Introduction
Large infrastructure projects involve thousands of contractual obligations and multiple categories of risk. A delay may result from defective work, extreme weather, supply-chain disruption, labour issues or decisions taken by another contracting party.
Insurance may cover some of these risks, but the policy must be read alongside the underlying construction contract.
Insurance Is Not the Entire Risk Allocation
A contractor may have insurance covering physical damage, while the construction contract separately allocates responsibility for delay. The existence of insurance therefore does not automatically determine who is contractually responsible.
Why Businesses Need Integrated Contracts
Insurance requirements should be considered when drafting the principal project agreement. Indemnities, warranties, limitation clauses and insurance provisions should work together rather than contradict one another.
Conclusion
In major projects, insurance is one part of a larger risk-allocation structure. The strongest contractual protection comes from ensuring that the project agreement and insurance programme operate together.
