Logo signage on a building, how do you insure it?
Jun 30, 2022
Question: An entrepreneur entered into a "combination" contract for demolition and construction, under which he received approval from the owner to display the company logo on a "permanent plaque" in the new building. The contract clarified that the entrepreneur must arrange for appropriate insurance after handover, in accordance with the instructions of his insurance advisor. How should the entrepreneur proceed?
Question: A developer entered into a "combination" demolition and construction contract, under which he received permission from the owner to display the company's logo on a "permanent plaque" in the new building. The contract clarified that the developer must ensure appropriate insurance after delivery, in accordance with the instructions of an insurance consultant on his behalf. How should the developer proceed?
answer
In a nutshell, a sign embedded in a building can be seen as part of it . Therefore, physical damage caused to someone's body or property as a result of a defect in the sign or its installation is covered (like all other parts of the building) under the product liability policy that applies to the building .
In order to be meticulous and avoid future problems, it is advisable to ensure that the planning of the location of the signage, as well as the material used to make it and the method of its installation, will be planned by the architect or constructor and will be an integral part of the building plan.
Many contractors and developers want to incorporate permanent signage into their completed projects. Whether for the sake of displaying the name of the project or for branding purposes, such as indicating the name of the contractor/developer who was behind the work. Signage is done using various techniques, and from an insurance perspective, the following rule should be remembered – have you placed a sign? You are responsible .
Damage caused to third parties as a result of the sign exposes the developer/contractor to a tort claim and should not be taken lightly. The detachment of a heavy element from a tall building may cause bodily harm and property damage and develop into a complex and expensive legal-tort proceeding.
In terms of insurance, because the branded signage is supposed to remain permanently, it is an integral part of the building , that is, of the "product", and it must be ensured that it is defined as such in the terms of the product liability insurance subject to the Liability for Defective Products Law, 1980, and the liability according to the Torts Ordinance.
It is important to ensure in advance that the contractor/developer is insured against risks of damage to a third party as a result of a defect in the sign or its installation with product liability insurance with comprehensive coverage, adequate insurance amounts, and retroactive application.
Please note that product liability insurance is, in most cases practiced in Israel for the construction industry, based on the " date of claim filing " (Claims Made). That is, the insurance must be in effect both at the time the sign is installed and at the time the claim is filed. It is sufficient that one of these two conditions is not met and the insured may find himself facing a broken trough on the day of the order.
The contractor's work policy that was relevant at the time of execution is no longer valid against construction defects or detachment of elements from the structure after its delivery. It should also be emphasized that these claims can escalate to huge amounts (especially in cases of serious bodily injury).
Answer
In a nutshell, a sign embedded in a building as part of its structure is covered under the building’s product liability insurance. Accordingly, any physical damage to a person or property caused by a defect in the sign or its installation is covered, just like any other part of the building, under the product liability policy applicable to the building.
To be precise and avoid future issues, it is advisable to ensure that the location, materials, and installation method of the signage are designed by the architect or structural engineer and form an integral part of the building plan.
Many contractors and developers wish to incorporate permanent signage in completed projects, either to display the project name or for branding purposes, such as identifying the contractor or developer behind the work. Signage may be installed using various techniques, but from an insurance perspective, there is a simple rule:
You install a sign? You are responsible.
Damages caused to third parties due to the sign expose the developer or contractor to civil liability claims, which should not be underestimated. The detachment of a heavy element from a high-rise building can cause serious injury or property damage and may evolve into a complex and costly civil lawsuit.
From an insurance standpoint, because branded signage is intended to remain permanently, it is considered an integral part of the building, i.e., “the product”, and it must be explicitly included in the product liability coverage under the Defective Products Liability Law, 1980 (Tasham-1980) and tort law.
It is important to ensure in advance that the contractor/developer is insured against third-party risks arising from a defect in the sign or its installation, with comprehensive product liability coverage, adequate policy limits, and retroactive coverage.
Note that product liability insurance in Israel is usually Claims-Made, meaning it must be active both at the time of installation and at the time the claim is filed. If either condition is not met, the insured may find themselves in serious legal and financial trouble.
Additionally, the contractor’s works policy relevant at the time of construction no longer covers defects or detachment of elements after the building has been handed over. It should also be emphasized that such claims can reach extremely high sums, especially in cases involving serious bodily injury.
