Which construction insurance do you need? Your guide to a secure construction project
12.06.25
8
Minutes
Katrin Straub
Managing Director at nextsure
Building a house is a major project with many opportunities, but also risks. Without the right construction insurance, unforeseen events can quickly lead to financial disaster. Find out which policies are really necessary and how to bring your dream home safely to completion.
The topic in brief and concise terms
Builder’s liability insurance is the most important policy and protects against third-party claims for damages with cover amounts of at least five million euros.
Construction all-risk and fire shell insurance protect the structure itself against unforeseen damage such as severe weather, theft or fire.
Private construction helpers must be registered with BG BAU; additional private accident insurance for construction helpers often offers better protection.
Fundamental protection: Why builders' liability insurance is indispensable
As the property owner, you are responsible for everything that happens on your construction site. Even a simple accident, such as a passer-by tripping over unsecured building materials, can lead to claims for compensation running into six figures. [2-2] The builders’ liability insurance is therefore the most important insurance for any construction project. It protects you against the financial consequences of injury, property damage and financial loss suffered by third parties on your construction site or caused by your construction site. The cover limit should be at least five million euros. [2-2] Even appointing a main contractor does not fully exempt you from your duty to keep the site safe. This insurance also fends off unjustified claims, if necessary in court, giving you additional peace of mind. Without this protection, you risk your private assets.
The cost of builders’ liability insurance is low in comparison with the risk. It is often based on the project cost, for example at around one-thousandth of the construction sum. [2-2] For a project costing 300,000 euros, the premium can therefore be around 300 euros. This one-off premium covers you for the entire construction period. Bear in mind that your private liability insurance is usually not sufficient for the risks involved in building a house. [2-3] Checking your own policy is the first step here. Builders’ liability insurance comes into play precisely when your private cover ends. That gives you the first important cornerstone for a secure building project.
Protection for your building project: construction all-risk and fire insurance for buildings under construction
In addition to liability to third parties, the building itself must also be protected. The builders' risk insurance, often also referred to as construction insurance, covers unforeseeable damage directly to the building project. [1-1] This includes damage caused by force majeure such as storm or hail, as well as vandalism or theft of already permanently installed components. [1-2] Damage caused by normal weather effects or structural defects is usually not covered. The sum insured should cover the total construction costs, including architectural services and your own work. [1-1] This ensures your invested capital is optimally protected.
Another essential cover is the shell construction fire insurance. It protects your shell structure against damage caused by fire, lightning or explosion. Often, this insurance is a prerequisite for the disbursement of a construction loan by the bank. [2-4] Many providers include the shell construction fire insurance free of charge in a later buildings insurance policy, if this is taken out with the same insurer. [1-2] The premium for the builders' risk insurance is a one-off payment and is based on the construction sum. For a house worth 300,000 euros, costs of between 180 and 520 euros can be incurred. [1-5] These investments protect you from financial ruin should your building be damaged during construction.
The following damage is typically covered by builders' risk insurance:
Damage caused by exceptional weather events (storm, hail, heavy rain)
Vandalism and malicious damage
Theft of permanently installed components (e.g. radiators, windows) [1-3]
Design or material defects (if unforeseeable) [1-2]
Damage caused by collapsing scaffolding or crane components
Consequential damage caused by burst pipes or flooding during the construction period
These covers are essential to protect the invested capital and the value of your future home.
Safety for helpers: the indispensable accident insurance for construction helpers
Many homeowners rely on the hands-on support of friends and family to save costs. But what happens if a helper has an accident on the construction site? Private construction helpers must be registered with the Berufsgenossenschaft der Bauwirtschaft (BG BAU). [2-9] This statutory accident insurance provides basic cover. Registration must be completed no later than one week before the helper starts work; otherwise fines of up to 2,500 euros may apply. [3-3] The homeowner themselves and their spouse or partner are usually not insured through BG BAU. [3-5]
The benefits of statutory accident insurance are often limited. Private construction helper accident insurance offers additional, often more comprehensive cover. [2-3] It can cover disability benefits, hospital daily allowances or rescue costs that go beyond the statutory scope. [3-6] The cost of private construction helper insurance is manageable and starts, depending on the level of cover, at around 26 to 45 euros per helper as a one-off premium. [2-3] Some insurers also offer packages for a set number of helpers. This additional cover protects not only your helpers, but also you from possible financial claims in the event of damage. It is a sign of appreciation and responsibility towards those who help you build your home.
Keeping an eye on costs: what construction insurance costs and where there is potential to save
The total cost of the most important construction insurances for an average detached house with a build cost of EUR 300,000 can amount to around EUR 1,200 as a one-off payment. [1-5] This amount is made up of the individual policies. The builder’s liability insurance can cost around EUR 250 to EUR 500. The construction all-risk insurance costs between EUR 300 and EUR 600, depending on the provider and scope. The fire shell building insurance is often included free of charge in the later residential buildings insurance. For private construction helper insurance, you should budget EUR 25 to EUR 50 per helper.
Savings potential comes from comparing quotes and choosing suitable sums insured. Some insurers offer package deals that can be up to twenty per cent cheaper than individual policies. Also check whether your private liability insurance already covers smaller construction projects up to a certain amount. [2-6] An excess can reduce the premium, but it should not be set too high, so that you do not end up heavily burdened in the event of a claim. Careful calculations and advice help you find the right cover at fair conditions. Bear in mind that the cost of insurance is significantly lower than the potential cost of an uninsured loss.
Expert tips: How to optimise your insurance cover when building
To ensure the best possible insurance cover, builders should follow a few expert tips. Start planning your insurance early, ideally before the first spade is put in the ground. Document construction progress regularly with photos; in the event of a claim, this can considerably speed up settlement. Register all construction helpers correctly and on time with BG BAU and check whether additional private cover is needed. [3-3] With contract works insurance, make sure that theft of permanently installed parts and damage caused by gross negligence are also covered. [1-1]
Our expert tip: Clarify whether insurance for construction equipment makes sense if you rent or own expensive machinery. Check the insurance terms carefully for exclusions and obligations. Underinsurance can lead to significant deductions in the event of a claim. Seek advice from independent specialists to put together a tailored insurance package. This can help you avoid gaps in cover and optimise premiums. Good preparation and choosing the right policies are crucial for a worry-free house build.
Important points for your checklist:
Contact insurance experts early, at least three months before construction begins.
Check the cover limits of all policies; five million euros for public liability is often recommended. [2-2]
Accurately record all self-performed work for the sum insured under the contract works insurance.
Clarify whether the shell structure fire insurance transfers to the residential buildings insurance.
Register all helpers with BG BAU and check whether additional private accident insurance is needed. [2-9]
Compare at least three different quotes for each insurance you need.
Look for clauses relating to natural hazards, especially with a natural hazard insurance policy.
Review your insurance cover regularly if the construction schedule or building costs change.
This careful planning protects you from nasty surprises and safeguards your investment.
After the build comes protection: insurance for the finished home
Once the house is completed, the need for specialist construction insurance ends, but cover for your property must continue seamlessly. Fire shell insurance usually transfers into buildings insurance. [1-2] This is essential to protect your home against damage caused by fire, burst pipes, storms and hail. Many homeowners underestimate the risk of natural hazards such as flooding or earthquakes. Additional natural hazard insurance can provide vital protection here. Also consider contents insurance to protect your belongings. For landlords, other types of cover are relevant, as explained in the article Insurance for landlords.
Our expert tip: review your insurance policies annually and adjust them if necessary, for example after value-adding renovations or purchases. Regular reviews ensure that your cover is always up to date and that no gaps in insurance arise. Comprehensive advice, such as that offered by nextsure, helps you stay optimally insured even after the construction phase. That way, you can enjoy your new home without any worries. Request your personalised risk analysis now.
More useful links
Federal Statistical Office provides comprehensive data and statistics on the construction sector in Germany.
Consumer Advice Centre Rhineland-Palatinate offers helpful advice on checking building and service specifications to better understand construction contracts.
German Social Accident Insurance (DGUV) provides publications on safety regulations and guidelines for construction sites.
Federal Office for Building and Regional Planning (BBR) provides information on federal construction projects and regional development.
Federal Chamber of Architects (BAK) offers valuable tips for clients planning construction projects.
German Environment Agency provides information on sustainable construction practices and the relationship between building and the environment.
Federal Association of Construction Materials – Stone and Earth provides information on construction materials and the German construction materials industry.
FAQ
Which construction insurance policies are really essential?
Essential are the site owner's liability insurance, the construction all-risk insurance and the fire shell insurance. For building owners who use helpers, the construction helper accident insurance (statutory and, if applicable, private) is also very important.
What happens if I do not register my construction helpers with BG BAU?
The failure to register construction helpers with BG BAU can result in fines of up to 2,500 euros. In addition, in the event of a claim, there may be no or only limited insurance cover provided by statutory accident insurance. [3-3]
Does my private liability insurance also cover risks associated with building a house?
Usually not sufficient. Private liability insurance policies often only cover very small construction projects (e.g. renovations up to a low amount). A separate builder’s liability insurance policy is necessary for a new build or larger conversions. [2-3]
Can I deduct construction insurance from my taxes?
Insurance contributions that serve to protect private assets (such as most building insurance policies for an owner-occupied home) are generally not tax-deductible. There are a few exceptions, e.g. in the case of rental. A tax adviser can provide precise information on this.
What is the difference between construction all-risk insurance and buildings insurance?
Construction insurance protects the building during the construction phase against unforeseen damage. Residential building insurance takes effect once the property is completed and insures the finished building against risks such as fire, storm, hail and water damage from mains supplies.
How do I find the right construction insurance for my project?
Define your needs precisely (construction sum, own labour, helpers). Compare offers from different insurers and pay attention not only to the price, but also to the cover and exclusions. Independent advice can be very helpful. We at nextsure will be happy to support you.
