Insurance, as opposed to bonds that provide guarantees, is a loss sharing mechanism that guards the policy holder from damages that may be incurred in the future.
Standard contract insurance requirements are usually limited to the following:
*_ Commercial general liability (CGL)_. A policy that provides third-party coverage to operations and premises either owned by or under the control of the contractor. The CGL policy provides both bodily injury and property damage liability coverage.
- Contractor’s professional liability insurance (CPL). A policy that provides payment on the part of the contractor for damages caused by bodily injury or property damage, or a combination of both, when caused by the insured.
Builder’s risk insurance is generally excluded from the contractor’s basic insurance requirements, and if requested by the owner, is treated as an addition to the scope of the contract, leading to an increase in the contract sum. This type of insurance is also known as course of construction insurance since it provides coverage for loss or damage to the structure during the course of construction. There are two basic forms of builder’s risk insurance:
image All Risk. A policy that covers all risk except that specifically excluded
image Named Peril. A policy that covers only specific risks spelled out in that policy
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