Project insurance — role, scope and issues

A key element of the solution to managing many project risks (see Identifying and analysing project risks and risk allocation — part 1) is to transfer that risk to insurers by way of one or more insurance policies. As such, ensuring that a comprehensive, adequate and robust insurance package is in place during all phases of a project (see Key steps in financing a project) is of critical importance to financiers (see Key finance parties and their roles).

Project finance lenders usually require an expert insurance adviser to report on the types of insurance that are appropriate for the project as well as levels of cover, excesses and exclusions. The lenders will want to be sure that risks associated with the project are covered by insurance as much as possible.

Among other things, this guidance note explains the types of insurance in project finance and considers matters relating to uninsurable events, key insurance covenants commonly included in the finance documents and the role of an insurance specialist in a project finance transaction.

See Project insurance — role, scope and issues.