infrastructure and real estate

All companies or organizations investing in an infrastructure project and other key project stakeholders should consider insurance to adequately protect their interests and manage their risks throughout the project lifecycle. The size and type of project may limit meeting contractual requirements for insurance. It is therefore important to contact an insurance and risk advisor early to help discuss these requirements and create insurance solutions that can minimize the potential impact of project risks.

In addition, risk mitigation strategies at all stages of the project lifecycle provide essential support for all stakeholders by identifying and managing potential issues. Risk arises at every stage, from planning and design to physical construction and infrastructure implementation. Therefore, it is important to provide a safety net to ensure the smooth and error-free completion of the project.

This type of insurance generally protects project stakeholders from the risks associated with the most common infrastructure development nuisances.

Likewise, it always encompasses third-party liability risks, as by its very nature most infrastructure projects go public. Beyond that, insurance generally covers risks associated with the physical loss of the project from a natural hazard such as a flood or windstorm, or damage caused by the contractor or the public.

In addition, in infrastructure developments involving private financing, insurance coverage expands to include financial risk due to delay in project completion (due to physical damage) or errors and omissions in design-related professional services.

Innovative insurance solutions have been developed to cover a wide range of risks, from rain and temperature difference (weather insurance) to insuring against subcontractor default. Because so many variables vary in the risk distribution for each project, it’s important to consult a risk consultant such as NART to manage your specific risk exposures.

While extremely valuable to society in the long run, large infrastructure projects have a long-standing reputation for causing problems. Delays due to unforeseen events such as supply chain problems, prolonged adverse weather conditions, labor disputes, and stakeholder opposition to major project decisions can cost taxpayers and private investors huge amounts of money.

While some risks, such as stakeholder mismatch, cannot be addressed in advance, others can be mitigated in certain ways through risk management planning. Risk management consultants can help infrastructure companies set strategies ahead of time to protect themselves from common problems, while also providing claims and recovery support should these problems arise.