What is the term for the amount retained by the owner for all claims against the contractor?

The term "retainage" refers to the amount of money that the owner withholds from the contractor’s payment to ensure that all claims, such as incomplete work, damage, or disputes, can be adequately addressed. Retainage serves as a financial safeguard for the owner, allowing them to retain a certain percentage of the total contract amount as leverage until the project is satisfactorily completed according to the agreed terms.

In construction contracts, it is common practice for owners to retain a portion of the progress payments. This ensures that there are funds available to resolve any potential issues that may arise after the contractor finishes the work. Retainage generally incentivizes contractors to complete the work satisfactorily and on schedule, since they will receive the retained amount only after all obligations have been fulfilled.

The other terms listed do not capture the essence of this specific financial practice. Contractor’s insurance relates to risk protection against liabilities, liabilities refer to broader obligations and debts, and a contingency fund is set aside for unexpected costs but does not specifically pertain to the withholding of payment for claims against a contractor.