Construction Projects – Employer vs Contractor Insurance Placement

Posted October 2, 2025

When starting work on a project choosing a contractor is one of the most important tasks, but when it comes to insuring the project, who is best placed to ensure adequate cover is provided? Many developers are unaware until something goes wrong that insurance held by contractors isn’t always what it was thought to initially be.

Most contracts that fall under JCT conditions have 3 options for insurance cover arrangements:

Option A (usually for new build projects) requires the Contractor to take out and maintain all risks insurance for the works

Option B (also usually for new build projects) requires the Employer to take out and maintain all risks insurance for the works

Option C – (where there is an existing structure in place) – requires the Employer to take out and maintain joint names insurance in respect of the Existing Structures and All Risks insurance for the works (usually noting the contractor as part of the policy) or has the flexibility for a bespoke arrangement.

To ensure peace of mind and coverage that meets the requirements of both parties, the recommendation is for developers to take control of the insurance placement and work with a specialist broker to source a specific policy, known generally in the market as an Owner-Controlled Insurance Programme (OCIP).

The main benefits to a developer placing the insurance policy themselves are the following:

1. Certainty – Contractor insolvency remains a risk in the market so should this occur, and they have placed the insurance, the existing works remain covered whilst another contractor is appointed. This is a particularly important aspect for Project Lenders.
2. Control – In the event of a claim, you remain in control of the claims process. s for a resolution given there can be a “blame game” process where the buck is passed between parties, causing delays in settlement and hindering progress at a site,
3. Coverage – All elements of the contract can to be covered, including all tiers of sub-contractors and packages meaning that if a loss occurs, the project insurer will deal with the claim presented ensuring swifter resolutions and lessening of site delays.
4. Funder Requirements – If there is a lender involved in the project you can ensure the coverage meets with their requirements which may be certain Lender-specific clauses, certain perils to be addressed or the addition of covers such as Terrorism, Marine or DSU
5. Cost-Efficiency – Achieving a competitive, bespoke policy whilst working with a specialist broker who has strong knowledge and market experience typically is cost-neutral vs contractor-led route.

OCIP policies can include several sections of cover such as Construction All Risks, Plant & Machinery, Liability to the Public and JCT Non-Negligent Liability. However, these policies can be extended in many circumstances to include additional support such as Delay in Start Up Costs or Advanced Business Interruption, Marine Transit risks and Environmental risks.

Working with a broker who understands not only how the Construction market has ebbed and flowed over the past few years, but also what may be coming is key to future-proof your insurance policy for the entire length of your contract.

Cape Insurance are a specialist Property & Construction broker who have experience working with developers of all sizes and are able to review various contracts and build types. Contact us today using the details below to discuss your requirements and how we can help you with your next project.

Cassie Dicken BA (Hons), Cert CII