08/29/2026
Construction projects carry significant risks, from personal injury and property damage to construction defects and costly disputes. The right contract and insurance provisions can help allocate those risks before a claim arises.
Key risk-management tools include:
• Contractual indemnity: Allocates responsibility for losses, damages, and defense costs arising from a party’s work or conduct. The scope of indemnity matters, particularly because state anti-indemnity laws may limit what can be transferred.
• Prevailing-party attorneys’ fees: Can allow the prevailing party to recover attorneys’ fees and litigation or arbitration costs, but parties should consider whether available insurance will actually cover those amounts.
• Insurance requirements: Construction agreements should clearly identify required coverage, including general liability, builder’s risk, professional liability, bonds, and other project-specific coverage.
• Additional insured coverage: Simply requiring insurance may not be enough. Contracts should specify the required additional insured coverage and whether it extends to ongoing and completed operations.
• Deductibles and self-insured retentions: Contracts should address who is responsible for satisfying these amounts when a loss occurs, particularly in projects using wrap-up insurance programs.
• Early ADR: Mandatory meet-and-confer and mediation provisions can provide an opportunity to resolve disputes before litigation or arbitration increases costs and disrupts the project.
Effective risk transfer requires more than inserting standard provisions into a construction contract. The contractual allocation of risk should be carefully drafted and coordinated with the insurance coverage actually available.
Need help managing risk on a construction project? Contact The Parkman Law Firm to discuss your construction contracts, risk-allocation provisions, and dispute-avoidance strategies.