Texas Property and Casualty License Practice Exam 2025 - Free Practice Questions and Study Guide

A construction defect insurance policy is specifically designed to provide coverage for losses that arise due to faulty construction work. These policies protect builders, contractors, and developers from claims related to defects in the construction process, such as poor workmanship, inadequate materials, or design flaws that may lead to damages or the need for repairs. By offering this specialized coverage, the policy helps ensure that businesses and individuals in the construction industry can manage their financial risks associated with potential defects in the completed structures.

The primary focus of this type of insurance is on the potential costs that might be incurred because of construction errors, making it crucial for those in the industry to safeguard their operations and assets against the risks of financial loss resulting from defects. Understanding this distinction helps highlight the value of having such targeted insurance in place, as it addresses the unique challenges faced in the construction field.