The exclusions list isn't the insurer's collection of get-out clauses – it's the genre's definition: it tells you what isn't a sudden loss, but a business risk, a quality issue or a maintenance matter. Anyone who knows the exclusions won't be caught out – and, with any luck, won't make the mistakes the list warns against in the first place. Here's the map, told straight.
- Never an insurable loss: liquidated damages, fines, delay on its own, wear and tear, stock shortages, wilful acts.
- Your own defect, your own cost: fixing defective work or a defective design – though the consequential loss is typically insurable.
- Subject to conditions: theft (security), natural-catastrophe loss (protective measures), water damage (dewatering).
- Endorsement-dependent: flood, earthquake, strikes and terrorism, testing and commissioning.
The business-risk group
Liquidated damages and fines are not an insurable loss – no endorsement brings them in, because they're not a sudden event but a contractual or regulatory consequence. Likewise excluded: a delay to the schedule on its own (the resulting loss of market share or revenue), exchange-rate and price movements, and stock shortages (something that's "just gone missing" isn't proven theft). These call not for insurance, but for contract management and the toolkit of legal-expenses cover.
The quality group: your own defect, consequential loss
Fixing your own defective work or a defective design yourself is part of your obligation to perform, not a loss. The consequential loss arising from the defect and affecting otherwise sound parts, however, is typically insurable – the design-defects article draws the precise line. Wear and tear and corrosion are likewise excluded: the work of time isn't a sudden event.
The conditional group
Here, cover applies – but with expectations attached. For theft, security or locked storage (theft article); for natural-catastrophe loss, temporary protection and watching the forecast (natural-catastrophe losses); for water damage, dewatering readiness. Failing to meet these makes up the first half of the list of common rejection reasons – and all of them are preventable through good site management.
The endorsement-dependent group
Finally, there's a group that's excluded by default but can be opened up by endorsement: flood/inland inundation at exposed sites, earthquake, strike and civil-commotion losses, the risks of testing and commissioning (EAR), and the extra cost of overtime and express freight. These aren't needed automatically – the project's site and nature decide. That's precisely the work of structuring the cover: needs-assessment article; for the full picture: what's covered and what isn't.
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