Ten-year liability insurance mandatory in Construction sector

In July 2018 the law on mandatory ten-year liability insurance for contractors, architects and other service providers in the construction sector will take effect. As of this date, insurance is mandatory for all parties with an effect on the stability of a building intended for residential use. Insurance broker Vanbreda Risk & Benefits introduces a new integrated policy for the protection of all the construction sector workers involved.

Ten-year liability insurance mandatory in Construction sector

The new Peeters Law that takes effect on 1 July 2018 makes it mandatory for all contractors, architects and other such construction sector workers (such as engineering firms) to take out a ten-year liability insurance when constructing or renovating a building intended for residential purposes. The mandatory insurance covers the liability for a ten-year period following the acceptance of the works for defects that affect or could affect the stability or watertightness of the building or an important part thereof.

The insurance obligation applies to works for which the final planning permission will be granted after 1 July 2018.

40,000 building permits per year

Eli Hemelaer, Assistant Manager at Vanbreda Risks & Benefits: “The impact of the new legislation is hard to overstate. Every year 40,000 building permits are granted in Belgium. Many service providers in the construction industry have a direct or indirect impact on the stability of the building. In other words: as of 1 July 2018, all these parties must have the mandatory liability insurance for every housing construction project they work on.”

New: all parties protected under one policy

This new mandatory insurance is proving challenges for the insurance sector. On the one hand the appropriate insurance solution must be found, whilst on the other hand the issuing of the mandatory certificates (read more about this in this article) must also be managed properly.

Eli Hemelaer: “We see that many insurers are feeling apprehensive about this new mandatory insurance. We have now drawn up a new insurance solution with coverage for all those parties obligated to insure themselves. In practice, the most optimal solution is for the primary contractor to take out a policy covering all parties affecting stability.”

Contractors and promoters can already calculate prices

This solution offers many benefits in comparison to each construction sector worker taking out their own policy. The integrated approach has a positive effect on the cost of the mandatory insurance and in the event of a claim, avoids lengthy debate regarding which policy will cover the liability. Moreover, it allows for the creation of an organised procedure for the issuing of the mandatory certificates.

Eli Hemelaer: “We have already developed this insurance solution so promoters and contractors can use the price in their calculations for major projects which won’t receive a building permit until after 1 July 2018.”

The cost of the policy is estimated at 0.6% of the construction value. By offering this innovative insurance solution, Vanbreda Risk & Benefits provides a clear answer to the challenge the mandatory liability insurance poses to the construction sector.

Eli Hemelaer

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