Insurance considerations for modular and prefabricated construction
Snapshot
- Modular construction can improve project delivery, but it introduces a different risk profile that extends beyond the construction site to manufacturing, storage, transport and installation.
- Water ingress, moisture damage and serial defects are among the most significant insurance concerns, with a single issue having the potential to affect multiple modules and increase loss severity.
- Insurance outcomes are typically strongest when risk is addressed early, with clear quality controls, supplier oversight, contractual risk allocation and alignment between the delivery model and insurance programme.
Modular and prefabricated construction methods are becoming increasingly common across Australia’s property, accommodation, healthcare and education sectors as developers seek greater programme certainty, improved productivity and more consistent delivery outcomes. What was once viewed as a niche construction approach is now becoming an important component of modern project delivery.
However, while modular construction can offer significant commercial and operational advantages, it also introduces a different risk profile. More value is created away from the construction site, responsibility for works may pass through multiple parties, and defects can be repeated across numerous identical units before they are detected. As a result, insurers are placing greater emphasis on understanding how risks are managed throughout the entire delivery lifecycle.
Water ingress, moisture damage, transit exposures and serial defects are among the issues shaping insurer attitudes toward modular projects today. Understanding these emerging exposures, and how to present a well-controlled risk profile, is becoming increasingly important for developers, contractors and asset owners looking to secure appropriate insurance coverage.
Our latest paper explores the evolving insurance considerations associated with modular and prefabricated construction, including emerging claims trends, underwriter expectations, risk management practices and practical steps clients can take to strengthen insurance outcomes. Download the full paper to learn more.
Download Now
To learn more about the insurance implications of modular and prefabricated construction, emerging claims trends and what insurers look for when assessing modular projects, contact Aon’s Construction team.
