If you’re planning to build a new home, commercial structure, or real estate project in Nigeria, securing construction insurance should be a top priority. Construction insurance protects you from financial losses caused by property damage, theft, liability claims, and project delays. Yet, many Nigerian developers and homebuilders overlook this critical aspect of risk management.
In this blog, we’ll walk you through how construction insurance works, the different types available, the process of securing one in Nigeria, and where to find trusted providers.
📄 What Is Construction Insurance?
Construction insurance is a form of policy that covers a building project during construction. It protects against risks such as site damage, third-party injury, fire, collapse, and even legal liabilities arising during the construction phase.
In Nigeria, this coverage is particularly useful given the unpredictable weather, rising theft rates on sites, and frequent material cost escalations.
Key Benefits:
- Covers material losses, damage, or theft
- Protects against third-party claims or site accidents
- Ensures compliance with local laws or contract terms
- Reduces financial shocks from delays or natural disasters
📅 Types of Construction Insurance in Nigeria
- Contractor’s All Risk Insurance (CAR)
- Covers construction site works, materials, and equipment.
- Includes third-party liability coverage.
- Mandatory for many large-scale projects and government contracts.
- Builder’s Risk Insurance
- Primarily protects the structure and materials until handover.
- Typically purchased by the property owner.
- Public Liability Insurance
- Covers legal liability for injuries or damage to third parties around the construction site.
- Workmen’s Compensation Insurance
- Mandatory under Nigerian labour law.
- Covers employees or workers injured while on duty.
- Professional Indemnity Insurance
- For architects, engineers, and consultants.
- Covers errors, omissions, or negligence in design or supervision.
🔎 Is Construction Insurance Mandatory in Nigeria?
Yes and no. While not always required for private residential buildings, contractors working on public projects or commercial real estate are usually mandated to show proof of insurance, especially CAR or Workmen’s Compensation.
As of 2025, Lagos and Abuja states are also introducing stricter building compliance regulations, and this may soon become a default requirement across the board.
💳 How Much Does Construction Insurance Cost in Nigeria?
Premiums vary based on:
- Project value (insured sum)
- Risk exposure (e.g., flooding, theft)
- Duration of the build
- Type of insurance (CAR is more expensive than Public Liability)
Average CAR premiums range from 0.25% – 1.5% of the total contract value. For instance, on a N100 million project, you may pay between N250,000 to N1.5 million.
📚 How to Get Construction Insurance in Nigeria
Step 1: Evaluate Your Project Risks
- Size, duration, workforce, location (flood-prone?), and value.
- Are subcontractors involved?
Step 2: Choose the Right Type of Insurance
- Use a combo of CAR + Workmen’s Comp + Public Liability for full protection.
Step 3: Compare Quotes
Contact multiple Nigerian insurance providers:
- AIICO Insurance – aiicoplc.com
- Leadway Assurance – leadway.com
- AXA Mansard – axamansard.com
- Mutual Benefits Assurance – mutualng.com
Ensure the insurer is registered under the National Insurance Commission (NAICOM) – naicom.gov.ng
Step 4: Submit Project Details
- Location, cost, type of work, timeline, etc.
- You may need architectural drawings, land title, or approval permits.
Step 5: Finalize & Pay Premium
Upon review, you’ll get your policy documents. Always read the terms to know what’s covered and what’s not.
📈 Additional Tips
- Include insurance cost in your project budget early on.
- Renew coverage if your project timeline extends.
- Request regular safety audits to minimize site incidents.
- Always report claims immediately and keep documentation.
✅ Final Thoughts
Construction insurance may feel like an extra cost, but it can save you millions and give peace of mind. Whether you’re a first-time homebuilder or a seasoned developer, protecting your investment is non-negotiable.
Don’t wait until a site accident or storm ruins your project – secure the right coverage now and build smarter in Nigeria.
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