Which policy would you select if you want to protect yourself from claims regarding the completion of a construction project?

A performance bond is designed specifically to protect project owners and stakeholders from financial losses if a contractor fails to complete a project as agreed. It serves as a guarantee that the contractor will fulfill their obligations according to the contract terms. If the contractor is unable to complete the work or meets agreed-upon standards, the performance bond provides funds to cover the costs of hiring another contractor to finish the project or to rectify any issues.

This is particularly important in construction where the successful completion of projects is critical to timelines, budgets, and overall project viability. The performance bond provides a safety net both for the entity commissioning the work and for the contractor, helping ensure that all parties meet their contractual commitments.

In contrast, builders risk insurance primarily covers property damage during construction; general liability insurance protects against third-party claims related to bodily injury or property damage; and workers' compensation covers employee injuries on the job. While these policies are essential to a well-rounded risk management strategy, they do not specifically address completion guarantees as effectively as a performance bond.