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When you tender for bids for construction projects, contractors are normally asked to arrange insurance cover for the works and their own liabilities.  There are a number of disadvantages for you as the owner: 

·      You must check that the contractor’s policies note your interest

·      Most contractors arrange an annual policy with a specific contract limit.  If the value of your contract exceeds this limit, then separate arrangements should be made by the contractor.  In addition, the contract may extend across two periods of insurance and the contractor’s cover may change during the life of the contract

·      With sub-contractors and others arranging their own insurance, there will be several policies covering the same contract, possibly leading to overlaps and gaps in cover.  This can also cause delays in settling claims, where there may be disputes between insurers over cause and responsibility

·      Premium charged may include a ‘profit margin’

·      As the owner, you must still arrange insurance to cover your own liabilities, even although you will be named on the contractor’s policies

·      Claim settlements are paid to the contractor – not to you as the owner




As an option to the traditional Contractor Controlled Insurance Programme, it is now accepted practice that the Owner should arrange insurance protection.  The benefits of going down this route are that you:

·      Control the policy and are not governed by the contractor’s insurance cover

·      Place the insurance with one insurer, thus avoiding duplication of effort and potentially improve policy terms

·      Include all contractors on your policy, avoiding potential disputes between insurers

·      Choose the sum insured and can amend it to reflect changes in the project

·      Select the level of self-insurance (deductible)

·      Reduce premium cost

·      Have control of claim monies, ensuring they are used to reinstate the work


This is a viable alternative to traditional arrangement of insurance for construction projects.















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