What protects a contractor from risk?

What protects a contractor from risk?

• A. Insurance.
• B. Bonds.
• C. Permits.
• D. Marketing.

Answer: (A)

In construction, risk is managed by transferring financial exposure to an insurer through insurance. Having the right policies—such as general liability to cover third‑party injuries or property damage, workers’ compensation for on‑the‑job injuries, and builder’s risk for damage to the project—helps a contractor absorb or avoid large out-of-pocket costs when something goes wrong. This protection keeps the business financially stable so work can continue. Bonds provide a guarantee to the owner that the contractor will fulfill obligations, but they protect the client rather than directly shielding the contractor from risk. Permits ensure work is legal and up to code, yet they do not offer financial protection. Marketing has no role in risk protection.

In construction, risk is managed by transferring financial exposure to an insurer through insurance. Having the right policies—such as general liability to cover third‑party injuries or property damage, workers’ compensation for on‑the‑job injuries, and builder’s risk for damage to the project—helps a contractor absorb or avoid large out-of-pocket costs when something goes wrong. This protection keeps the business financially stable so work can continue.

Bonds provide a guarantee to the owner that the contractor will fulfill obligations, but they protect the client rather than directly shielding the contractor from risk. Permits ensure work is legal and up to code, yet they do not offer financial protection. Marketing has no role in risk protection.