Liquidated Damages Cover – protect your balance sheet
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Large construction projects often include Liquidated Damages (LD) clauses to compensate if contractual obligations are not met
Some of the reasons why you do not meet your obligations might be excusable events. However, delays, failures, or lack of performance within your responsibility can result in Liquidated Damage payments.
In this situation, the liquidity of a company can come under stress easily. Besides the LD payments, additional cost for site installations, resources, and equipment are reducing the liquidity even more.
These costs cannot be claimed by the contract partner, as the delay or lack of performance is within their own responsibility.
As banks and investors grow more cautious, securing liquidity for additional costs is becoming more difficult and expensive.
The solution - an insurance that covers your contractual risks
Munich Re offers you coverage against LD payments when you have not met your contractual obligations. We aim for back-to-back coverage with the original contract of the insured, whenever possible.
We assess the prerequisites for the coverage in a professional due diligence process, evaluating the contract and the inherent project risks.
Our protection aims to cover project portfolios and extends to the following deficiencies:
Late project delivery
Lack of performance
LD gap between contractor and developer or owner
Munich Re LD Cover:
Transactional Flow and Indemnification
How the cover works
Whenever you are contractually obliged to provide compensation for delayed performance or lack of performance, our insurance coverage helps to limit your financial burden.
The insured gets reimbursed for the paid LDs, excluding deductibles and co-insurance, to form a strong alignment.
Your advantages with Munich Re
Financial burden limitation
Reduce your financial obligations for delayed or poor performance
Balance sheet protection
Safeguard your financial stability when in case of unmet contractual duties
Liquidity when needed
Indemnify with the necessary liquidity for additional costs or starting new projects
Expert insight
Benefit from our transparent due-diligence process and clear insights
Alternative applications for Developers and Principals
| Project financing enablement | Tailored LD coverages can facilitate financing for developers and principals. |
|---|---|
| Bridging the gap | Closes the shortfall in financial obligations (e.g., loan payments, SLA, PPA) when contractor LD payments are insufficient. |
Explore our Liquidated Damages cover for Data Centers
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Liquidated Damages Cover
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