The business environment in general, and the construction business environment in particular, are fraught with risks of all kinds. An assessment of all of the elements of risk to which contractors and the construction projects they perform are exposed, would comprise a voluminous listing. Consequently, contractors must be resourceful, and diverse, and comprehensive in the management methods they devise to manage the risks to which they may be exposed.
Insurance is one form of risk management. Insurance does not eliminate the risks involved in construction contracting, but it does shift most of the financial threat to a professional risk-bearer and a company whose business it is to protect others from risk.
In devising the best risk management program for themselves and their companies, contractors quickly come to the conclusion that obtaining the correct kinds and the optimum combination of forms of commercial insurance is the keystone to adequate financial protection. Since the risks in construction are so numerous and so diverse, the variations in types of insurance policies that may be written by a risk underwriter and are available for purchase by contractors is a very lengthy compilation. This chapter is directed primarily toward a comprehensive discussion of standard commercial insurance coverages that are utilized in the construction industry.
Risk management may be defined as a comprehensive approach ...