Insurance, Bonding, and Risk Management Flashcards

Which type of insurance covers bodily injury and property damage claims made by third parties against a contractor?

Answer: Commercial general liability (CGL) insurance

Commercial general liability (CGL) insurance protects contractors from third-party claims for bodily injury, property damage, and personal injury arising from their operations.

Workers' compensation insurance is designed to cover:

Answer: Medical expenses and lost wages for employees injured on the job

Workers' compensation insurance provides medical treatment and wage replacement for employees who suffer work-related injuries or illnesses, regardless of fault.

What is a 'performance bond' in construction?

Answer: A surety guarantee that the contractor will complete the project according to contract terms

A performance bond is a three-party guarantee by a surety company that the contractor will perform all contract obligations, protecting the owner if the contractor defaults.

A 'payment bond' on a construction project primarily protects which parties?

Answer: Subcontractors and material suppliers who may not be paid by the contractor

A payment bond guarantees that subcontractors and material suppliers will be paid for their work and materials, even if the general contractor fails to pay them.

'Builder's risk insurance' covers which type of loss?

Answer: Damage to the structure and materials during the construction period

Builder's risk insurance covers physical loss or damage to a structure under construction and materials on site, protecting against fire, theft, vandalism, and weather damage.

What is the purpose of an 'additional insured' endorsement on a contractor's general liability policy?

Answer: To extend liability coverage to another party (such as the project owner) for claims arising from the contractor's work

An additional insured endorsement extends the contractor's liability coverage to protect another party (typically the owner or general contractor) against claims arising from the insured's operations.