What building insurance do you need? Your guide to a secure construction project
12 Jun 2025
4
Minutes
Katrin Straub
CEO at nextsure
Building a house is a major project with many opportunities, but also risks. Without the right building insurance, unforeseen events can quickly lead to financial disasters. Discover which policies are truly necessary and how to safely bring your dream home to completion.
The topic in brief and concise terms
The builder’s liability insurance is the most important policy and protects against third-party compensation claims with coverage amounts of at least five million euros.
Construction all-risk and fire construction insurance protect the structure itself against unforeseen damages like adverse weather conditions, theft, or fire.
Private construction assistants must be registered with the BG BAU; an additional private accident insurance for construction assistants often provides better protection.
Fundamental Protection: Why Builders' Liability Insurance Is Indispensable
As a building 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 in the six-figure range. [2-2] The construction liability insurance is therefore the most important insurance for any building project. It protects you from the financial consequences of personal injury, property damage, and financial losses to third parties on or due to your construction site. The coverage amount should be at least five million euros. [2-2] Even commissioning a general contractor does not completely release you from your traffic security obligation. This insurance also defends against unjustified claims, if necessary in court, providing you with additional security. Without this protection, you risk your private assets.
The costs for construction liability insurance are low compared to the risk. They are often based on the construction sum, for example, approximately one-thousandth of the construction sum. [2-2] For a construction project costing 300,000 euros, the costs could amount to about 300 euros. This one-time payment covers you for the entire construction period. Keep in mind that your personal liability insurance is typically not sufficient for the risks associated with building a house. [2-3] Reviewing your own policy is the first step here. The construction liability insurance kicks in precisely when your personal coverage ends. This lays the first important foundation for a secure building project.
Protection for your construction: The construction performance and fire shell insurance
In addition to liability towards third parties, the structure itself must be protected. The building performance insurance, often referred to as construction insurance, covers unforeseen damages directly to the construction. [1-1] This includes damages caused by acts of God such as storms or hail, but also vandalism or theft of already firmly installed parts. [1-2] Usually, damages caused by normal weather conditions or construction defects are not insured. The insurance sum should encompass all construction costs including architectural services and personal contributions. [1-1] This way, your invested capital is optimally protected.
Another essential coverage is the fire shell insurance. It protects your shell construction against damages from fire, lightning strikes, or explosions. This insurance is often a prerequisite for banks to release construction credit funds. [2-4] Many providers include the fire shell insurance for free in a subsequent residential building insurance if it is concluded with the same insurer. [1-2] The premium for the building performance insurance is a one-time contribution based on the construction sum. For a house valued at 300,000 Euro, costs between 180 and 520 Euro may arise. [1-5] These investments protect you from financial ruin should your building suffer damage during construction.
The following damages are typically covered by the building performance insurance:
Damages from exceptional weather events (storms, hail, heavy rain)
Vandalism and malicious damage
Theft of firmly installed building parts (e.g. radiators, windows) [1-3]
Construction or material defects (as long as unforeseen) [1-2]
Damages from collapsing scaffolding or crane parts
Consequential damages from water pipes or flooding during the construction period
These coverages are crucial to protect the invested capital and the value of your future home.
Safety for helpers: The indispensable construction helper accident insurance
Many builders rely on the active support of friends and family to save costs. But what happens if a helper has an accident on the building site? Private construction helpers must be registered with the Employers' Liability Insurance Association of the Construction Industry (BG BAU). [2-9] This statutory accident insurance provides basic protection. Registration must be completed no later than one week before the start of the helper activity, otherwise fines of up to 2,500 euros may be imposed. [3-3] The builder and their spouse or life partner are generally not insured through BG BAU. [3-5]
The benefits of statutory accident insurance are often limited. A private construction helper accident insurance offers additional, often more extensive protection. [2-3] It can cover disability benefits, hospital daily allowance, or rescue costs that exceed the statutory framework. [3-6] The costs for a private construction helper insurance are manageable, starting at a single premium of approximately 26 to 45 euros per helper, depending on the scope of benefits. [2-3] Some insurers also offer packages for a specific number of helpers. This additional coverage not only protects your helpers but also shields you from potential financial claims in the event of an accident. It is a sign of appreciation and responsibility towards those who assist you in building your home.
Keeping an Eye on Costs: What Building Insurances Cost and Where Savings are Possible
The total cost for major construction insurance can be approximately 1,200 euros one-time for an average single-family house with a construction sum of 300,000 euros. [1-5] This amount comprises the individual policies. The builder's liability insurance can range from around 250 to 500 euros. The construction performance insurance costs between 300 and 600 euros, depending on the provider and scope. The fire shell insurance is often included free of charge in the later homeowner insurance. For private construction helper insurance, you should estimate 25 to 50 euros per helper.
Savings potential arises by comparing offers and choosing appropriate coverage amounts. Some insurers offer package deals that can be up to twenty percent cheaper than individual contracts. Also check if your personal liability insurance already covers smaller construction projects up to a certain sum. [2-6] A deductible can reduce the premium, but it should not be set too high to avoid being overly burdened in the event of a claim. Careful calculation and advice help find the optimal protection at fair conditions. Remember that the cost of insurance is significantly lower than the potential costs of an uninsured loss.
Expert Tips: How to Optimise Your Insurance Coverage During Construction
To ensure the best possible insurance coverage, builders should follow some expert tips. Start planning your insurance early, ideally before the first spade hits the ground. Regularly document the construction progress with photos; this can significantly speed up the process in the event of a claim. Report all construction helpers correctly and in a timely manner to BG BAU, and consider the need for additional private coverage. [3-3] Ensure your construction insurance also covers theft of installed parts and damage caused by gross negligence. [1-1]
Our expert tip: Determine whether insurance for construction equipment is advisable if you rent or own expensive machinery. Carefully review the insurance terms for exclusions and obligations. Underinsurance can lead to significant deductions in the event of a claim. Seek advice from independent professionals to tailor an insurance package. This can help you avoid coverage gaps and optimise premiums. Good preparation and choosing the right policies are crucial for a worry-free house construction.
Important points for your checklist:
Contact insurance experts early, at least three months before construction begins.
Check the coverage amounts of all policies; five million euros for liability is often recommended. [2-2]
Accurate recording of all own contributions for the construction insurance coverage amount.
Clarify whether the fire shell insurance transitions to the residential building insurance.
Register all helpers with BG BAU and consider additional private accident insurance. [2-9]
Compare at least three different offers for each required insurance.
Pay attention to clauses regarding natural hazard damage, especially with a natural hazard insurance.
Regularly review insurance coverage with changes in construction process or budget.
This careful planning protects you from nasty surprises and secures your investment.
After construction comes protection: Insurance for the completed home
With the completion of the house, the need for special construction insurances ends, but the insurance coverage for your property must continue seamlessly. The fire construction insurance usually transitions into the residential building insurance. [1-2] This is essential to protect your house against damage from fire, water leaks, storms, and hail. Many homeowners underestimate the risk of natural disasters, such as floods or earthquakes. An additional natural disaster insurance can provide existential protection here. Also, consider a household contents insurance to protect your inventory. For landlords, further protection is relevant, as explained in the article Insurances for Landlords.
Our expert tip: Review your insurance policies annually and adjust them if necessary, for example, after renovations or acquisitions that increase value. Regular reviews ensure that your coverage remains up-to-date and no coverage gaps occur. Comprehensive advice, as we offer at nextsure, helps you remain optimally insured even after the construction phase. This way, you can enjoy your new home worry-free. Request your individual risk analysis now.
More useful links
Statistisches Bundesamt offers comprehensive data and statistics on the construction sector in Germany.
Verbraucherzentrale Rheinland-Pfalz provides useful advice on reviewing construction and performance descriptions to better understand building contracts.
Deutsche Gesetzliche Unfallversicherung (DGUV) publishes materials on safety regulations and guidelines for construction sites.
Bundesamt für Bauwesen und Raumordnung (BBR) informs about federal construction projects and spatial development.
Bundesarchitektenkammer (BAK) offers valuable tips for clients planning construction projects.
Umweltbundesamt provides information on sustainable building practices and the connection between construction and the environment.
Bundesverband Baustoffe – Steine und Erden offers information about building materials and the German building materials industry.
FAQ
Which construction insurances are truly indispensable?
Indispensable are the builder's liability insurance, the construction insurance, and the fire shell insurance. For builders who use helpers, the construction helper accident insurance (both statutory and possibly private) is also very important.
What happens if I don't register my construction helpers with the BG BAU?
The failure to register construction assistants with BG BAU can result in fines of up to 2,500 euros. Additionally, there may be no or only limited insurance coverage through statutory accident insurance in the event of damage. [3-3]
Does my personal liability insurance also cover risks associated with house construction?
Generally not sufficient. Private liability insurances often cover only very small construction projects (e.g., renovations up to a low amount). A separate builder's liability insurance is necessary for a new build or major renovations. [2-3]
Can I deduct construction insurance from taxes?
Contributions towards insurance policies that serve to protect private assets (such as most building insurances for owner-occupied homes) are generally not tax-deductible. There are few exceptions, for example, in cases of rental. A tax advisor can provide precise information on this.
What is the difference between construction insurance and home insurance?
The construction all-risk insurance protects the building during the construction phase from unforeseen damage. The home building insurance takes effect after completion and covers the finished building against risks such as fire, storm, hail, and water damage from pipes.
How do I find the right construction insurance for my project?
Define your needs precisely (construction sum, own contribution, helpers). Compare offers from different insurers and pay attention not only to the price but also to the services and exclusions. Independent advice can be very helpful. At nextsure, we are happy to assist you with this.
