On equipment-intensive projects, routine jobsite events can turn into high-severity equipment loss and schedule disruption. For general contractors, that event can create exposure disproportionate to fee — especially when custody/control and commissioning roles are unclear. This article outlines the questions that help align insurance, contract risk allocation and execution controls. It's for general contractors and construction managers on data center, power and advanced manufacturing projects where owner-furnished/vendor equipment is a major share of total value.
Why equipment-intensive projects change the risk equation
When equipment value is a multiple of the construction work, risk concentrates in equipment damage, interface error, unclear custody/ control and delay impacts. Effective programs clarify responsibility at each handoff, maintain coverage through testing and turnover, and keep liability aligned with control.
High-level Insurance program considerations
Program structure and claims control
This consideration encompasses who buys what, limit approach versus equipment values and how claims will be managed.
- Coverage continuity: Transitions across transit, builder's risk, install, testing and permanent property — especially for early storage/movement/energization
- Testing, integration and commissioning roles: How "testing" is treated, what conditions apply and whether delegated design/controls integration creates uninsured gaps
- High-severity loss modes: Limits/sublimits/deductibles and required controls for water, contamination and resultant damage
- Delay exposure — Delay in Start Up (DSU) or Advance Loss of Profit (ALOP): Alignment of schedule control and contract terms with how coverage responds.
- Critical trade performance: Qualification and financial backing for key system trades that drive commissioning and schedule
Contracting strategy: Allocate control and contain severity
Custody and control (in writing): Define when risk of loss transfers and how acceptance is evidenced at receipt, storage, installation, energization and turnover.
- Liability proportional to control: Align caps, carve-outs and available insurance with your scope and ability to prevent loss — then flow it down consistently.
- Prevent gaps at testing/turnover: Align waivers, consequential damages and performance obligations with the insurance program and handoff milestones.
- Deductibles as a managed exposure: Clarify funding, allocation and caps so a single loss doesn't become a balance-sheet event.
Key handoffs to clarify early
| Milestone/activity | Examples of questions to resolve |
| Pre-site: Manufacture, storage and transit | Who covers it, when does risk transfer, what handling applies and how are issues documented/escalated? |
| On-site storage (pre-install) | What conditions apply, who verifies them and how is custody tracked? |
| Setting/installation | Who directs sequencing/vendor coordination, and who owns what risk? |
| Testing/commissioning/energization | What starts testing, what approvals apply and when does property coverage attach? |
| Turnover/beneficial use | How is acceptance documented, and who manages latent defect exposure? |
Execution controls that reduce severity
Treat equipment protection as critical path: Align logistics, temporary conditions and storage to equipment sensitivities (water, handling, environment and security).
- Commissioning governance: Establish authority, documentation and vendor participation for energization and integrated testing.
- Systems QA/QC and defensible records: Verify interfaces and controls integration and preserve documentation that supports claims and dispute resolution.
Post-completion: Latent defects, completed operations and documentation
Completed-ops severity: Post-completion events can implicate equipment values and Business Interruption amounts that dwarf construction value — so risk transfer should contemplate a long tail.
Documentation wins: Acceptance criteria, turnover evidence and commissioning records often determine outcomes later.
How Gallagher helps
- Drive early alignment on risk-of-loss, insurance responsibility and commissioning authority.
- Structure builder's risk/project programs for equipment-driven exposures through testing and turnover.
- Support insurance requirements, waivers and liability language that's practical and defensible.
- Provide loss control perspective and claims advocacy focused on documentation.
Contact Gallagher to review your equipment strategy, delivery method and commissioning plan — and to translate these considerations into project-specific insurance placement support and risk-transfer language.
