Special purpose companies established for the project need to protect their assets and liabilities in order to achieve the desired return on investment and for the lenders to recover the debt.

Matters relating to risk and insurance can be complex, especially where there are multiple contracts for a single project.

Critical questions you need to consider

• Is the project being undertaken through a special purpose company?

• Is the project company highly leveraged/substantially funded by loans?

• Is the project company highly dependent on subcontractors?

• Is the proposed insurance cover adequate to protect the construction and operation of the project?

• Are any of the project risks accepted by the project company unusual in nature, or incapable of being insured?

• Are you aware of restrictions in the insurance marketplace that might hinder the buying of certain classes of insurance?

• Are you aware of the insurance regulations in the country in which you are based that might stipulate that local carriers are granted insurance? Do those insurers represent adequate security?

• Do you have adequate information to assess the security rating or suitability of the re/insurer being used?