Awareness on insurance principles in construction industry

Abstract

Unique characteristics of the construction industry from beginning to end in production process create, many uncertainties about its final products. Due to these uncertainties, emergence of risks is unavoidable. Dealing with these risks is a major area of concern in construction industry. One method to deal with these risks is to transfer it to a third party known as an insurer through an insurance contract. Purpose of this paper is to identify the degree of knowledge on insurance principles among the construction industry professionals. This paper covers the areas of insurance principles, knowledge on it and issues of application of them in insurance contracts. Questionnaire surveys and interviews were used as main data collection methods and descriptive analysis and narrative analysis was used to analyses data. The results suggest that awareness on insurance principles is inadequate among Sri Lankan construction professionals. It is also emphasized that knowledge gap between construction industry professionals and insurance providers lead to unpleasant situations at later stages of an insurance contract. These findings are limited to six major principles of insurance namely insurable interest, utmost good faith, proximate cause, indemnity, subrogation and contribution. This paper enhances knowledge among construction industry practitioners on principles of insurance and areas of application of them to reduce unsettled claims to optimize insurance as a risk transferring mechanism in Sri Lankan construction sector.