The purpose of third party insurance is to protect contractors from bankruptcy in case there are severe accidents happened to the third party due to the construction work. Therefore, in government contracts, contractors are requested contractually to procure third party insurance from the commencement of contract until the end of Maintenance Period. If contractors have the financial capability to handle the claims due to accidents to third party, the client is not bound to include this requirement in the contract.
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This question is taken from book named – A Self Learning Manual – Mastering Different Fields of Civil Engineering Works (VC-Q-A-Method) by Vincent T. H. CHU.
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