efficacy insurance
Efficacy insurance guarantees the owner's debt service if the insured project cannot perform at the anticipated capacity due to deficiencies in the system's design, materials, or construction.
Additional Information
The policy provides the funds required to pay the debt service costs and may be modified to reimburse the insured for capital expended so that the project may be brought up to the expected performance level. The most common use of efficacy insurance is on energy-related construction projects, such as geothermal or hydroelectric plants.
Synonyms
systems performance insurance
