1. The picture
| Cover | Who takes it out | Mandatory? | Indicative cost | What it covers | When to take it out |
|---|---|---|---|---|---|
| Structural warranty insurance | Client or developer | 🔴 YES, by statute | 1.5 – 3 % of the works | Pre-funding of ten-year repairs with no prior search for liability | Before the site opens; mandatory |
| Contractors' ten-year liability | Contractors, architect, engineers | 🔴 YES | 0.5 – 2 % of annual turnover for an architect | Ten-year defects for which the firm is responsible | Annual; check the certificate before signing the contract |
| Contractors' all-risks | Client or main contractor | ⚠️ Strongly advised | 0.15 – 0.4 % of the works | Physical damage to the works in progress: fire, storm, theft, flood | Before work starts |
| Professional indemnity | Architect, engineers, economist | 🔴 YES, regulated professions | 0.5 – 3 % of annual turnover | Errors and omissions in intellectual work causing loss to the client | Annual; check the certificate before contracting |
| Contractors' public liability | Construction firms | 🔴 YES | Variable by activity | Damage to third parties and their property during the works | Annual; certificate before the instruction to start |
| The completion guarantee | Developer selling off plan | 🔴 YES on off-plan sales | 0.5 – 1 % of turnover | Guarantees buyers completion if the developer fails | Before the first reservation contracts are signed |
| Legal expenses cover | Client | No, recommended | 500 – 2,000 € a year | Legal and procedural costs in a dispute with the builders | Before the site; useful from the design stage |
| Borrower's insurance | Client or developer | According to the lender | Variable | Protects the funding on death or incapacity of the sponsor | When the loan is taken out |
Five covers are mandatory by law: structural warranty, contractors' ten-year liability, professional indemnity, contractors' public liability and, on off-plan sales, the completion guarantee. Failing to take them out exposes the client to criminal sanction and, above all, to the total loss of financial protection in the event of damage. All-risks and legal expenses cover are strongly recommended but not mandatory; their modest cost against the risk covered makes them simple decisions.
2. Structural warranty insurance: mandatory, misunderstood, under-subscribed
The legal mechanism
Structural warranty insurance is imposed by statute on every client who builds, whether a private individual, a developer, a social landlord or a public authority. Its principle is pre-funding: where damage falls within the ten-year liability, the insurer advances the repairs to the client without waiting for liability to be established, then pursues the responsible builders.
That pre-funding is the essential value of the cover. Without it, a client discovering structural water ingress five years after handover must first identify who is responsible, the architect, the structural contractor, the engineer?, then bring them before a court, then await the outcome of a judicial expert determination, two to four years, before being compensated. Throughout that time the building deteriorates.
The real cost and how to reduce it
The premium represents 1.5 to 3 % of the total works cost according to the programme and the client's profile. On a 1.5 M€ site the premium is 22,500 to 45,000 €. That is significant but not negotiable, and it must be built into the budget from feasibility.
- Levers for reducing the premium: pooling across several operations for a recurrent developer, a favourable claims history, a certified environmental programme where a rating bonus applies, and using a specialist construction broker rather than a generalist insurer.
ℹ Taken out after the site opens, it is void The law is absolute on this point: the cover must be taken out before the site is formally declared open. Taken out after work has begun, even by a single day, it is void. The insurer can refuse any claim arising on that site. In practice, clients in a hurry or badly advised start work without cover and try to regularise afterwards. No serious insurer accepts that, and the exposure is total through to handover and then throughout the ten-year period.
3. Contractors' ten-year liability: the certificate you must demand
Ten-year liability cover is mandatory for every builder in the wide sense: contractors, architects, engineering consultancies, construction economists, technical controllers. It guarantees that the builders will be able to meet their ten-year obligations if damage occurs within ten years of handover.
Verifying each party's cover is a direct responsibility of the client, and a condition of their own recourse in the event of damage. The recommended practice is to require a valid certificate before signing each contract, works, design, engineering, and before any instruction to start.
ℹ What to check on a certificate A ten-year liability certificate must state the name of the insured, the activity covered, which must correspond to the work carried out, the period of validity, covering the duration of the site, and the sum insured. An expired certificate, an activity that does not correspond, or an insufficient sum can deprive the client of any recourse against that firm. A point often neglected: check the certificate is still valid not only at signature but throughout the site and up to handover. Some firms change insurer mid-appointment without telling the client.
4. All-risks cover: why not to go without it
Contractors' all-risks insurance is not mandatory, but it covers a risk neither the ten-year liability nor the structural warranty covers: physical damage to the works in progress from an incident, fire, storm, flood, theft of materials. A fire on an uninsured 2 M€ site can erase months of work with no compensation at all.
Its cost, 0.15 to 0.4 % of the works, is among the lowest in the whole panel. On a 1.5 M€ site the premium is 2,250 to 6,000 € for cover of the entire works carried out. It is one of the best risk-to-cost ratios in construction insurance.
5. The insurance budget by operation type
The table gives orders of magnitude for the client's complete insurance budget, structural warranty, all-risks, completion guarantee where applicable, legal expenses, for the most common types. These amounts must be built into the appraisal from feasibility.
| Type of operation | Works cost | Structural warranty | All-risks | Completion guarantee | Legal expenses | TOTAL |
|---|---|---|---|---|---|---|
| Self-built house | 250 k€ | 3,750 – 7,500 € | 375 – 1,000 € | n/a | 500 – 1,000 € | 4,600 – 9,500 €, 1.8 – 3.8 % |
| Apartments, 10 dwellings | 1,500 k€ | 22,500 – 45,000 € | 2,250 – 6,000 € | 7,500 – 15,000 € | 500 – 1,500 € | 32,750 – 67,500 €, 2.2 – 4.5 % |
| Development, 30 dwellings, 5 M€ turnover | 3,000 k€ | 45,000 – 90,000 € | 4,500 – 12,000 € | 25,000 – 50,000 € | 1,000 – 2,000 € | 75,500 – 154,000 €, 1.5 – 3.1 % |
| Offices of 3,000 m² | 4,500 k€ | 67,500 – 135,000 € | 6,750 – 18,000 € | n/a | 1,000 – 2,000 € | 75,250 – 155,000 €, 1.7 – 3.4 % |
| Heavy refurbishment, 800 m² | 1,200 k€ | 18,000 – 36,000 € | 1,800 – 4,800 € | n/a | 1,000 – 2,000 € | 20,800 – 42,800 €, 1.7 – 3.6 % |
The overall band of 1.5 to 4.5 % of the works cost is a reliable order of magnitude for providing for the client's insurance in any appraisal. A central value of 2.5 % is the minimum provision recommended where the details are not yet known at feasibility.
6. The traps and exclusions that neutralise cover
Taking out the mandatory covers is necessary but not sufficient. Many claims are refused not through fraud but through contractual clauses poorly understood or procedures poorly followed. The most frequent traps are set out below.
| Trap or exclusion | Frequency | Effect if undetected | How to avoid it |
|---|---|---|---|
| Late notification, beyond five working days | ★★★★★ | Refusal of cover; the client loses the pre-funding | A notification calendar posted in the site office plus a reminder from the design team |
| Under-declaring the value of the works | ★★★★ | Proportional reduction of the indemnity | Declare the real value and endorse the policy if variations exceed 10 % |
| Exclusion of the existing fabric, in refurbishment | ★★★★ | Damage to the retained parts not covered | Check the boundary between new work and existing in the policy, and extend if necessary |
| Exclusion of consequential loss | ★★★ | Loss of trade not covered, in a shop or hotel | Take out a business interruption extension |
| Non-renewal of a contractor's ten-year cover | ★★★ | No cover if damage occurs five years after handover | Check that the certificates remain valid throughout the ten-year period |
| A high excess not negotiated | ★★★ | A substantial retained loss on medium claims | Negotiate the excess when taking out the policy |
| Cover taken out after the site opens | ★★★★★ | The policy is void; no cover on the whole site | Take it out BEFORE the site is declared open; a legal obligation |
The most common and most expensive trap is late notification: beyond five working days the insurer can invoke the bar. That period runs from the date the client had knowledge of the defect, not the date they took it seriously. Any water ingress, structural crack or visible defect must trigger immediate notification, to be completed later if need be.
7. The client's checklist before the first spade
- Six months before the site: contact a specialist construction broker for the structural warranty and all-risks cover; underwriting can take time.
- Before declaring the site open: the structural warranty taken out and the certificate received, with an effective date before the declaration.
- Before signing the contracts: demand and archive the ten-year liability certificates of every contractor and the professional indemnity certificates of every consultant.
- Before signing off-plan contracts: the completion guarantee in place, with the bank's certificate available.
- During construction: check annually that the contractors' cover has been renewed, and ask for the certificates at each renewal.
- At handover: keep every certificate for ten years; they are indispensable if damage occurs within the ten-year period.
In summary
Five covers are mandatory in French construction: the structural warranty for the client, ten-year liability for the builders, professional indemnity for the consultants, public liability for the contractors, and the completion guarantee for developers selling off plan. The client's insurance budget represents 1.5 to 4.5 % of the works cost, to be provided for from feasibility with a central value of 2.5 %. The structural warranty is the most critical: taken out after the site opens, it is void; notified more than five days after a loss, it can be refused. The two indispensable reflexes: take out the structural warranty before declaring the site open, and demand the ten-year liability certificates of every builder before signing the contracts.
The nature of the figures quoted
The percentages and amounts quoted on this page are orders of magnitude for framing, not measurements. They illustrate mechanisms and proportions, and they substitute neither for a tender exercise nor for an estimate prepared on drawings.
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Sources: the BT construction cost indices published monthly by INSEE on its 2010 base, used to update the figures · construction cost statistics from SDES, the statistical service of the ministry responsible for construction · regulatory texts published in the Journal officiel and consolidated on Légifrance for the requirements cited.