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?
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.
מסמכים
