Managing Risk

Question 1

What are the benefits of risk management?

Answer 1

1. Lower general and liability insurance premiums
2. Lower risk of being sued
3. Better chance of winning a lawsuit

Question 2

Maryland Home Improvement Law requires you to carry General Liability insurance in what amount?

Answer 2

$50,000

Question 3

What is an All Risk Builders’ Insurance

Answer 3

This type of property insurance protects the construction project or project materials. It does not cover workmanship or design defects.

Question 4

Named Peril Builders’ Risk Insurance

Answer 4

This insurance covers a narrower scope than the All Risk, in that it specifies named risks to be covered. Typical named perils would be fire, wind, explosion, water or earthquake damage

Question 5

What does a liability insurance cover?

Answer 5

Only losses suffered by others that may have been caused by the contractor, their employees or subcontractors

Question 6

What is The Miller Act?

Answer 6

Federal projects valued at more than $100,000 must produce a performance bond to guarantee completion of the project under the terms of the contract.

Question 7

What is a Contract Surety Bonds

Answer 7

This is an agreement with a surety company making the surety company financially liable to the customer for non-performance of the contractor.

Question 8

How may a surety agreement be proceed?

Answer 8

Finance the contractor until job completion
Employ another contractor
Pay outstanding debts
Allow the owner to finish project

Question 9

What is a Bid Bonds?

Answer 9

Guarantees that if the contractor’s bid is successful, a contract will be entered into for the same amount of that bid. This type of bond is most often used on governmental projects.

Question 10

What type of insurance will protect the contractor for losses due to a fire on his construction project?

Answer 10

All Risk Builders insurance

Question 11

General liability insurance will protect the contractor against claims brought by third parties who are not employed by the contractor.

Answer 11

true

Question 12

Who pays for workers’ compensation insurance?

Answer 12

the employer

Question 13

A guarantee that a contractor will pay certain subcontractors, laborers, and material suppliers associated with the project would be known as a____________.

Answer 13

payment bond

Question 14

Any monies paid out by a surety company will need to be paid back.

Answer 14

True

Question 15

Equipment in transit, on the premises or at the job site, would typically be covered by:

Answer 15

Equipment floater policy

Question 16

A Performance Bond guarantees that the contractor will complete the project according to the contract plans and terms.

Answer 16

true

Question 17

The __________ requires that federal projects valued over $100,000 must produce a performance bond to guarantee completion of the project under the terms of the contract.

Answer 17

Miller Act

Question 18

Liability Insurance on employees provides coverage over and above worker’s compensation insurance in case of injury or death of an employee.

Answer 18

True

Question 19

Prime contractors should verify that their subcontractors have secured their own insurance for general liability and workers compensation.

Answer 19

true

Question 20

Can a prime contractor be held liable for a subcontractor whose employee is claiming workers compensation benefits if the subcontractor was uninsured?

Answer 20

Yes