who need demolition insurance:

  • Demolition contractors
  • General contractors
  • Piling contractors
  • Blasting contractors
  • Welding contractors

Property exposures at the contractor’s own location usually consist of an office and storage of equipment and vehicles. The insured often handles salvage, which may be stored inside or outside. If explosives are stored on premises, the hazards of fire and explosion increase the potential for a severe loss. Therefore, superior controls on inventory and access to the explosives’ storage areas are required. Storage must be in accordance with all provincial and federal regulations. Local fire departments must be notified and a plan of control and evacuation should be in place.  Explosives are target items for thieves and terrorists.

Inland marine exposures include contractors’ equipment and goods in transit. If explosives or salvage are transported, drivers must have a Dangerous Goods license and be experienced in transport. The vehicle must be properly marked. If the contractor is responsible for removal of the debris, additional types of equipment may be needed, such as front-end loaders. Any type of equipment may be damaged or destroyed during blasting operations. Some equipment, such as cranes, may be leased, rented or borrowed for a particular job.
Equipment on site may be dropped from heights, strike utility piping or wires either underground or within the building being demolished. The insured may own materials used to set up fences and blockades. If equipment, machinery, tools or supplies are left at job sites, they may be susceptible to theft and vandalism. Detonating devices, as well as explosives, may be a target for thieves.

Occupiers’ Liability exposures are extremely high, both at the contractor’s premises where explosives are stored and at any site using blasting material. Lack of proper storage on premises or improperly set explosives at the job site may result in severe bodily injury, loss of life, and major structural damage. Demolition and wrecking operations may attract crowds of onlookers. There must be barriers in place to protect the curious. The buildings or structures must be carefully combed for people prior to any destruction.

The presence of fuels, flammables and combustibles at the job site poses a significant hazard control challenge. Building services, if not disconnected properly, may result in fumes, gas or water leaks, and shock hazards, as well as interruption of utility services to adjacent properties.

The collapse of a structure, intentionally or prematurely, may cause vibration damage to adjacent premises. The areas around the buildings and the structures nearby should be reviewed and evaluated prior to any destruction to prevent damage and claims for damage predating the demolition. Salvage may involve cutting, compacting or crushing, which present fire or explosion hazards. Debris piles are attractive nuisances and must be barricaded to prevent climbing.  In addition to the injury potential posed by fire or explosion, detonation may also cause serious hearing impairment.

Environmental impairment liability exposures include the storage and disposal of waste and debris from demolition sites. Lead or stored fuels may contaminate soil and groundwater supplies. Friable asbestos (asbestos insulation that crumbles easily and becomes airborne) may pose a serious risk. Proper written procedures and documentation of both the transportation and disposal process is important.

Automobile exposures include transporting workers, equipment and supplies to and from job sites. Transporting explosives demands extreme care by drivers due to the potential for fire, explosion, collision, overturn, and theft. A Dangerous Goods licence must be obtained, and attention paid to all provincial and federal laws. Transport of any salvage is difficult and requires proper loading to prevent overturn or overflow. The absence of detailed training and procedures in the event of overturn or spill may indicate a serious morale hazard. Age, training, experience, and records of the drivers, as well as the age, condition, and maintenance of the vehicles, are all important items to consider.

Workers’ compensation exposure is severe. Anytime work is done above ground, injury or death can occur from falls and being struck by falling objects. In addition to potential severe injury or death from fire or explosion in the event of an unplanned detonation, there is the possibility of injuries sustained during an attempted robbery. Common hazards include slips and falls, foreign objects in the eye, the use of tools during demolition, and back injuries from lifting during loading, unloading, and setup. Explosions may cause hearing impairment, either suddenly or due to cumulative trauma.

Minimum recommended coverage:
Business Personal Property, Employee Dishonesty, Contractors’ Equipment and Tool Floater, Goods in Transit, General Liability, Employee Benefits Liability, Umbrella Liability, Automobile Liability and Physical Damage, Hired and Non-owned Auto Liability, Workers Compensation

Other coverages to consider:
Building, Business Income with Extra Expense, Accounts Receivable, Computers, Valuable Papers and Records, Employment Practises Liability, Environmental Impairment Liability, Stop Gap Liability

For more information on demolition and deconstruction insurance, contact KRGinsure today!