An evaluation of the use of insurance in managing construction risks

One of the major methods of managing construction risks in the Nigerian construction industry is the insurance method. On the basis of data from some selected construction sites in Nigeria, this paper evaluates the effectiveness of the method. Also it identifies, through a questionnaire survey, the various insurable construction risks perceived to be encountered in the Nigerian construction industry and the types of insurance policy employed in managing them. High importance is placed by the construction industry on site security, construction risk, and health and welfare requirements, and the use of an all-risk insurance policy is the most prominent method for managing the identified risks. Finally it is concluded that there is a correlation between insured sum and actual replacement cost when there are losses or damages. However, the insurance claims settled could cater for only 61.1% of the replacement cost of on-going construction works studied.