04Key takeaways
- Read the insurance and indemnity clauses at tender stage, while there's still time to price the cover.
- Match every requirement in the contract to a policy, a named insured and a period of cover.
- Gaps tend to sit between parties and between phases: subcontractors, hired plant, design work and the defects period.
- Cover is placed through licensed insurers and brokers. An independent review checks that it fits the contract.
Construction contracts in Kenya and the wider region, whether bespoke or based on standard forms such as FIDIC, set out which party insures the works, the people on site and third parties, for how long and in whose name. When the cover a contractor holds doesn't match what the contract requires, the gap tends to surface at the worst moment: after an incident, when a claim is declined or a payment is withheld.
Work through the checklist below before you sign. Tick items off as you go; anything left unticked is a question for your broker, your insurer or us.
The checklist
Ticks are not saved. Print or note what is still open.
Where the gaps usually sit
Most gaps aren't about a missing policy. They're about edges: where one party's cover stops and another's begins, or where one phase of the project ends and the next starts.
- The defects period. Cover that ends at handover leaves the return visits to fix defects exposed.
- Extensions of time. If the programme runs late, policies with a fixed end date need extending too.
- Hired plant. Hire agreements often place the risk on the hirer, and standard cover may not pick it up.
- Design. A design-and-build contract can carry design liability that contractors' all-risk does not cover.
- Deductibles. A deductible the contract allows may still be more than your cash flow can absorb.
- Missing evidence. If you fail to insure as the contract requires, many contracts let the employer arrange cover and recover the cost from you.
Ask whoever arranges your cover to confirm in writing, clause by clause, how each contract requirement is met. That single document closes most of the questions an employer or lender will raise.
Guarantees aren't insurance
Performance and advance-payment guarantees are often discussed alongside insurance, but they do a different job. A guarantee protects the employer if you fail to perform or to repay an advance; it doesn't protect you. Check whether a guarantee is payable on demand or only on proof of default, what it covers and when it expires.
Your bank will assess your business before it issues one, so prepare that application early rather than in the week before signing.
How we help
Our insurance and risk consulting practice can review construction contract clauses and your existing policies for gaps, overlaps and exclusions, then help you specify the cover you need so quotations can be compared like for like. Subject to partner confirmation
Cover is placed through licensed insurers and brokers; we advise, and we don't underwrite. Our finance practice can prepare the guarantee applications alongside, and our HR and safety practice can link the risk review to site safety training.
NoteGeneral information, not financial, legal or insurance advice.