Your guide to insurance in construction projects

Discover the role of insurance in construction and learn more about your options.

When carrying out construction projects, it is essential that insurance is put in place to protect all parties. Insurance helps to protect everyone, from investors, lenders, contractors, employees, and the general public. In the past, the insurance industry relied upon the employer to insure the structure of a building being renovated.

Once the employer had insured the structure, the industry-standard was that the contractor would then insure the work being carried out. However, this caused confusion and disputes and so measures were put in place to ensure that insurance within construction met a standard.

The Joint Contracts Tribunal (JCT) sets out insurance contracts that lay out the responsibilities of each party. This helps to avoid disputes and covers the range of contracts that might come up in a construction project. Further to this, other types of insurance were also provided boost cover.

Each type of insurance in construction projects should be understood by those working in the industry.

Insurance In Construction

Here are some of the most common types of construction insurance contracts:

JCT Contracts

The JCT (Joint Contracts Tribunal) Contracts aim to write out the responsibilities of all parties and ensure that the insurance is carried out in both names. The contractor and employer, therefore, have a joint responsibility when it comes to the insurance of the build and their obligations.

It sets out what will happen in a variety of situations and aims to avoid disputes by clearly outlining responsibilities before work begins. This way, each party knows what they’re getting into and can ensure that they are properly insured. Read more about JCT Contracts here.

CAR Insurance

Contractors’ All Risks (CAR) insurance is commonly used in the construction industry to cover contractors for property damage and third-party disputes. Commonly these disputes would involve injury or damage, and the insurance aims to mitigate these risks and protect the contractor.

The CAR insurance is a good option for those looking to cover themselves across third parties, including injuries to subcontractors and property damage carried out by subcontractors. Third parties are often an afterthought; however, subcontractors can also become injured on a construction site, or cause damage and therefore they need to be insured.

PII Insurance

Professional Indemnity Insurance (PII Insurance) is essential for construction businesses, lenders and contractors who provide specialist advice.

PII covers you in the event of claims against your business in the case of negligence or failure to provide the correct professional advice. PI Insurance covers construction businesses in the event that the advice they give is incorrect or where something they advised was not carried out with due diligence.

It is essential insurance for any professional services firm that is offering advice that could have serious negative repercussions for the business they are advising.

Next steps

Are you looking for more advice on insurance for construction projects? Get in touch to learn more about our range of building consultancy services.


Disclaimer: Please note this article is for guidance purposes only and does not constitute legal advice.

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