What is Liability?
The term liability refers to the responsibility a person or business has for damage, loss, or harm caused by their actions/ decisions, or work. In construction projects, liability is used to determine who is accountable when problems occur.
Definition
Purpose
Liability helps determine who is responsible when issues come up during a project. Since construction projects involve many people working on different tasks simultaneously, it is important to clearly define who is accountable for what. Questions about liability usually arise when there are delays, property damage, safety issues, or work that does not meet expectations. It also plays a major role in contracts, insurance coverage, and the resolution of disputes among the parties involved in the project.
Examples of Use
- Site accidents: A contractor may be held liable if unsafe working conditions lead to an accident, injury, or even death, on the job site. Insurers thus prefer construction liability insurance to safeguard themselves.
- Defective/ Improper work: A company can be held liable if improper installation causes damage after the project is completed.
- Missed contract terms: Liability may apply when a party fails to meet agreed project timelines or requirements.
Notes
- Liability can apply to individuals, contractors, suppliers, property owners, and other project stakeholders. Basically, all and any stakeholders involved in the project.
- Due to the nature of the industry, many construction companies use liability insurance to protect against unexpected claims and expenses.
- The scope of liability is usually clearly outlined in contracts before work begins.
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