Liquidated Damage Cover – a protective shield for your balance sheet

Large projects, major risks

Anyone who works on large construction projects secures for himself and his company good chances of profit. Of course, you also take risks, because you commit yourself to deliver at a fixed time. Irrespective of how experienced and well prepared your company is, there are always factors beyond your control that make it impossible for you to meet your contractual obligations. Some of them might be excusable events. However, delays, failures or lack of performance can result in compensation payments like Liquidated Damage (LD) payments to the owner. The owner can use these LD payments as an alignment which reduces his risk while increasing yours.

As a contractor, shouldn’t you also minimize your risks? Because the payment of liquidated damages can quickly limit your ability to maneuver financially and put unwanted pressure on your balance sheet. Consider the LD payment itself as well as the additional resources required during the delay to complete the project. You may have already planned and invested in a new project and this risk can limit your available resources for further projects.

An insurance that covers your contractual risks

Munich Re offers you cover for a large part of your Liquidated Damage payments when you have not met your contractual obligations. We assess the prerequisites for this in a professional due diligence process that also covers the contract and the inherent project risks. Our protection aims to cover project portfolios and extends to the following defects:

late (project) delivery

lack of performance and

certain force majeure events

Whenever you are contractually obliged to provide compensation for delayed performance or lack of performance, our insurance coverage helps to limit your financial burden.