Who is responsible for damage in a construction project? The developer, the contractor, or the planner
Mar 19, 2026
By: Itzick Simon and Omri Nisani
Itzick Simon is an expert in construction insurance and risk management for complex projects, and the CEO of Itzik Simon Insurance Agency.
Omri Nisani is a civil engineer, holds an MBA, is a law graduate, and a licensed insurance agent. At Itzik Simon Insurance Agency, he is engaged in accompanying construction projects and analyzing the engineering, legal, and insurance risks involved in complex projects.
The following article addresses one of the more complex issues in the construction industry: the allocation of responsibility when damage occurs in a construction project, and the relationship between professional liability, execution responsibility, and the project’s insurance framework.
When damage occurs in a construction project, the question of who bears responsibility is not always straightforward. The damage may result from an accidental event on site, defective design, faulty execution or deviation from the design, managerial decisions during the project, or sometimes a combination of several factors.
Every construction project involves several key parties: a developer who leads the project, a contractor who performs the work in practice, a designer responsible for the engineering and architectural planning, as well as project managers and other professional consultants.
When the project progresses according to plan, the division of roles among these parties is relatively clear. However, when a failure occurs in the project, property damage is caused, or a third party is harmed, the boundaries between the responsibilities of the various parties are not always clear.
Why the question of liability in a construction project is complex
A construction project is a complex system that integrates engineering design, field execution, project management, and entrepreneurial decision-making. When a failure occurs, it is often difficult to pinpoint a single factor responsible for the damage.
In many cases, only after a comprehensive engineering inspection, and sometimes also within the framework of a professional or legal dispute, does it become clear whether the source of the problem is in the design, the execution, or a combination of the two.
The developer is usually the initiator and leader of the project. He is the owner of the rights to the land or the one who controls the project, and he is the one who makes the key economic decisions.
However, the developer does not usually carry out the actual construction work. To do so, he contracts with an operating contractor, planners, and various professional consultants.
Therefore, when a failure occurs resulting from the construction work itself, the responsibility does not necessarily lie with the developer.
However, there are situations in which the entrepreneur may also be exposed to liability, for example when it comes to managerial or professional decisions taken within the framework of project management.
Developer's responsibility in a construction project
In October 2025, the Knesset approved a significant amendment to the occupational safety regulations in the construction industry, which was published in Reshumot and determines an expansion of the responsibility imposed on the work orderer, and in many cases also on the developer, with regard to safety management on the construction site.
In accordance with the provisions of the law, the amendment's entry into force was set at 12 months from the date of its publication, that is, in October 2026.
This means that even when the developer does not actually carry out the construction work, the law imposes certain obligations on him related to the organization of work on the site and the management of the safety system.
The amendment reinforces the understanding that responsibility in a construction project is not limited only to the executing contractor, but may also apply to other parties involved in project management.
Expanding the developer's responsibility for site safety
The executing contractor is the party that is actually responsible for carrying out the construction work on site, and is the one who is responsible for implementing the engineering and architectural planning on the ground.
Therefore, when damage occurs resulting from the manner in which the work is performed, such as incorrect execution, use of unsuitable materials, or deviation from the design, liability may be attributed primarily to the performing contractor.
However, the contractor's role is not limited to technical execution alone. As part of the execution planning and work on site, the contractor is expected to identify in certain cases weak points in the design or difficulties arising from its implementation on the ground, and to alert the relevant professional parties in the project to them.
Responsibility of the executing contractor
Thus, it becomes clear that even when there is a complete engineering plan, the responsibility for the manner in which the work is carried out in the field and for managing the work on site remains largely with the executing contractor. However, planners and supervisory bodies have a central role in monitoring the execution and performing various tests during the work aimed at identifying defects at the earliest possible stage.
It is precisely at the meeting between planning and execution that disagreements often arise between project stakeholders. In some cases, the contractor claims that the defect stems from poor planning, while the planner believes that the source of the problem is the manner of execution on the ground.
In the reality of complex construction projects, the question of who is responsible for a defect is not always clear-cut.
When planning meets execution
Engineers, architects, and professional consultants are responsible for project planning and key professional aspects of construction. The engineering and architectural design is the foundation upon which the project is actually carried out.
When the damage results from poor planning or other professional failure in planning, liability may be attributed to the relevant planner or consultant.
Sometimes planners also have a role in monitoring the execution of the work as part of site visits or various professional inspections.
Responsibility of the planner and professional consultants
Let's assume a situation where, in a residential building construction project, a significant crack is discovered in the parking lot walls shortly after the skeleton is completed.
An engineering examination reveals that part of the problem stems from inadequate design of the support system, but at the same time it turns out that the contractor deviated from the design during construction.
In such a situation, responsibility may be divided between several parties in the project.
Example from the field
The role of insurance in risk management in a construction project
The division of responsibility between the developer, the contractor, and the planner is also the reason why construction projects are usually accompanied by a wide range of insurance policies. Each type of insurance is designed to address a different type of risk arising from the role of each party in the project.
The main insurances in a construction project are:
Contractor work insurance
A combined policy that usually includes three main sections: insurance for the work itself and the structure being constructed, third-party liability insurance, and employers' liability insurance.Professional liability insurance for the operating contractor
A policy designed to cover liability arising from a professional error by the contractor in the context of execution planning, site management, or making professional decisions during construction.Professional liability insurance for planners and consultants
A policy that covers liability arising from professional error by engineers, architects, and professional consultants involved in project planning.Professional liability insurance for project management and supervision
Policies intended for project managers, supervisors or other professional entities involved in project management and leadership.Professional liability insurance for the entrepreneur
In some cases, the developer may also be exposed to professional liability, for example when he is involved in project management or in making professional decisions regarding planning or execution.Product liability insurance
This insurance is designed to cover liability for bodily injury or property damage caused to a third party as a result of a defect in the construction work after the project has been delivered. The policy does not cover the actual defect in the construction or the cost of repairing it, but only the damage caused to a third party as a result of it.Officers' liability insurance
This insurance is designed to protect managers and directors from personal claims related to management decisions they made in the course of the company's project activities. In construction projects, such claims may arise, for example, around decisions related to project management, contractual agreements, or safety risk management.
Who is responsible for damage when an incident occurs on a construction site?
Liability is not always determined immediately. In some cases, it rests with the executing contractor; in others, with the designer; and sometimes with the developer or additional parties involved in the project. In many instances, only after a comprehensive engineering review can it be determined whether the damage originated from design, execution, or a combination of both.
Can the developer be sued even if they did not perform the work themselves?
Yes. In certain cases, the developer may also be held liable—for example, where the issue relates to managerial decisions in the course of the project, or where the law imposes responsibility on the developer for site safety management.
Is the contractor responsible for a defect originating in the design?
Not always. If the defect stems from faulty design, liability may be attributed to the designer. However, in some cases, it may be argued that the contractor should have identified the issue במסגרת their work and alerted the design professionals.
What happens when both design and execution contributed to the damage?
In such situations, liability may be apportioned among several parties involved in the project. Disputes of this kind often lead to engineering assessments and, in many cases, legal proceedings between the parties.
Which insurance policy is supposed to cover the damage?
The answer depends on the circumstances of the event. In some cases, coverage falls under a Contractors’ All Risks policy; in others, under a professional liability policy of one of the project participants; and sometimes under another policy relating to third-party damage.
What should be done immediately after an incident on a construction site?
When a significant incident occurs on a construction site, it is important to act quickly and in an orderly manner. First and foremost, the safety of workers and the public must be ensured, and any ongoing danger must be prevented. Next, the event should be documented, including photographs and records of the circumstances on site.
At the earliest possible stage, we—as the insurance agents accompanying the project—should be notified. Together, we will review the circumstances of the event and determine the initial course of action, including whether it is necessary to appoint appropriate consultants and professionals such as engineers, loss adjusters, or other experts to handle the matter in a professional and efficient manner.
The conduct in the first hours following the incident can be critical, both for determining liability and for properly managing the insurance process.
Questions that arise in the field after an incident at a construction site
Summary
In construction projects, the question of who is responsible for damage is not always a simple one. In many cases, the failure does not stem from a single factor, but from a combination of planning, execution, and project management.
Precisely because of this complexity, investigating responsibility after an incident on site may be a complex professional and legal process, including engineering tests and examining the conduct of the parties involved.
From our experience in accompanying construction projects, an early understanding of the division of responsibility between the developer, the contractor, and the planner, along with an appropriate insurance system, is a key component in managing the risks of any construction project.
Ultimately, in a construction project, the question is not only who built the structure, but also who bears responsibility when something goes wrong.
מסמכים
