What is a primary way to protect a contractor from risk?

Insurance serves as a primary means to protect a contractor from risks that may arise during the course of a project. It provides financial coverage in case of unforeseen events, such as property damage, injuries, or liabilities that could result in significant costs. In the construction industry, various types of insurance policies can be crucial, including general liability insurance, workers' compensation insurance, and builder's risk insurance. These policies help mitigate the financial impact of incidents, ensuring that the contractor can manage potential liabilities and continue operations without severe financial distress.

While surety bonds, legal contracts, and regulatory compliance are also important aspects of risk management, they function differently. Surety bonds guarantee that work will be completed according to the contract, protecting the project owner rather than primarily the contractor. Legal contracts outline the terms and conditions of a project but do not provide direct financial protection against losses. Regulatory compliance helps ensure that a contractor adheres to laws and regulations, which can prevent legal issues but does not directly mitigate financial risks associated with incidents on the job site.