Andrew Gibson | Ahead of Schedule
As 2026 dawns, project insurance remains one of the most critical risk management tools for developers, builders and design professionals. Yet with multiple acronyms out there such as OCIP, CCIP, OPPI, GL, PL and SDI, defining the right insurance program is not easy. Common mistakes leading to coverage denials include deference to “standard” insurance forms (tip: nothing is “standard”), misplaced reliance on informal broker assurances (get it in writing), and a reluctance to wade through the swamp of policy “endorsements” that operate as “exclusions” for certain claims.
In 20-plus years of practicing construction law, I’ve encountered plenty of insurance-related mistakes but also quite a few best practices to emulate as lessons learned. To mitigate the danger of lacking or losing coverage, keep in mind the following typical mistakes and best practices when you next review coverages or claims.
Mistake no. 1: failing to obtain adequate proof of insurance. Construction parties too often defer to stock contract terms requiring each party to only produce a Certificate of Insurance (COI) or ACORD certificate. Without more, these certificates can be largely worthless as evidence of coverage when a claim arises because a COI typically does not also list the endorsements excluding coverage (e.g., exclusions for multifamily projects, condominiums, mold, and/or cross-suits by one insured against another).
Best practices: To confirm project-specific coverage, modify the contract terms regarding insurance to require that parties produce copies of the actual policies. Then double-check all endorsements and use a contract insurance rider excluding any insurance endorsements that don’t fit your project or risk tolerance.
Mistake no. 2: failing to obtain adequate insurance limits. As a transactional attorney and a litigator, I’ve encountered a key subcontractor with a risky scope of work carrying only its standard $1 million coverage. Or for a project with potential soils or site condition problems, the soils engineer carries only a $1 million policy or worse, a contractual limitation of liability to the amount of the engineer’s fee.
Best practices: In prime contracts, specify not just insurance limits for the general contractor or design professional, but also for their subcontractors and subconsultants. Additionally, consult the insurance broker early to gain independent written confirmation of the appropriate types and limits of coverage for the project. Finally, consider whether a project-specific policy or wrap (construction or design) might fit the project better than a traditional insurance setup.
Mistake no. 3: neglecting to employ specific insurance tracking protocols. Despite best intentions, parties often neglect to track insurance during construction and for the duration of the applicable statute of repose. Consequently, when a claim arises several years later, evidence of policies and coverage is hard to locate and determine.
Best practices: Compile policy and COI copies in a separately labeled electronic file. Calendar out yearly intervals following project completion to reconfirm policy limits and any change in policy providers. If a contracting partner is out of business, determine whether you need to take separate action to insure interests. Finally, utilize an insurance tracking log or similar spreadsheet that lists each project participant and its policy numbers, limits and notable exclusions each year during construction and in each year following project completion. Contact your attorney or broker for an example tracking log.
Mistake no. 4: not tracking the time frames within which to report a claim. Many policies require claims reporting and cooperation within a specific or default “reasonable” time. Delays in recognizing and reporting claims can risk denials of coverage.
Best practices: Review policies annually for applicable reporting requirements or ask your broker or attorneys to identify the specific timelines therein. Ensure project managers are aware of the deadlines and practice prompt reporting of claims.
Mistake no. 5: failing to obtain or document Additional Insured status. Standard ISO endorsements are available to provide additional insured or “AI” status to various entities on construction projects that are not the primary named insured. However, endorsements can limit AI coverage only for ongoing operations and may prohibit coverage altogether via a cross-suit exclusion for coverage where one insured sues another insured.
Best practices: Remove any cross-suit exclusion from the policy and specifically analyze the risks of naming multiple parties as additional insureds.
Parties don’t plan to fail; they just too often fail to plan. Mitigating potential coverage oversights on complex construction projects is possible by employing some or all these practices. Ensure periodic reviews of insurance policy language and endorsements, utilize tracking protocols, and double-check policies on specific projects to make certain coverage is not excluded. While the law of unintended consequences mandates that all parties to a project will likely face risks and potential claims, with some foresight and consultation of insurance brokers, attorneys, and each other, the parties will be best prepared for any potential coverage issues.
When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.