Selection of contractor insurance option in the Ghanaian Construction Industry

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Insurance in the Building Industry is the process of swapping a conditional claim for a set amount to safeguard the benefits of stakeholders undertaking a construction venture. Insurance in construction is a primary technique of handling risks in the construction sector. It has been established that persons involved in the construction sector are repeatedly faced with various instances of situations that have many unknowns, are often detrimental and mostly unpredictable. This research had the aim of assessing the selection of feasible contractor insurance option in the Ghanaian construction industry. Literature review was undertaken and it tackled the underlying risk factors associated with contractor insurance provision and selection of contractor insurance option. Quantitative research method was adopted and structured questionnaires were used to gather data from contractors, consultants and insurance officers. Fifty-nine questionnaires were retrieved from seventy distributed representing an eighty-four percent response rate. Descriptive statistics and Relative Importance Index (RII) were the analytical tools used for the analysis. The findings showed that: exchange rate fluctuation, unrealistic contract duration, inaccurate estimating, interference from client, mistakes in design documents, inadequate contractor experience and materials damage were the most significant risk factors. Furthermore, the contractor insurance options that were selected the most were: Employers’ liability, Professional indemnity, Workers’ compensation, Contractors all risk, Performance bond, Third party insurance and Bid bond. The study recommended that series of educational as well as training programs ought to be organized for contractors to advise them on the different insurance options available for the different types of construction risk.
A thesis submitted to the Department of Building Technology, College of Art and Built Environment in partial fulfillment of the requirement for the degree of Master of Science,