Asuransi Konstruksi

How to calculate construction project insurance costs?

Liga Asuransi – Dear Risk takers, how are you? Hopefully, your business is always fine.

In this blog, we always discuss risk management and insurance. This time we discuss the importance of carefully calculating the cost of project insurance premiums to get maximum insurance coverage but with efficient premium costs.

If you are interested in this article, please share it with your colleagues so they understand like you.

As we all know, success depends on efficient cost management and effective risk mitigation in construction projects.

Contractors and project owners face uncertainties and potential responsibilities throughout the project cycle. Therefore, having a comprehensive insurance policy with efficient premiums is very important to protect their investment and ensure the smooth implementation of the project.

Why do contractors and project owners need efficient insurance premiums? Let’s discuss the main reasons:

  • Financial Protection

Construction projects involve significant capital investments. A solid insurance policy can provide financial protection in the event of an unexpected accident, breakdown, or delay. By paying efficient insurance premiums, contractors and project owners can transfer potential loss risks to insurance providers, protect their economic interests and ensure business continuity.

  • Reducing Liability Risks

Construction project sites are inherently vulnerable to various risks, such as accidents, injuries, property damage, and third-party liability. Contractors and project owners are legally responsible for these incidents. Efficient insurance premiums help reduce this liability risk by providing coverage for legal claims, medical expenses, property repairs, and other related expenses. This allows contractors and project owners to focus on their core activities while minimizing the potential financial burden.

  • Meet Contract Requirements

Many construction projects involve contractual agreements that require thorough insurance coverage. Contractors and project owners must meet these requirements to obtain a project contract. By getting efficient insurance premiums, they can demonstrate their commitment to fulfilling contractual obligations, increasing their credibility and competitiveness in the industry.

  • Get Project Funding

Financial institutions often require construction projects to have adequate insurance coverage as a prerequisite for project funding. Lenders seek assurance that their investment is protected against unforeseen events that could jeopardize the project’s success. By obtaining efficient insurance premiums, contractors and project owners can meet these funding requirements, facilitate smoother loan approvals, and ensure project funding availability.

  • Peace of Mind and Risk Management

 Construction projects involve complex coordination between various stakeholders and complex operations—uncertainty and risk lurk at every stage, from design and procurement to construction and completion. Efficient insurance premiums give contractors and project owners peace of mind, knowing they have a safety net to overcome unforeseen challenges. This allows them to manage risk proactively, focus on project delivery, and reduce potential disruptions.

In conclusion, contractors and project owners must recognize the importance of efficient insurance premiums.

This provides a critical safeguard against financial loss, reduces liability risks, ensures compliance with contractual requirements, facilitates project funding, and provides peace of mind in a dynamic and uncertain construction environment.

By working with experienced brokers and insurance companies, contractors and project owners can tailor insurance coverage to their needs, strike the right balance between cost and scope, and start their construction projects with confidence.

One of the cost components that need to be considered from the start is the cost of construction project insurance premiums.

As consultants and insurance brokers, they often receive requests from their clients to provide input regarding the estimated cost of insurance premiums for the projects they will work on.

Without complete information, insurance brokers can only provide a general indication of the cost of insurance premiums for construction projects. Meanwhile, clients want more specific figures because they will participate in project tenders and compete with significant contractors.



To help you get an estimate of competitive construction project insurance costs, here we present some important information needed so that we can provide a more accurate assessment of insurance premium costs:

  • Job Type: Wet Risks

The cost of construction project insurance premiums depends on the type of work to be carried out. The higher the risk, the higher the insurance premium costs. Types of work at increased risk are called “wet risks,” including bridge construction, harbor construction, piers, dams, irrigation, and other similar jobs. Estimated premium costs for wet risks types of work can be 2 times higher than civil jobs. In addition, not many insurance companies are interested in guaranteeing it.

  • Type of Work: Civil Works

Compared to Wet Risks, the risk of civil works is lower. Most risks can be anticipated using qualified tools and a skilled workforce. Premium rates range from 0.25% depending on underwriting information or other supporting information.

  • Project Design

You need a drawing of the overall project design to get an overview of the insurance underwriter project—details of each floor, section, unit, and other sections.

  • The parties involved in the project

The insurer will evaluate the parties involved in this project. Names of owners and developers, names of consultants/designers, engineers, names of contractors, sources of financing, and others

  • Time Schedule/Bar Chart

The underwriter needs this information to calculate the cost of construction project insurance premiums, namely the work schedule, how long it will take to build the project, the breakdown schedule, and when to test commission and maintenance.

  • Bill of Quantity (BQ)

The insurance underwriter requires details on the type of goods and quantity to measure the magnitude of the risk if any part is damaged.

  • Project location

Project location dramatically affects the level of risk. Projects in the middle of a crowd and close to other buildings have a high risk of accidents. On the other hand, projects located near slopes and elevations are prone to landslide risks.

  • Number of Project Management Team and Employees

Details of the number of the project’s management team, supervisors, and staff involved. Likewise, with the number of workers in the field. Here is a breakdown of their wages.



Usually, in every construction project contract, there are provisions regarding insurance or article of insurance. There are several versions regarding who must take care of project insurance. Several types of insurance are taken care of by the owner or developer. Some are taken care of by the contractor. Or all insurance becomes the obligation of the contractor. Please get the information.

  • The party in charge can be the owner or the contractor if the owner takes care of it, preferably in the Owner Control Insurance Program (OCIP) concept, where the owner takes care of all types of insurance needed by the project.
  • If the contractor takes care of it, the contractor usually only focuses on insurance guarantees related to construction work.



From our experience so far, the following are several types of insurance coverage that are usually required for a construction project:

The above information is usually available when you are about to take part in a tender or when the project is in the preparation stage for development. This information will help insurance brokers negotiate with insurers to get the most comprehensive construction project insurance coverage and efficient costs.



Insurance brokers are essential in obtaining construction or installation project insurance for contractors and project owners. Their primary responsibility is to act as an intermediary between the insured and the insurance company, facilitating the insurance process and providing valuable expertise and guidance.

The following are the primary roles of an insurance broker in construction or installation project insurance:

  • Assessing Project Insurance Needs

Insurance brokers carry out a thorough analysis of the special requirements and risks associated with construction projects. They evaluate project scope, potential hazards, and contractual obligations to determine the appropriate type and level of insurance coverage. By understanding the details of a project and the risks involved, brokers can tailor insurance solutions to meet the unique needs of contractors and project owners.

  • Market Knowledge and Access to Multiple Insurance Companies

Insurance brokers have comprehensive insurance market knowledge, including available policies, coverage options, and competitive prices. They establish relationships with various insurance companies and underwriters so that they can access multiple insurance products. This expertise and market access allow the broker to present clients with various insurance options, ensuring they get the most competitive rates and appropriate coverage.

  • Placement and Negotiation of Insurance Premiums

Once an insurance need is identified, the broker draws on industry knowledge and employment relationships to negotiate favorable terms and conditions with insurance companies. They provide project details, risk assessments, and other relevant information to insurance companies, acting as a proxy for clients to obtain optimal coverage at competitive premiums. Brokers strive to get policies that match project requirements while ensuring cost efficiency.

  • Bid Comparison

Insurance brokers obtain quotes from several insurance companies to provide clients with various options. They carefully analyze and compare the terms, conditions, and prices of different policies, highlighting the advantages and limitations of each. By presenting comprehensive information and facilitating comparative analysis, brokers empower clients to make informed decisions regarding their insurance coverage.

  • Claim Assistance

In the event of a claim, the insurance broker acts as an advocate for the client. They assist in handling the claims process, communicating between the insured and the insurance company. Brokers provide guidance on document requirements, facilitate communication, and ensure timely and fair claims settlement. Their expertise helps streamline the claims process, minimize disruption, and ensure clients receive the compensation they deserve.

  • Continuous Support and Risk Management

Insurance brokers offer ongoing support throughout the project cycle. They stay informed about changes in insurance regulations and industry practices, advising clients on modifications that may affect their insurance coverage. The broker also provides advice in risk management, helping clients identify and mitigate potential risks to improve overall project safety and minimize insurance-related challenges.

Insurance brokers can leverage industry knowledge, market access, negotiation skills, and ongoing support to secure efficient and comprehensive construction or installation project insurance. Their expertise enables contractors and project owners to navigate the complex insurance landscape, obtain optimal coverage and effectively manage risk throughout the project’s life.



In the construction industry, the success of a project is highly dependent on cost efficiency. One of the cost components that need to be considered from the start is the cost of construction project insurance premiums. To get an accurate and competitive estimate of insurance premium costs, the role of an insurance broker is crucial.

Acting as intermediaries between the insured party and insurance companies, insurance brokers have in-depth knowledge of the insurance market and access to a wide range of insurance products. They assist in assessing project insurance needs, placing and negotiating favorable policies, and providing clients with various options. With their support, contractors and project owners can obtain coverage appropriate to the risks they face while ensuring optimal cost efficiency.

In addition, insurance brokers also assist in the settlement of claims and become advocates for clients in the process of shares that may occur. They provide ongoing support throughout the project cycle, keeping clients informed about changes in insurance regulations and advising on risk management to improve project safety.

By having a competent and experienced insurance broker, contractors, and project owners can optimize their insurance protection, reduce financial risks, and maintain the smooth running of construction projects. So contacting a reliable insurance broker is a crucial step to ensure the success and safety of a construction project.

One of the leading insurance broker companies with experience in construction insurance is L&G Insurance Broker.

For all your project insurance needs, contact L&G now!


L&G HOTLINE 24 HOURS: 0811-8507-773 (CALL – WHATSAPP – SMS)



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L&G Insurance Broker Registered by OJK KEP-667/KM.10/2012
Proses hanya 24jam
Asuransi Marine Cargo Lebih Untung Dengan MOP
(Marine Open Policy)
Chat kami di WhatsApp untuk info lengkap!