Construction Insurance: PI, Public Liability, and Contractors All Risks Explained

Construction insurance is a maze of overlapping policies and excluded perils. This guide demystifies the four cover types every South African project involves.

1. Professional Indemnity (PI)

Covers professionals (architects, engineers, consultants) for negligence in design or advice.

• Typical residential consultant cover: R20m – R40m
• Commercial: R100m – R200m
• Project-specific PI may be required for large schemes

Verify with a certificate. Check exclusions — many policies exclude basement work, fire safety design, or work over RX value.

2. Public Liability (PL)

Covers contractor liability for injury or damage to third parties.

• Domestic projects: R40m – R100m
• Commercial: R100m – R200m
• Large/complex: R500m+

3. COIDA registration

Statutory R200m minimum for any South African contractor with employees. Sub-contractors who are sole traders may not have COIDA — your contractor must cover the gap.

4. Contractors All Risks (Contractors All Risks)

Covers the works themselves against damage during construction (fire, theft, vandalism, accidents). Usually arranged by the contractor; on larger projects, the client takes it out.

• Sum insured = full reinstatement value plus debris removal
• Standard exclusions: faulty design, defective workmanship, gradual deterioration

5. Existing Structures cover

If you're extending or renovating, your existing buildings need cover against damage from the works. Your buildings insurance may exclude this once major work starts — notify your insurer.

6. JBCC Insurance clauses

JBCC contracts specify which party insures what:

• Option A: Contractor insures new works
• Option B: Employer insures new works
• Option C: Employer insures existing structures + new works (used for renovations)

Option C is standard for extensions and refurbishments — the homeowner takes responsibility because contractor's Contractors All Risks usually excludes existing structures.

Common gaps

• Sub-contractor PI not on file
• PL cover too low for the project
• Existing structures not covered during works
• Run-off cover expired (consultant insurance after they leave the project)

MCFAR holds appropriate PI and PL cover for all our engineering instructions.

Frequently Asked Questions