DBIA Insurance and Bonding in Design-Build

Question 1

In a design-build project, which type of insurance specifically covers claims arising from errors or omissions in the design professional's services?

Accepted Answer

Professional Liability (Errors & Omissions) insurance

Answer

Professional Liability (E&O) insurance covers claims resulting from negligent acts, errors, or omissions in professional design services. CGL covers bodily injury and property damage but explicitly excludes professional services. Builder's Risk covers physical damage to the structure during construction, and Workers' Comp covers employee injuries.

Question 2

A performance bond on a design-build project primarily protects the:

Accepted Answer

Owner against the design-builder's failure to complete the project per contract terms

Answer

A performance bond is a surety instrument that guarantees the design-builder will fulfill its contractual obligations. If the design-builder defaults, the surety steps in—either completing the work or compensating the owner—up to the bond amount. The bond protects the owner, not the design-builder or its lenders.

Question 3

Builder's Risk insurance in a design-build project is best described as:

Accepted Answer

A temporary policy covering physical loss or damage to the project during the construction phase

Answer

Builder's Risk (also called installation floater) is a temporary property insurance policy covering the project structure and materials against covered perils—fire, wind, theft, vandalism—during construction. It expires at substantial completion when the owner's property insurance takes over.

Question 4

A payment bond on a design-build project guarantees that:

Accepted Answer

Subcontractors and suppliers providing labor or materials will be paid

Answer

A payment bond protects lower-tier parties—subcontractors, sub-subcontractors, and suppliers—ensuring they are paid for labor and materials furnished to the project, even if the design-builder becomes insolvent. It is distinct from a performance bond, which protects the owner against non-completion.

Question 5

Under the DBIA model agreement, professional liability insurance for the design services on a design-build project is typically the responsibility of the:

Accepted Answer

Design-builder or its design subconsultant, consistent with single-point responsibility

Answer

Design-build's defining characteristic is single-point responsibility: the design-builder is accountable for both design and construction. Accordingly, the design-builder (or its retained design professional) carries professional liability insurance. This alignment of risk and responsibility is a core DBIA principle.

DBIA - Design-Build Institute of America Certification Practice Test

DBIA - Design-Build Institute of America Certification Practice Test

DBIA Insurance and Bonding in Design-Build