Answer to Question #237353 in Mechanical Engineering for Nimmi

Question

7. Is the procurement of third party insurance necessary to be incorporated in contract for construction works?

Answer 1

The purpose of third party insurance is to protect contractors from bankruptcy in case there are severe accidents happened to the third party due to the construction work. Therefore, in government contracts, contractors are requested contractually to procure third party insurance from the commencement of contract until the end of Maintenance Period. If contractors have the financial capability to handle the claims due to accidents to third party, the client is not bound to include this requirement in the contract.