7 Fundamental Insurance Covers for Construction Companies in UAE

insurance for construction companies- Gargash Insurance brokers- UAE 27 Jun, 2023

Protect your employees & property with comprehensive insurance covers for construction companies in UAE. Find out which policies are right for your business!

Which insurance policies are required for construction businesses in UAE?

UAE is home to some of the world’s most iconic engineering marvels such as the Burj Khalifa and Palm Jumeirah. This is owing to the government’s commitment to investing heavily in construction and engineering projects.

The construction industry in the United Arab Emirates (UAE) has been a major contributor to the country’s economic growth and development. The industry has seen an unprecedented boom over the past two decades, with Dubai emerging as one of the most sought-after destinations for construction projects in the Middle East.

However, there is more to it than meets the eye. Managing a construction company in UAE involves dealing with workers, contractors, and large machinery that increases the risk of accidents, third-party losses, and potential legal action.


Quick Read Section

  • Insurance is an essential investment for construction companies in the UAE as it safeguards company owners from monetary loss and accidents due to unanticipated circumstances.
  • It provides protection against loss or damage brought on by natural catastrophes, fire, theft, vandalism, and other accidental losses.
  • Construction companies can purchase a variety of insurance policies, including general liability insurance, workers' compensation, machinery, professional indemnity, and contractors-all risk insurance, depending on their requirements.
  • Design faults, delays, equipment theft, third-party injuries, property damage, and natural disasters are the common risks that are covered by construction insurance policies.


Construction companies in the UAE need to be aware of the risks associated with their operations and take necessary steps to mitigate them. Insurance can provide coverage against loss or damage caused by natural disasters, fire, theft, vandalism, and other risks associated with construction work. It can also provide coverage for legal expenses and liabilities incurred towards third parties.

Construction companies need to have the right kind of business insurance to protect their assets and employees. Each type of policy provides different levels of protection and coverage for the company's assets and personnel. It is important for construction companies to understand what these policies cover so they can make an informed decision when it comes to buying the right type of policy for their business.

Construction insurance safeguards contractors, project owners, principals or consultants from expensive liabilities including lawsuits and property damage.

A single insurance cover won't be sufficient for businesses engaged in construction and contracting. Instead, a combination of multiple insurance plans will offer better defense for your enterprise and construction endeavors.



Common risks faced by construction companies in UAE

There are significant risks associated with the construction sector, including:

  • Third-party liabilities
  • Design defects
  • Injury/Death of workers involved in the project
  • Equipment theft and damage
  • Damage to the property/project


7 Essential Covers for Construction Companies in UAE

Below is a list of insurance covers critical for seamless operation management as a construction company owner in the UAE.

1.      Contractors All Risks (CAR) Insurance

Contractors' All Risks [CAR] Insurance safeguards the interests of the principal, contractors, subcontractors, and other key players involved in construction activities. The policy provides coverage for material damage due to fire, theft, flood, or other accidental causes. It also covers liability costs due to accidental injury, death, or property damage caused to a third party.

2.      Erection-All Risk Insurance

Erection All Risks Insurance policy [EAR] defends the interests of the principal, contractors, subcontractors, and other pertinent parties involved in the erection of plant machinery, and equipment during the course of a project. The policy provides coverage for material damage due to fire, theft, flood, or other accidental causes. This insurance policy also covers legal compensation to third parties as a result of accidental damage from construction activities.

3.      Professional Indemnity Insurance

Professional Indemnity (PI) cover provides protection from legal liability (including legal costs and expenditures) for negligent acts, mistakes, duty breaches, or omissions resulting from professional activity. Professional Indemnity Insurance would cover the costs of any monetary damages demanded by a court of law as well as any associated legal defense expenses up to the policy's maximum. The coverage can be provided for a specific project or on an annual, renewable basis.

4.      Contractors Plant and Machinery Insurance

Contractors' Plant and Machinery Insurance (CPM) covers accidental physical damage to different kinds of plant, machinery, and equipment while being employed at commercial locations and project sites. The machinery is covered based on new replacement costs. The policy can also be extended to cover transit-related costs, third-party liability costs, as well as strikes, riots, and civil disorder.

5.      Marine-cum-Erection (MCE) Insurance

This is an extensive policy that covers all physical dangers to which a project is exposed, from the equipment supplier's warehouse to the site location of the equipment's installation, testing, and commissioning.

The policy can be purchased by manufacturers/suppliers, contractors, or subcontractors, individually or together. It also includes coverage for any physical loss or damage on the insured property and legal responsibility of the contractors for any third-party property damage or physical harm caused.

Moving materials, tools, and equipment between numerous job sites is a frequent part of the construction industry. The insurance policy covers all risks of physical loss or damage incurred during import shipping, offloading and storage at the port, inland transportation to the site, storage, handling, erection, testing, and commissioning at the site.

6.      Advance Loss of Profits Insurance

The Advance Loss of Profits Insurance (ALOP) covers monetary loss brought on by infrastructure and building project delays.

ALOP also provides compensation to the insured if projects take longer to finish, causing the businesses to incur higher costs or lose profit. ALOP is alternatively known as delay in start-up insurance (DSU) or delayed completion coverage (DCC).

7.      Workmen’s Compensation Insurance/ Employer’s Liability Insurance

Employees are exposed to a variety of risks associated with construction jobs. Employers are protected by workmen's compensation insurance from legal obligations mandated under UAE labor law. The policy shields businesses against claims stemming from lost pay and medical costs due to work-related accidents.

In addition to basic coverage, the insurance can be expanded to include Employer's Liability Extension, which will defend the employer from claims filed by the employees under Shariah Law or Common Law. The policy also includes reimbursement for accidental death, disability, injuries, and repatriation of mortal remains. 


Factors affecting the cost of construction insurance premiums

The following elements will have the most influence on the cost of insurance for your business:

  • Scope of work for the project
  • Period of construction
  • Location of project
  • Number of workers
  • Contract value


The construction sector faces substantial risks compared to other business sectors, which requires investing in several policies for added protection. Business Insurance for construction companies in the UAE is an important investment that can help protect your business from unexpected losses and liabilities. With the right coverage in place, you can ensure that your business is protected should any unforeseen event occur.



Why choose Gargash Insurance for your construction insurance needs?

Confused about which of these coverages is best for your construction company? Contact our insurance brokers for guidance on the best ways to safeguard your company's interests and mitigate risks.

Gargash Insurance is one of the most reputable insurance brokers in the UAE. With 30+ years of experience working with companies from various sectors, we can help you find the most affordable insurance plan that is specifically designed to safeguard your company. Our commitment to providing only the finest for our clients and providing individualized support is what sets us apart.

And what’s more, our knowledgeable team of professionals is always available to assist you whether you're new to business insurance or looking to renew or upgrade your current insurance plan.

Contact us today for all your business insurance needs!


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