Why Transparent & Full Disclosure? (When Buying Project Insurance)

Project insurance (i.e., Contractors’ All Risks, Erection All Risks) — whether for construction, engineering, infrastructure, or large commercial works — is built on one critical principle: utmost good faith.

 

“ Full and transparent disclosure is not optional — it is essential. “

 

What Does “Full Disclosure” Mean?

Full disclosure means providing complete and accurate information about:

• Project scope and contract value
• Construction methods and timeline
• Ground conditions and site risks
• Past claims history
• Subcontractor involvement
• Existing structures (PEP – Principal Existing Property)
• Special risk activities (piling, tunnelling, marine works, etc.)

 

Why Transparency Is Critical?

• Avoid Claim Rejection

 

If material facts are not disclosed:

• The insurer may reduce claim payout
• The policy may be voided
• Coverage may not respond to specific losses

 

For example:

Undisclosed weak soil conditions → foundation collapse claim dispute

Undeclared nearby structures → third-party property damage not covered

Omitted high-risk works → exclusion applied during claim

 

• Protects Project Financing

Banks and financiers often require a valid Contractors’ All Risks policy. If a policy is voided due to non-disclosure, it may breach financing agreements.

 

• Prevents Legal & Contractual Disputes

A dispute over policy validity can lead to non-compliance, contractual conflicts, and potential litigation.

 

Best Practices for Project Owners & Contractors

• Conduct proper risk assessment before insurance placement
• Share full tender documents and soil reports
• Declare contract amendments and variation orders
• Disclose past claims and project experience
• Work with experienced insurance agents
• Keep written records of all submissions

 

Building a Culture of Transparency

In an increasingly competitive construction market, contractors often focus on cost efficiency. However, insurance should never be treated as a cost-cutting exercise.

 

Project insurance is designed to protect capital investment, contractual obligations, and business reputation. For contractors, the message is clear:

 

Full disclosure is not a risk — it is protection.

 

Contact us now for a free consultation:
1.) Mr. Chap : 012 – 286 1817 / Ms. Syafiqah : 012-890 1328
2.) Office : 03 – 2162 2515
3.) Email : insurance@edindings.com