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Types of Construction Insurance

Types of Construction Insurance – Calculate Man HoursTypes of Construction Insurance.
The estimate of financial costs in an economic proposal includes the insurance cost and the financial cost itself.

This post examines the costs and types of insurances and sureties of the bond.

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Insurance Requirements for Bid / Types of Construction Insurance


Time needed: 5 minutes.

Different types of insurance are used to protect the Customer and Contractors throughout the various phases of a construction project. 
Here is a comprehensive guide to the types of insurance required to tender. 

  1. Identify the types of coverage required by the Customer.

    Tender documents should establish the type of insurance required by the client, coverage and amounts insured.

    The type of insurance to be included in the proposal is divided into bid bonds and those required for contract performance.

    We must ensure that there is no lack of any other insurance required under current labor laws.

    The type of insurance currently used in the construction industry is summarized in the following figure:

    Types of Construction Insurance - Calculate Man HoursTypes of Construction Insurance - Calculate Man Hours

  2. Verify, who are the insurance companies accepted by client.

    In most cases, in the tender documents, the purchaser lists the approved insurers.

    If the information does not appear in the bidding documents, we should make a written request to the client.

    List of authorized Insurers

  3. Last step

    After defining all of the above, the next step is to request quotes from different insurance companies so as to choose the most convenient.

    When taking out a policy, it is advisable to consult a risk manager and an insurance advisor, besides your agent or broker.

    Request Quotes


1 – What is Policy/Coverage/Premium?

Policy: The policy is the document that gives validity of the insurance contract agreed between the insured and the insurer.

This agreement sets out the requirements, rights and obligations of the parties in question.

Coverage: The insurance coverage is the commitment assumed by the insurer to pay an indemnity to the insured (or his/her beneficiaries), in order to repair the consequences of a loss.

It should be noted that the coverage has a limit known as the insured capital.

Premium: The insurance premium is the price of insurances, that is, the amount of money that the insured pays periodically to the insurance company for the coverage he receives by the insured risk.

Payment of the premium within the prescribed period obliges the insurer to comply with the service agreed with the insured.

2 – What is a bid bond?

A bid bond is a temporary guarantee that is returned to the bidder if their proposal is not accepted.

These bonds were returned to the unsuccessful bidders after the work was assigned to the winning bidder.

The bidder assigns the cost of these policies to overhead.

3 – What assurances are needed to implement the project?

The usual insurance requirements include:

–Workplace accident insurance.

– Life insurance for workers.

-Civil responsibility for construction.

-Professional liability insurance.

-Contractors pollution liability (CPL)

– Business and commercial motor vehicle insurance.

-Contractors Equipment Insurance.

-Guarantee insurance to ensure compliance with the contract.

-Surety insurance to replace the retention with repair funds.

-Policy of guarantee for financial advance and/or collection.

-Construction and erection insurance during the execution of a project. All risk insurance.

-Any other insurance required by current labor legislation.

4 – What are the additional clauses required by the Client?

Generally, the Client requests that insurance policies include the following clauses:

Clause waiving subrogation by the insurer against the Client.   
(Known as the non-repetition clause)

Clauses that prevent the insurer from modifying and/or canceling the insurances without prior notice to the Client.

We should note that the Client regularly monitors the validity of each of the policies required in the contract document

The following post discusses the financial cost in construction projects.

Types of Construction Insurance – Calculate Man Hours


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