Managing Risk on Large-Scale Construction Projects

Large-scale construction projects bring together multiple parties — developers, principal contractors, subcontractors, consultants, and financiers — each with distinct risk exposures and often with conflicting assumptions about who is insuring what. The result, without careful coordination, is either gaps in coverage or expensive duplication.

Contractor's All Risks (CAR) insurance is typically the central coverage in a construction programme. A CAR policy insures the works themselves — the physical structure under construction — against loss or damage from a wide range of perils, including fire, storm, flood, theft, and accidental damage. The scope, exclusions, and coverage territory are project-specific and need to be aligned with the contract documents.

Third party liability coverage is equally critical. Construction sites present elevated liability exposures — to adjacent properties, members of the public, and workers. A project-specific liability policy, structured with appropriate limits and designed around the project's activities, provides protection that a contractor's general liability policy may not fully extend to.

Professional indemnity for design consultants adds a further layer of complexity. On design-and-build contracts, the overlap between construction defects and design deficiencies can create coverage disputes. Ensuring that professional indemnity policies held by design consultants are compatible with the CAR coverage held by the contractor — and that limits are adequate relative to project value — requires careful coordination.

Delay in Start-Up (DSU) and Advanced Loss of Profits (ALOP) coverages address the financial consequences of project delays caused by insured events. For commercial developments where rental or revenue income depends on practical completion, these extensions can be as valuable as the underlying property coverage.