- Author
- Construction Industry Institute
- Title
- Allocation of Insurance-Related Risks and Costs on Construction Projects.
- Coporate
- Construction Industry Institute, Austin, TX
- Report
- Publication 19-1, November 1993, 44 p.
- Keywords
- construction | insurance | risk management | risks | costs
- Abstract
- The Insurance Task Force was formed by CII as a result of the extremely hard market for liability insurance that was experienced in the late 1980s. The purpose of the task force was to study the impact of current insurance circumstances on the construction industry and the results of that study are presented herein. The construction industry presents a complicated variety of exposures to accidental loss ranging from injury to personnel and property to loss of income and other liability exposures. The identification, measurement, and control of these risks is commonly referred to as risk management. A better understanding of risk management and insurance concepts as they relate to the construction industry is necessary. To achieve the optimal allocation of insurance-related risks and costs on construction projects, owners and contractors must change their attitudes in contract negotiations. Owners and contractors must realize that the costs associated with risk financing on projects has become a significant portion of total project cost (5-7 percent as compared to 1-2 percent in the mid-1980s), and that with proper management and cooperation these costs are controllable.