10 Insurance Tips to Help Manage Construction Risk

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Construction involves risks that cannot be managed and must be managed, often by transferring that risk to insurance. The following 10 tips can help you in that endeavor:

Remember that a construction contract is the basis of risk management. Contract documents must set out the risk allocation plan, which includes additional insurance coverage, litigation, and cancellation clauses.
Builder’s risk insurance may be insignificant. Builder risk can be purchased at a comprehensive and often less expensive comprehensive policy. It can protect against project damage and lost events from many different hazards.


Don’t buy insurance unless it is necessary. Use an experienced salesperson who knows the type of work involved and asks the right questions about the project and the risk involved. Some insurance policies are less expensive for certain projects. Ask why each piece of insurance is required for each project. Do not take anything. Work hard and do not buy unnecessary insurance.

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Read the policy as soon as you find it. There is no substitute for reading the policy. Do not rely on an insurance certificate. Policymakers (and other insured parties) should always review the policy as soon as they receive it and reject the policy if its terms do not comply with the terms and conditions that existed when the insurance was purchased.


Know your mind. At least one court ruled that an additional insurance cover that agreed to provide assistance to the organization “agreed to add it as an additional insurance company,” did not admit to being the main construction contractor despite the fact that the policyholder agreed to award the contract in his contract with the sponsor. . According to the court, the main contractor was the business “that” the policy owner agreed to cover, but that did not reach the “identity” of the policy holder.
Explain who the “other party” really is. The general CGL policy does not cover the coverage of claims for a contract unless, among other things, the claim arises as a result of an “insured agreement,” that is, an agreement where the policyholder assumes liability for another party to pay for physical or material damage to a third party or entity. Some courts have taken the narrow view that the term “other party,” as used outside of the insurance contract, is limited to the company’s policyholder. This does not include the coverage of a general contract obligation to the owner arising from the negligence of subcontractors, even if the general contractor assumes that obligation in his contract with the owner, as the owners always require. This should be addressed by amending and clarifying the definition of an “insurance contract.”


Note the limitations on additional insurance approvals. The inclusion of the standard form of the latest protective clothing is limited in many new ways. One change is to limit the amount of coverage available to other insurers under contract requirements or policy limits. An insured person can achieve a policy limit that can be substantial by stating in the construction contract that the limitations available on additional insurance will be a specified amount or actual policy limit, whichever is greater.
Watch out for constipation. Revealing self-control deprives others of the right to recovery for the loss covered by insurance. Sometimes a split is made between two or more sides of a construction project. Be careful, because some insurance policies will punish the policyholder by avoiding binding them. Make sure all recovery teams are doing well.
Think over and over again that wrap up your business plan. Owner and contractor control.