Dewatering expense is an exclusion in the Contractors All Risk insurance policy but the coverage for the dewatering can be included in the main policy by paying extra premium. A dewatering add-on or warranty is normally added to the Contracts All Risks Insurance Policy mainly if the policy is regarding infrastructure or civil project. It is to be noted that the dewatering expense coverage is limited. For example – a policy will cover for dewatering expenses for up to INR 10 lakhs in the policy.
Dewatering can be termed in two ways. It involves the process of lowering the water table level around and at the work or contract site. Dewatering also involves the removal of groundwater mostly by evaporation or pumping, which then enables the site contractor to perform the job taken in a workable or reasonably dry environment. Many times, dewatering can be mistaken or confused for removing water from a hole which was dug as part of the construction contract and later got filled with rainwater.
A contract works policy principally provides cover for sudden and unforeseen loss or damage to the works being constructed. It does not guarantee the accuracy of project engineers’ assumptions or succeeding work. In the above illustration, if the Project Engineer miscalculated the required number of pumps needed to continually pump the water out of the construction area of the basement levels, resulting in damage and delay to construction, then the responsibility lies with that Engineer. Due to the dewatering warranty or exclusion, there will be no cover for such loss under the contract works policy. However if, for example, water damage was incurred to the site or building as a result of the dewatering pumps being faulty or stolen, then the contract works policy may offer coverage cover as the loss was sudden and unanticipated.
A contract works policy will usually respond to this situation. The policy excludes the additional expenses incurred in dewatering. Although, this does not include “dewatering” costs directly caused by insured perils. If there is a miscalculation on the number of pumps required to dewater then the policy will not cover the professional mistake made by the engineer
However, a storm cannot be predicted by the engineer so if the site is flooded due to an insured peril then the policy will provide normal coverage for such situations.
In the example given above, part of the contract may be to dig footings for portico posts just 20 inches below the original level of the ground. Once the digging has been done for the footings, the hole may get filled with water if it rains in the night. In order for construction to continue the next day, the water from the hole will need to be extracted. The process of getting emptying the water out of a hole is not categorised under dewatering and the policy will not cover the expenses for the same.