You have Bought a Property That’s Still Under Construction. Are You Covered If Something Goes Wrong?

You bought a property that’s under construction. All the payments are done, and we're waiting for the construction to finish now. So, practically and technically, the site is still active. Work is still happening; workers are moving materials, and several things can go wrong before the property is ready. And what if your construction causes damage to someone else, or part of the building is damaged before the handover? What are your measures to tackle these issues? Furthermore, does buying the property mean you are automatically protected against these risks? Lots of questions and confusion.

Let us help you understand what’s behind this. The answer to your question depends on the situations, agreements involved and insurance arrangements already in place. One of the main insurance arrangements that could already be there is contractors all risk insurance.

Who Is Responsible for a Property Under Construction

Responsibility in a construction project is always like a line: it’s distributed among several parties, including contractors, developers, architects and more. When you are buying a property that is still under construction, the contractor could have responsibilities under the relevant construction/sales agreements between the client and property owner.

If any kind of accidental damage or injuries occur at the construction project, it is usually covered by contractors all risk insurance. It is often a requirement by law for the construction and building licenses in Dubai and specified municipal authorities, and it is mandatory in practice across practically all UAE projects.

As a buyer, don’t assume that your purchase agreement automatically protects you against any kind of loss happening during construction. Review the terms carefully and ask the developer what kind of insurance there is for the project, what it covers, etc.

What If the Construction Damages Someone Else’s Property

Construction activity can affect more than the buildings that are being developed. Any kind of excavation, materials falling, equipment and other site operations can cause damage to a third party’s property or person. The result would be repair costs, expenses, compensation, and questions about who was responsible.

If you have the best contractors insurance in the UAE, it offers protection, including third-party liability damages and injuries, which is one of the essential factors when it comes to construction. For property buyers, the important point is to understand that a construction project can involve risks beyond physical damage to the property being purchased.

How Can Contractors All Risk Insurance Help

Contractors all risk insurance is a type of policy that is designed to address the specified risks associated with a construction project. The coverage extends to accidental loss or damage to the building, construction materials, third-party liabilities and more. It is usually bought by the contractor or developer and not the buyer.

For a buyer, the point isn’t to purchase it yourself but to know it exists, because a project with the right cover helps to recover from a setback until the handover. And while choosing the best one, make sure it’s the one whose limits, duration and exclusions actually match the size and timeline of your project.

What Should You Check Before Handover?

Before you sign the agreement, take time to understand about:

• Review the sale agreement: Check the conditions relating to damage, repairs, handover, and responsibility before completion.
• Ask about project insurance: Confirm whether insurance for the project is in place.
• Inspect the property: Look for visible damage, incomplete work, or defects and report them.
• Understand the handover terms: Clarify how outstanding issues will be recorded and addressed.
• Check your future insurance needs: Once the property is handed over, consider what separate protection may be needed for you.

If you're exploring the best contractors insurance options for a construction project, remember that the right choice depends on the project's risks, contractual responsibilities, and required coverage. The cheapest quotation alone may not provide the protection needed.

Conclusion

Buying a property before the construction is complete still exposes you to construction-related risks. Understanding who is responsible, what insurance covers, and what your agreement says can help you ask the right questions before handover. The insurance aggregators in Dubai, such as PromptTech Insurance, can help businesses explore and compare available insurance options, depending on the needs and risks aligned with their project.

Ultimately, a property purchase agreement and a construction insurance policy serve different purposes. Knowing what each one covers can help you approach handover with greater clarity.