What are the Insurance Premium Rates for Toll Road Projects in Indonesia?

In recent years, Indonesia has been aggressively promoting infrastructure development, particularly toll road projects, as the backbone of national connectivity. The government, through its Master Plan and National Strategic Projects (PSN), targets the construction of thousands of kilometers of new toll roads by 2030. Significant investment growth from state-owned enterprises, the private sector, and foreign investors has made the toll road industry one of the most promising yet high-risk sectors.

Toll road project contract values ​​often reach trillions of rupiah. With such a scale, the risk of loss cannot be ignored. Risks can arise from the construction phase—such as landslides, work accidents, or structural failure—through to the operational phase, such as floods, earthquakes, or major traffic accidents on newly opened toll roads. All of these risks can lead to significant financial losses, project delays, and even lawsuits from third parties.

Therefore, one of the main questions that always arises from project owners and contractors is: “What are the insurance premium rates for toll road projects in Indonesia?” Insurance premiums are not just an additional cost, but an integral part of risk management that impacts cash flow, investor confidence, and project smoothness.

This is where the role of an experienced insurance broker like L&G Insurance Broker becomes crucial. Brokers not only help calculate and reduce premium costs but also ensure the coverage provided meets the specific needs of toll road projects. With the right insurance placement strategy, owners and contractors can obtain maximum coverage at efficient premium rates, as well as guaranteed support in the event of a claim.

Contact L&G Insurance Broker now at Phone number 08118507773 for a free consultation before the risks haunt your business.

Potential and Scale of Toll Road Projects in Indonesia

Indonesia is an archipelagic nation with a significant need for land connectivity. Toll roads are a key solution for accelerating logistics distribution, reducing transportation costs, and supporting national economic growth. In the past five years alone, the government has added hundreds of kilometers of new toll roads, and by 2030, it is targeted to have over 5,000 kilometers of toll roads operational across Indonesia.

Toll road projects are funded not only by the state budget but also by state-owned enterprises, private consortiums, and foreign investment schemes. The investment value of each project can reach Rp 10 trillion to Rp 50 trillion, depending on the length of the road, its construction structure, and the complexity of the project, such as flyovers, tunnels, or large interchanges.

This growth potential makes toll road projects one of the most attractive investment sectors. However, with such significant value, any risk, no matter how small, can have devastating consequences. For example, damage from natural disasters can cause hundreds of billions in losses, while construction delays can disrupt operational schedules and erode investor confidence.

Risks Faced by Toll Road Projects

Toll road projects are large-scale and highly complex. From construction to operation, each phase carries risks that can lead to financial losses, delays, and even potential legal disputes. Here are some of the key risks to anticipate:

1. Construction Risks

During the construction phase, the greatest risks typically involve structural failure, landslides due to unstable ground conditions, or the collapse of incomplete bridges. Furthermore, floods and earthquakes at the project site can damage foundations and materials. Workplace accidents involving workers and heavy equipment are also serious risks.

2. Operational Risk

Once a toll road begins operating, the risk shifts to infrastructure damage due to natural disasters, extreme rainfall, or earthquakes. Toll roads are also prone to major traffic accidents that can damage facilities, cause fatalities, and even trigger lawsuits against the operators.

3. Financial Risk

Project delays due to accidents or disasters can disrupt operational schedules. This results in financial losses in the form of delayed toll revenue. Furthermore, investors and lending banks typically require insurance coverage as part of a project’s financial viability.

4. Legal and Environmental Risks

Toll road projects often involve land acquisition and direct contact with surrounding communities. The potential for social conflict, environmental damage, and even third-party lawsuits are additional risks that cannot be ignored.

Given the complexity of these risks, insurance protection is an absolute necessity. The right policy can provide protection against physical loss, delays, and even legal liability. This is where insurance brokers like L&G Insurance Broker become vital, as they understand the risk characteristics of toll road projects and can design the best protection solutions at cost-effective premiums.

Case Study of Risk and Loss in Toll Road Projects

To understand how important insurance protection is in toll road projects, let’s look at some cases that have occurred in the field:

1. Landslide on the Toll Road Project in West Java

One toll road project was temporarily delayed by a massive landslide that buried part of the newly constructed section. Material losses reached hundreds of billions of rupiah due to structural damage and additional repair costs.

2. Bridge Collapses During Installation

In a toll road project involving the construction of an overpass, a technical failure during the casting process caused part of the structure to collapse. In addition to material losses, this incident resulted in fatalities, triggering legal liability claims.

3. Floods that Damage Infrastructure

Several new toll road sections were operational but were immediately affected by heavy flooding. Water submerged large sections of the road and damaged toll equipment such as payment booths and electrical systems. Losses ballooned as projects had to be temporarily shut down.

4. Fatal Traffic Accidents

On an operational toll road, a truck accident damaged a safety fence and resulted in a fatality. The victim’s family filed a lawsuit against the toll operator.

These cases illustrate that losses in toll road projects can be significant and have long-term impacts. Without insurance protection, losses can threaten the project’s continuity and even undermine investor confidence. Therefore, project owners and contractors must secure appropriate insurance coverage from the outset with the assistance of a professional broker like L&G Insurance Broker.

Types of Insurance for Toll Road Projects

Toll road projects fall into the megaproject category, with enormous investment values ​​and multiple risks, from construction to operation. Therefore, project owners and contractors are required to have various types of insurance protection to minimize financial risks. The following are the main relevant insurance policies:

1. Construction All Risks (CAR) Insurance

Provides protection against physical damage to construction projects caused by natural disasters (earthquakes, floods, landslides), fire, industrial accidents, and technical errors. This policy is the “core” of toll road project security from the start of construction.

2. Erection All Risks (EAR) Insurance

This is especially necessary for projects involving the installation of machinery, bridges, flyovers, and complex equipment. It protects against the risk of damage or failure during installation.

3. Third Party Liability (TPL) Insurance

Protecting project owners and contractors from lawsuits from third parties who suffer losses due to the project, for example accidents involving local residents, property damage, or loss of life.

4. Workmen’s Compensation / Personal Accident Insurance

Required for field workers. Provides compensation in the event of a work accident, disability, or death.

5. Property & Business Interruption Insurance

Once the project is completed and the toll road is operational, coverage shifts to property insurance (toll booths, offices, bridges, toll equipment) and Business Interruption to protect against potential loss of revenue due to damage.

6. Motor Vehicle & Heavy Equipment Insurance

Since toll road projects involve hundreds of units of heavy equipment, special coverage is required to cover damage or loss of high-value units.

With the right combination of policies, toll road projects can be protected from significant risks that could potentially disrupt investment sustainability. To ensure coverage meets needs and premiums remain competitive, an insurance broker like L&G plays a crucial role in developing a comprehensive insurance program.

Factors That Determine the Amount of Toll Road Insurance Premiums

Toll road project insurance premiums cannot be set uniformly. Each project has unique characteristics that vary in coverage costs. Some of the main factors that determine premium amounts include:

1. Project Contract Value

Premiums are typically calculated as a percentage of the total project value. The larger the contract value, the greater the risk exposure, and thus the higher the premium rate.

2. Project Duration

Toll road projects generally last for a long time (3–5 years). The longer the duration, the higher the potential risk of loss, so premium rates will be higher than for shorter-term projects.

3. Location and Geographical Conditions

Toll roads built in areas prone to earthquakes, flooding, or landslides will incur higher premiums than projects in flat, stable areas. Underwriters take environmental factors into account.

4. Job Type and Complexity

Project parts involving high technology such as suspension bridges, tunnels, or large interchanges will increase technical risks and impact premium rates.

5. Contractor Claim History

Contractor companies with a poor claims track record are usually charged higher premiums because they are consideredriskyConversely, experienced contractors with a good track record can get lower rates.

6. Risk Management dan Safety System

The availability of HSE (Health, Safety, and Environment) procedures, workforce training, and a good risk mitigation system can be negotiating factors to reduce premiums.

7. The Role of Insurance Brokers

Experienced brokers like L&G Insurance Broker are able to negotiate more competitive rates with underwriters, thanks to their comparative data, extensive insurance company network, and detailed understanding of the risks of toll road projects.

By understanding the above factors, project owners and contractors can prepare the right underwriting documents and obtain reasonable premiums according to their protection needs.

Estimated Insurance Premium Rates for Toll Road Projects

After understanding the determining factors, the most frequently asked question from owners and contractors is: “What is the actual insurance premium rate for toll road projects in Indonesia?”

In general, premiums for toll road construction insurance are calculated based on a percentage of the project’s contract value (Contract Value) being insured. Based on Indonesian insurance market regulations and the Financial Services Authority (OJK) reference rates, the following is an estimated premium range:

1. Asuransi CAR/EAR (Construction/Erection All Risks)

The rate ranges from 0.25% – 0.35% of the total contract value.

Example: If the project value is IDR 5 trillion, the CAR premium could be around IDR 7.5 – 12.5 billion, depending on the location, duration, and level of technical risk.

2. Asuransi TPL (Third Party Liability)

Rates range from 0.05% – 0.1% of the contract value.

Example: For a project of IDR 5 trillion, the TPL premium is around IDR 2.5 – 5 billion.

3. Heavy Equipment Insurance (Contractor’s Plant & Machinery/CPM)

The rate is between 0.30% – 0.75% of the insured value of the equipment.

For example, if a contractor uses a heavy equipment fleet worth IDR 500 billion, the premium will be around IDR 1.5 – 2.5 billion.

4. Additional Insurance (Extensions & Add-Ons)

Some additional clauses may increase the premium, for example:

1. Maintenance Cover (0,02% – 0,05%).
2. Strike, Riot, and Civil Commotion (SRCC) (0,05% – 0,1%).
3. Natural Catastrophe (earthquake, flood, landslide) can be subject to loading of up to 50–100% of the basic premium if the project location is in a risk zone.

👉Based on the above estimates, a toll road project worth IDR 5 trillion could require a premium of IDR 12-20 billion for CAR/EAR, TPL, and CPM protection, depending on the risks and negotiations.

The role of an insurance broker, such as L&G Insurance Broker, is crucial because they can help contractors obtain more competitive rates by comparing insurance companies and tailoring coverage to project needs. Brokers also assist in preparing underwriting documents to prevent overpricing.

With this simulation, contractors can prepare a more accurate budget and reduce premium costs without reducing the quality of protection.

Toll Road Project Insurance Claim Process

Having an insurance policy isn’t enough—the real challenge arises when an accident or loss occurs on the job. The insurance claims process for toll road projects involves several steps that must be carried out quickly, accurately, and according to procedure to avoid payment rejections or delays.

• Claim Process Stages

Initial Notice

Once a loss occurs, the contractor is required to report it to the insurance company within a maximum of 3×24 hours. The report must include a brief chronology of the incident.

• Documentation of Losses

Photos, videos, technical reports, minutes, and even witness statements are crucial documents. Without complete documentation, claims often get stuck.

• Surveyor/ Loss Adjuster

The insurance company will appoint an independent loss adjuster to assess the extent of the loss, the cause, and whether it falls within the risks covered by the policy.

• Coverage Review

An important part of a claim is to determine whether the incident matches the policy coverage, including additional clauses such as Natural Perils or Force Majeure.

Claim Settlement

Once verification is complete, the insurance will make a claim payment according to the agreed loss value, minus the applicable deductible (own risk).

Example of a Toll Road Claim Case

During a toll road construction project in Central Java, a landslide caused by heavy rain damaged a 1-kilometer-long construction foundation. Losses were estimated at IDR 80 billion. Because the contractor had a CAR policy with extended Flood & Landslide Cover, the claim was accepted and paid IDR 75 billion after deducting a IDR 5 billion deductible. Without insurance, the contractor would have had to cover these costs themselves, which could have impacted cash flow and delayed the project.

The Role of Insurance Brokers

The claims process is often complex and time-consuming. Insurance brokers like L&G Insurance Broker assist contractors from document collection and communication with loss adjusters to ensuring claims are paid according to the insured’s rights.mentoringbrokers, claims are prone to being slowed down or even rejected.

👉With the support of a broker, contractors can focus on completing the project, while risk protection and claims aspects are handled professionally.

The Strategic Role of Insurance Brokers in Toll Road Projects

In toll road projects worth trillions of rupiah, the risk of loss can arise at any time—from the design and construction stages to operations. Therefore, the presence of an insurance broker is not merely a complement, but rather a strategic partner for project owners, contractors, and investors.

1. Early Risk Consultation

Experienced insurance brokers, such as L&G Insurance Broker, assist with risk assessments before a project begins. By understanding potential risks—such as floods, landslides, earthquakes, fires, and workplace accidents—the broker can design an insurance program tailored to the project’s needs.

2. Get Competitive Premium Rates

Not all contractors know how insurance companies determine premium rates. Brokers are tasked with comparing quotes from various insurance companies.negotiatepremiums, and ensure the insured gets maximum coverage at competitive prices.

3. Compiling Accurate and Comprehensive Police

Each toll road project is unique. Brokers ensure the policy covers the main coverages (CAR/EAR, TPL) as well as relevant extensions, such as earthquake, flood, landslide, or delay in start-up (DSU) risks. This is crucial to ensure there are no gaps in coverage.

4. Accompanying the Claim Process

When a loss occurs, an insurance broker acts as an advocate for the insured. They assist with document preparation, communication with the loss adjuster, and ensuring that claims payments are processed smoothly and in accordance with the client’s rights.

5. Providing Education and Transparency

Many contractors or project owners don’t understand policy details. Brokers are here to provide simple and transparent insurance education so clients can make informed decisions.

Conclusion 

Toll road projects are strategic investments with significant value and long-term economic impact. However, behind these potential profits, there are also significant risks that can hinder the project’s progress, ranging from construction accidents, damage due to natural disasters, to third-party lawsuits. All of these risks can only be effectively managed through an appropriate and comprehensive insurance program.

Insurance premiums for toll road projects are not uniform. The premium amount is determined by various factors such as contract value, type of work, project location, construction duration, and the contractor’s risk record. This is why the question of “how much should toll road insurance premiums be” is crucial for both project owners and contractors.

This is where the role of an experienced insurance broker like L&G Insurance Broker becomes crucial. As a strategic partner, a broker helps:

• Analyze project risks thoroughly.
• Develop insurance programs according to project-specific needs.
• Get competitive premium rates from various insurance companies.
• Accompany the claim process until completion.
• Provide education and transparency so that project owners understand the guarantees they have.

Without broker support, project owners risk paying higher premiums or receiving inadequate protection.

L&G Insurance Broker – A trusted partner in protecting your toll road investments.

DON’T WASTE YOUR TIME AND SECURE YOUR FINANCES AND BUSINESS WITH THE RIGHT INSURANCE.

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