Duration disputes, where a claim is denied because the loss falls outside the insured period, are among the most common and most preventable problems in construction insurance. Unlike a static property risk, a construction project changes every day, and its timeline rarely ends when originally planned.
The Three Coverage Phases
A standard construction policy covers three sequential phases. Understanding their boundaries, and communicating changes to MECON promptly, is the single most effective way to avoid a duration dispute.
| Phase | Coverage & Key Consideration |
|---|---|
| Construction Phase | From commencement of works to practical completion. Notify MECON of any duration changes exceeding policy schedule limits immediately. |
| Testing & Commissioning | Up to 4 weeks is generally standard but it is important to align this with contract requirements. |
| Defects Liability Period | It is imperative to align this with contract requirements. |
Where Duration Disputes Come From
The most common trigger is practical completion. In an ideal world, the contractual completion date, physical finish, and formal handover all align. In practice they rarely do, and damage occurring in the gap between them can fall outside the period of insurance.
The other major cause is straightforward: the insurer simply isn’t told about duration changes exceeding policy schedule limits. When a claim is lodged after the original policy period has expired, the dispute that follows is usually avoidable.
Real Example
A project insured under an annual policy for 12 months was physically complete but formal handover was delayed by a stakeholder dispute. This caused the timeline to exceed the 12 months period. Damage occurred at month 13. The insurer denied the claim, the policy had expired. MECON’s Project Duration Endorsement would have provided certainty of cover.
MECON’s Project Duration Endorsement
MECON’s Project Duration Endorsement provides an automatic three-month coverage extension beyond the stated completion date. This endorsement provides clarity and certainty of cover for all stakeholders.
What Brokers May Do
- Set up a regular project update protocol with every construction client, any material schedule change should trigger a notification to MECON.
- Confirm the policy start date reflects actual commencement of works, not anticipated commencement.
- Align the testing and commissioning and defect liability periods in the policy with the period in the contract.
- If work on a project ceases, MECON should be notified promptly as, coverage is typically suspended after 60 days.
Speak to your MECON BDM or Regional Manager about the Project Duration Endorsement and project update protocols.