Abstract
Presently, Ethiopia has relatively an extensive program of infrastructure development and it is growing faster. The construction of new infrastructures, high rising buildings, energy and water work projects, airfields etc. are among the major construction activities. Construction insurance plays an increasingly important role in guaranteeing the success of projects. However, insurance sometimes does not receive the attention for it. Construction risks are uncertain events or conditions that may have an adverse effect on the construction projects. Due to this, this research amid to assesses the insurance practice, the problems and challenges encountered while implementing in Ethiopian construction industries. Questioners were designed and both cense and judgmental sampling techniques were applied. The study finds out most of the contractors are willing to buy insurances for their vehicles and plants and has no awareness about other types of construction insurances like third party and contractor’s all risk insurance coverage. On the other hand, insufficient documentation and low level of awareness of customers towards the benefit of insurance, financial and professional shortages are challenges that insurance companies faced. As a result, Ethiopian government should create awareness about insurance and formulate enforcing law that enables using of insurances for all construction works. Keywords: - construction, contractors, insurance, risk, role DOI: 10.7176/CER/12-3-03 Publication date: March 31 st 2020
Highlights
The construction industry is a vital sector of economy in any countries of the world
Most contractors who responded to this research listed the payment premium as cost disadvantage which come up to be a major challenge to use construction insurance in Ethiopia
Most construction projects contractors here in Ethiopia misunderstand the policy provisions they signed to buy and mostly their claims are rejected since it is in appropriate claim they raise and because of cost estimation problems raised between the client and the insurer in addition to that since insurance companies are conditional, contractors and other business firms must have to know the conditions and policies of the insurance firms
Summary
The construction industry is a vital sector of economy in any countries of the world. In Ethiopia the construction industry is one of the tools for the development of the country and it is a booming industry. Insurance companies can be used as a risk transfer mechanism by which the construction stakeholders can exchange their uncertainty for certainty. The uncertainty experienced would include whether a loss will occur, when it will take place and how severe will it be (Ashy B, 2014). This uncertainty makes it very difficult to budget and so the stake holders of the construction industry seek ways of controlling the financial effect of the risk. The contractor agrees to pay a fixed premium and in return the insurance company agrees to meet any losses which fall within the terms of the policy (Hicksone, 1987)
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