Unified Risk Insurances An Update

Unified risk insurance is a transfer‐of‐risk mechanism. It permits building owners and the construction team to transfer exposure from major construction deficiencies and defects to an insurance entity. Currently, the insurance industry accepts such responsibility through liability‐insurance policies. A more appropriate vehicle for risk transfer seems to be the property approach. The costs associated with the litigation process provide too great a financial risk to continue resolving disputes within the litigation framework. The combined resources of the construction industry and the insurance industry, working in harmony to resolve details for the construction of such a plan, are required. The practicality of such an insurance approach for construction is underlined by successful programs in Europe. The Decennale liability approach covers latent‐defect risk on construction projects in France for 10 years. The British have been experimenting with such protections, and in 1988 published a significant report that advocated the use of “Building Users' Insurance against Latent Defects” (which was the report's title). The concepts contained in these three approaches to a practical insurance program are discussed in the present paper.