What is construction insurance in Singapore?

Construction insurance is an umbrella term covering the suite of insurance covers required by Singapore main contractors, sub-contractors and developers across a building project. It typically includes Contractors All Risk (CAR), Erection All Risk (EAR), Workmen Compensation (WICA), foreign worker medical, public liability, professional indemnity for licensed designers, plant and machinery cover, and surety bonds for performance and maintenance. Each cover has different conditions and durations — read the project conditions of contract carefully.

What is the difference between CAR and EAR?

Contractors All Risk (CAR) covers building and civil works — physical loss or damage to contract works, materials and temporary works, plus third-party liability arising from the project. Erection All Risk (EAR) covers the erection and installation of plant, machinery and steel structures — typically used for power plants, refineries, manufacturing plant installation, MEP commissioning and similar engineering-heavy projects. The two wordings are similar in structure; EAR has additional testing-and-commissioning extensions that CAR does not.

What are the BCA requirements for builder insurance?

Under the BCA Builders Licensing Scheme, applicants for the General Builder and Specialist Builder licences must demonstrate, among other criteria, adequate financial standing and access to appropriate project insurance arrangements. The detailed project-level insurance requirements are set in the conditions of contract — the BCA-administered PSSCOC for public-sector projects, or the SIA Conditions of Building Contract for private-sector projects. Both require joint-names CAR cover with the Contractor, Employer and sub-contractors as insured.

What is a Project Insurance Programme (PIP)?

A Project Insurance Programme is a single insurance package for a specific construction project, arranged either by the Main Contractor or by the Employer (an Owner-Controlled Insurance Programme — OCIP), covering all parties involved in the works under a single set of policies. It typically combines CAR / EAR (material damage and third-party liability), professional indemnity for the design team, plant and equipment cover, and workmen compensation. PIPs are common on major Singapore infrastructure, mixed-use development and large industrial projects.

What are performance and maintenance bonds?

A performance bond is a guarantee issued by an insurer or bank to the Employer, securing the Contractor's performance of the contract — if the Contractor defaults, the surety pays the Employer up to the bond amount to cover the cost of completion or rectification. Maintenance bonds (or retention bonds) cover the defects-liability period after completion. Singapore main contracts commonly require a 5% to 10% of contract sum performance bond and a smaller maintenance bond. Surety capacity in Singapore is provided by AIG, Chubb, Tokio Marine, Asia Capital Re and similar specialist carriers.

Construction Insurance Singapore — Contractor & Developer Cover

Construction is a programme, not a single cover

Singapore construction insurance is an umbrella term for the suite of covers a project and a contractor need. The composition varies by project type, contract form (PSSCOC, SIA, FIDIC, bespoke) and the size of the Contractor:

CAR (Contractors All Risk) — physical loss or damage to building works plus third-party liability. See our CAR page.
EAR (Erection All Risk) — for plant, machinery and structural-steel installation projects.
Public liability at the corporate level — covering operations outside the named project sites.
WICA — Work Injury Compensation Act insurance for every manual worker and lower-earning non-manual worker. See our WICA page.
Foreign worker medical — MOM-mandated S$60,000 inpatient cover for Work Permit and S Pass holders. See our foreign worker insurance page.
Professional indemnity — for licensed designers (architects, professional engineers, M&E consultants). See our PI page.
Plant and equipment cover — for high-value mobile plant, cranes, excavators, scaffold.
Surety bonds — performance, maintenance, advance-payment guarantees.

BCA Builders Licensing Scheme

Under the BCA Builders Licensing Scheme, General Builder Class 1 (GB1), Class 2 (GB2) and Specialist Builder licence applicants must satisfy the BCA on financial standing, paid-up capital, technical personnel and access to appropriate project insurance.

BCA itself does not prescribe a specific policy or sum insured; instead the conditions of contract used for public-sector and private-sector works dictate the project insurance arrangements:

PSSCOC (Public Sector Standard Conditions of Contract) — clause 17 requires joint-names CAR cover with sums insured set in the contract data.
SIA Conditions of Building Contract — clause 19 (insurance) for private-sector main contracts.
FIDIC Red / Yellow / Silver — clause 18 for international projects with Singapore parties.

Erection All Risk (EAR) for engineering projects

Where the project is dominated by the erection and installation of plant, machinery and structural steel rather than building works, EAR is more appropriate than CAR. EAR covers:

Physical loss or damage to the plant being erected, including during transit to site.
Erection and assembly works.
Testing and commissioning (with the testing period typically up to 4 weeks).
Third-party liability arising from the erection works.
Removal of debris and surrounding-property damage where extended.

Major Singapore EAR projects: power plant additions on Jurong Island, MRT systems installation, data-centre mechanical and electrical, refinery turnarounds.

Performance and maintenance bonds

Performance bonds are guarantees issued by an insurer or bank to the Employer, securing the Contractor's performance of the contract obligations. If the Contractor defaults, the surety pays the Employer up to the bond amount towards completion or rectification.

Typical Singapore main-contract requirements:

Performance bond — 5% to 10% of contract sum, in force from contract award to completion.
Maintenance bond — smaller percentage, in force during the defects-liability period (typically 12 to 24 months post-completion).
Advance-payment bond — secures any pre-payment by the Employer at contract award.
Tender bond — for the tender period, securing the Contractor's commitment to accept the contract if awarded.

Surety capacity in Singapore is provided by AIG Surety, Chubb Surety, Tokio Marine, Asia Capital Re, Liberty Surety, MSIG and Sompo, with bank-issued guarantees as the alternative.

Owner-Controlled vs Contractor-Controlled Insurance

Two project-level architectures:

Contractor-controlled (CCIP) — the Main Contractor arranges all project insurance under its own programme, with sub-contractors named on the policy or carrying their own cover. Standard for the majority of Singapore main contracts under PSSCOC clause 17.
Owner-controlled (OCIP) — the Employer arranges a single project insurance programme covering all parties (the Employer, Main Contractor, sub-contractors of every tier, design team). Common on major mixed-use developments, large infrastructure and government concession projects.

OCIP gives the Employer direct control over the cover, eliminates gaps at sub-contract seams and is often more cost-efficient on large projects through aggregated buying. CCIP is simpler to administer on smaller projects.