REALWorld Law

Construction

Insurances

What insurances need to be put in place by law or under a typical construction contract?

Germany

Germany

There are various ways for a contractor to insure itself against risk in the construction process. It can obtain contractor's liability insurance (Haftpflichtversicherung). In addition, works in progress can be covered by contractor’s all risks insurance (Bauleistungsversicherung) including cover against damage and theft. Damage to works in progress caused by natural disasters such as storms, earthquakes and flooding can also be covered by advance building insurance (Gebäudeversicherung).

Architects are in many federal states required to obtain professional liability insurance (Berufshaftpflichtversicherung). The specific regulations can be found in the respective federal laws (see also sections 113 et seq. of the German Insurance Contract Act (VVG)). Typically, an insurance obligation arises already from the contract with the contractor as many contractors contractually demand the existence of such insurance.

In contrast, construction companies are not obligated to have liability insurance, although it is generally practiced. Additionally, project-specific insurance, such as Contractors All Risks (CAR; Bauleistungsversicherung) insurance, is commonly used to protect against project-related damage to construction services, equipment, and building materials.