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Types of Construction Insurance

There are several types of insurance products used in the construction industry to cover potential losses. They include Commercial General Liability policies, builder's risk policies, and errors and omissions policies.

RISKS IN A PRIVATIZED CONSTRUCTION PROJECT

As with any construction project, there are risks that are inherent to the project. In a privatized construction project, where a public entity seeks to construct, finance, and operate the project with private funds, there are additional risks. These risks become particularly prominent when the project is to be located in a foreign country.

Assurance of Owner's Financial Security

An owner's financial security can greatly impact his ability to fulfill his obligations under a construction contract. Most critically, a contractor's payment for materials and services can be jeopardized. For the protection of the contractor, provision can be made in the parties' contract requiring the owner to present reasonable evidence of his financial stability and ability to carry out his duties under the contract.

BREACH OF CONTRACT BY AN OWNER

When an owner and a contractor enter into a contract for the erection of a new structure or for the repair, remodeling, or alteration of an existing structure, the owner has an obligation to pay the contractor for his or her work on the project. If the owner fails to pay the contractor for his or her work, and there is no justification for non-payment, the owner will be considered in breach of the contract.

Concurrent Delay

A delay in the completion of a construction project cannot always be attributed to only one party. Sometimes, both the contractor and the owner have engaged in actions or inaction that have affected the timely completion of the project. When both parties cause the delay, the damages outcome is not uniform among the jurisdictions.