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New technology has created opportunities for new insurance coverage options for projects that have the right protections in place. Is your project one of them?


It can start with a slow leak that goes undetected. Or it can be a sudden burst that floods the new wing of the facility your crew just finished building. Whatever the cause, the damage can be devastating and costly.

In construction, piping, plumbing and mechanical systems account for the second most frequent cause of construction loss. According to Insurance Services Office (ISO) data, 12.84% of all construction claims are water damage-related, and account for an average per-claim amount of $138,404.

System failures, external water penetration, construction defects, even inadequate inspections can leave a construction site vulnerable to higher water damage exposures. Everything from fire sprinkler systems, plumbing systems, air conditioning systems etc. can become a source of water penetration both during construction and once the project is completed.

For that reason, many project owners are considering how to mitigate the losses before the project even gets underway. For one major hospital system, an expansion project provided the best opportunity for a new type of project protection that enhanced their own high level of risk management.

Protecting the Investment
A large metropolitan hospital system was building a new 10 story building next to their existing hospital due to population growth in their area. The state-of-the-art new building was designed to house 312 additional beds, new emergency department, new Heart/Vascular/Neurosurgery facilities, and Central Energy Plant to handle the growing needs of in this major metropolitan area.

The organization decided to purchase non-invasive ultrasonic water flow and leak detection system that not only reduced the risks but provided alerts should a leak occur to limit any possible damage. The technology, provided by Pillar Technologies, a digital construction technology company and AXA XL partner, deployed during construction, also protects the building well beyond construction.

Putting such a safety net in place may seem like an added expense that wasn’t necessary. However, with the project totaling $400 million, protecting that investment becomes paramount. What could happen without it? Another major Hospital within the same city had a major renovation project. A pipe burst during renovation flooding several floors of the active hospital. By the time water could be shut off, the leak source located, it ended up costing significant financial losses.

Yet hospitals are not the only projects vulnerable to water damage. Any commercial property project, from hotels and commercial offices to schools and manufacturing or procession operations could suffer damage from leaking sprinklers, construction defects, bad hookups, or faulty materials. The more protections in place at the outset, the lower the risk of water-related loss.

In another situation, a large civil contractor was demolishing sections within an existing stadium structure and performing renovation. The contractor was using Pillar technology to monitor jobsite conditions – temperature, humidity, carbon monoxide, noise, and particulates. During the renovation a sensor on the Pillar technology detected high levels of carbon monoxide. It triggered an immediate alert and the machine within minutes was shut off and a serious situation was averted.

The lower the risks, the better your insurance product offerings are. As project owners implement technology to protect the project lifecycle, insurance is responding. AXA XL’s Highly Protected Project class of business offers project owners custom-built cost effective solutions that are available only to construction projects that have put technologies in place to reduce project risks.

Not just water damage, either. Construction sites are employing a variety of technologies that reduce the risks associated with jobsite conditions, environmental hazards, overall site safety, worker safety and job allocation, and subcontractor prequalification and benchmarking.

The opportunity to improve construction site risk mitigation reaches beyond protecting the building itself. As part of our Construction Ecosystem, AXA XL has partnered with more than 35 tech companies that provide a variety of technology solutions – from wearables to Artificial Intelligent tools to help build stronger contracts – all aimed at improving worker and site safety as well as productivity. Such tools have great potential in helping reduce risk on construction jobsites and add to better safety and improved worker on-the-job health and wellbeing.

AXA XL’s Highly Protected Project class of business offers project owners custom-built cost effective solutions that are available only to construction projects that have put technologies in place to reduce project risks.

Insuring Highly Protected Projects
When project owners opt to deploy technology to reduce their risks, like the previously mentioned hospital system, that kind of diligence should be reflected in their insurance costs. At AXA XL, we believe that the spend on technologies to offset major risks should be supported.

The hospital, for instance, benefited from purchasing AXA XL’s Highly Protected Projects technology insurance solution, a tailored multi-line insurance approach for construction projects implementing technology. Contractors receive favorable terms and conditions as a result.

Our North American Construction team has compiled a list of quality practices that your organization must be utilizing in order to qualify for the more favorable insurance coverage. They include:

  • Prevent or mitigate water damage: Sensors help identify leaks and water flow in real time, send alerts, and automatically shut off the source of water.
  • Detect unhealthy or unsafe environmental conditions: Sensors monitor jobsite conditions, giving contractors real time alerts when conditions exceed established thresholds, such as temperature, humidity, or dust/airborne particulate.
  • Aid in subcontractor prequalification: Software allow contractors to review and benchmark the performance of trade subcontractors and provide risk mitigation recommendations.
  • Support project scheduling: Contractors can analyze the quality of a project schedule.
  • Monitor onsite safety: Wearable technology can detect falls, report injuries and sound alarms in the case of emergency.

Putting such protections in place help not only with lower insurance costs upfront but can also help your organization avoid claims. A large claim can impact your ability to secure affordable coverage at renewal.

Better Jobsite Results
As technology improves, so too does construction project outcomes. Putting the right technology to work on your jobsite can keep losses lower and costs under check. In a highly competitive construction market, having the right protections in place can help win bids and improve your own operations, as well as those of your client.

The more you do today to improve outcomes for your client, the better your competitive advantage. Talk with your insurance carrier today and involve them in the conversation during the budget-planning phase of construction. Establishing your protections early can save you countless dollars – and headaches – throughout the entire project lifecycle.


About the Authors

Gary Kaplan is AXA XL's President of North America Construction. He can be reached at Michael Esposito is VP and Underwriting Manager for AXA XL's  Construction Primary Casualty Insurance line. He can be reached at


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Global Asset Protection Services, LLC, and its affiliates (“AXA XL Risk Consulting”) provides risk assessment reports and other loss prevention services, as requested. This document shall not be construed as indicating the existence or availability under any policy of coverage for any particular type of loss or damage. AXA XL Risk. We specifically disclaim any warranty or representation that compliance with any advice or recommendation in any publication will make a facility or operation safe or healthful, or put it in compliance with any standard, code, law, rule or regulation. Save where expressly agreed in writing, AXA XL Risk Consulting and its related and affiliated companies disclaim all liability for loss or damage suffered by any party arising out of or in connection with this publication, including indirect or consequential loss or damage, howsoever arising. Any party who chooses to rely in any way on the contents of this document does so at their own risk.

US- and Canada-Issued Insurance Policies

In the US, the AXA XL insurance companies are: AXA Insurance Company, Catlin Insurance Company, Inc., Greenwich Insurance Company, Indian Harbor Insurance Company, XL Insurance America, Inc., XL Specialty Insurance Company and T.H.E. Insurance Company. In Canada, coverages are underwritten by XL Specialty Insurance Company - Canadian Branch and AXA Insurance Company - Canadian branch. Coverages may also be underwritten by Lloyd’s Syndicate #2003. Coverages underwritten by Lloyd’s Syndicate #2003 are placed on behalf of the member of Syndicate #2003 by Catlin Canada Inc. Lloyd’s ratings are independent of AXA XL.
US domiciled insurance policies can be written by the following AXA XL surplus lines insurers: XL Catlin Insurance Company UK Limited, Syndicates managed by Catlin Underwriting Agencies Limited and Indian Harbor Insurance Company. Enquires from US residents should be directed to a local insurance agent or broker permitted to write business in the relevant state.