Small Building Companies Face Large Insurance Risks

Many construction companies are taking to many risks And many were forced to close their doors due to substantial losses.

With the recession slowly making its way behind us, South Africa has been faced with a building boom - especially with the World Cup taking place in the country next month.

However, small construction companies are taking too many risks, according to leading insurance experts, and already some of them have been forced to close their doors due to substantial losses.

The Sales Director at CIB Insurance Solutions, Jonjon Smit, believes that many of these closures could actually have been prevented if the construction companies had the right type of insurance cover.

However, the sad fact of the matter is that 40 - 50% of these companies have no form insurance, putting them at incredible risk in a very tough industry.

"Large construction groups who have been around for years often have adequate cover in place," said Smit. "However many smaller players who are trying to save costs choose to cut back or neglect insurance, often with disastrous consequences."

As such, this is definitely a case of "goodkoop is duurkoop".

Just because smaller construction groups choose not to take out insurance does not mean that there not several excellent products available in the market.

For example, many construction groups face the problem of theft of their machinery and tools, which could lead to damage of hundreds of thousands without the proper cover.

"We have even had a case of a bulldozer being stolen, which is incredible when you think of the size and visibility of these vehicles," said Smit.