Construction Projects Insurance

Insurance against the risk when the buyer fails to compensate costs incurred during a project if the works do not proceed and against the risk that you either do not, not entirely or very late receive payment and interest.

Construction projects

Owing to the specialist nature of construction projects, Atradius has developed a special insurance policy to cover these. Construction projects are generally agreed upon on a budgeted contract sum. While the works are being carried out, the contractor produces a regular, usually monthly, progress report of the works that were carried out during the preceding period. Based upon the progress report, the client produces a certificate, on which the client certifies the proportion of the contract sum that relates to the work that has been completed. As soon as you have received this certificate, the customer must make payable to you that proportion of the contract sum as stated in the certificate. All the certificates together represent the final contract sum. If an advance payment has been agreed, part of the amount paid in advance will be deducted from each of the certificates that were issued during the works.

Risks insured

First of all, Atradius construction projects insurance covers the risk of not being reimbursed for the incurred costs, because not all the certificates are being issued. A possible reason for this may be that you are not able to fulfil the contract entirely for reasons that are beyond your control. Secondly, it covers the risk that, in spite of certificates being issued, you do not receive the certificate amounts that are due to you.

Covered percentage and uninsured portion

In the case of Atradius insurance, you always bear a percentage of the risk yourself. Generally this will be between 2% and 20%. You can also transfer your uninsured portion to another party, but only if that party has some involvement in the transaction, such as, for instance, a supplier or a bank. Atradius must approve any transfer of the uninsured portion in advance, for example when the promise of cover is issued.

Waiting period

In practice, amounts payable to you are not always paid on the due date. Some delay can be even more a rule rather than an exception. For this reason, the policy states that a claim can only be paid after the expiry of a specific period, the so-called waiting period. Because of this waiting period, Atradius avoids having to deal continuously with claims, while payment is still made shortly thereafter. Generally, the waiting period is three months. In some cases, however, this period can be extended to six, nine or twelve months when, for instance, a country has a fairly consistent level of payment arrears.

Calculation of the claim

A claim occurs if you have not received all the certificates or the payments that are based on issued certificates of the construction project. Atradius will pay the covered percentage of the claim within fourteen days after you have agreed to the claim statement in writing. When compensation is paid, Atradius will take over all rights and securities relating to the transaction.

Following payment of a claim, it is important for you that the transaction should be completed successfully, because, if Atradius still receives payments on the transaction (proceeds), you will receive a part that equates to your uninsured portion. Atradius always pays claims in Euros. In case of a credit claim, any amount in foreign currency will be converted against the exchange rate that is applicable on the due date of the amount payable. However, the exchange rate may never be higher than the rate that is applicable on the date on which the construction contract came into effect.