Is Contractors Liability Insurance Required by Law in Kenya
Kenya’s construction industry continues to grow rapidly, driven by residential developments, commercial buildings, roads, and public infrastructure projects. While this growth creates opportunities for contractors, it also increases legal, financial, and safety risks.
Construction sites are among the most dangerous workplaces, with frequent accidents involving workers, passers-by, neighbouring properties, and site visitors. This leads many contractors to ask an important question:
Is Contractors Liability Insurance required by law in Kenya?
At Step by Step Insurance, we work closely with contractors, engineers, developers, and subcontractors across Kenya. One thing is clear: while the law may not mention Contractors Liability Insurance by name, operating without it exposes contractors to serious legal and financial consequences.
This guide explains the legal position clearly and shows why Contractors Liability Insurance is considered mandatory in practice.
Key Takeaways
- Contractors Liability Insurance is not explicitly named as compulsory in Kenyan law, but is effectively mandatory for practical operations
- Kenyan laws impose strict liability for injury, death, and property damage on construction sites
- Government and private contracts routinely require proof of Contractors Liability Insurance
- Operating without this cover exposes contractors to unlimited compensation claims and financial ruin
- The National Construction Authority (NCA) expects contractors to demonstrate proper risk management
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Join WhatsApp GroupShort Answer: Is Contractors Liability Insurance Mandatory in Kenya?
Contractors Liability Insurance is not explicitly listed as a compulsory insurance cover under a single Kenyan statute.
However:
- Kenyan laws impose strict liability for injury, death, and property damage
- Regulatory bodies expect contractors to demonstrate risk management and financial capacity
- Government and private construction contracts require proof of Contractors Liability Insurance
👉 In real-world construction practice in Kenya, Contractors Liability Insurance is effectively mandatory.
Without it, contractors risk:
- Unlimited compensation claims
- Tender disqualification
- Project termination
- Personal financial loss
What Is Contractors Liability Insurance?
Contractors Liability Insurance protects contractors against legal liability arising from construction activities.
It covers claims made by third parties, meaning people who are not employees of the contractor.
Typical Risks Covered
- Injury or death of members of the public
- Damage to neighbouring buildings or property
- Accidents involving visitors to the site
- Legal defence costs and court awards
What It Does Not Cover
- Employee injuries (covered under Work Injury Benefits – WIBA)
- Damage to the contractor’s own works (covered under Contractors All Risks – CAR)
- Design errors or professional negligence (covered under Professional Indemnity)
At Step by Step Insurance, we help contractors structure these covers correctly so that no legal gaps are left exposed.
Why Many Contractors Misunderstand the Legal Requirement
A common misconception in Kenya is that if an insurance cover is not clearly named in law, then it is optional.
In reality, Kenyan construction law works differently:
- The law imposes responsibility and liability
- Contractors are expected to manage that liability professionally
- Insurance is the accepted method of financial protection
👉 Contractors Liability Insurance exists because the law holds contractors financially responsible for harm caused during construction.
Kenyan Laws That Make Contractors Liability Insurance Necessary
Occupational Safety and Health Act (OSHA), 2007
The OSHA Act places a legal duty of care on employers and occupiers of workplaces, including construction sites.
Key Legal Obligations
Contractors must:
- Protect the safety of workers and the public
- Prevent injuries to non-employees
- Maintain safe construction environments
If a contractor’s activities cause injury or damage, legal liability automatically arises.
📌 Contractors Liability Insurance is the most effective way to comply with this duty.
Work Injury Benefits Act (WIBA), 2007 – Why It Is Not Enough
WIBA is mandatory and very important, but it is often misunderstood.
What WIBA Covers
- Injuries and death of employees
- Occupational illnesses
What WIBA Does Not Cover
- Members of the public
- Visitors to the construction site
- Neighbouring property damage
This means a contractor can fully comply with WIBA and still face massive third-party claims.
👉 Contractors Liability Insurance fills this critical gap.
National Construction Authority (NCA) Compliance
The National Construction Authority regulates contractors in Kenya.
While the NCA Act does not list Contractors Liability Insurance by name, it requires:
- Financial capability
- Risk management systems
- Compliance with safety laws
In practice:
- NCA registration and renewal often require proof of insurance
- Site inspections may demand liability cover
- Non-compliance can affect licensing status
At Step by Step Insurance, we regularly assist NCA-registered contractors to meet these expectations correctly.
Contractors Liability Insurance in Tenders and Contracts
This is where the requirement becomes non-negotiable.
Government and County Tenders
Most public construction tenders require:
- Contractors Liability Insurance
- Public Liability Insurance
- WIBA cover
Failure to submit valid insurance certificates leads to automatic disqualification.
Private Developers and Financiers
Banks, investors, and developers require contractors to:
- Transfer third-party risk through insurance
- Protect the project from legal claims
👉 No Contractors Liability Insurance means no contract.
When Contractors Liability Insurance Becomes Mandatory in Practice
From our experience at Step by Step Insurance, the cover is essential for:
| Project Type | Why It’s Required | Risk Level |
|---|---|---|
| Government infrastructure projects | Public funds & high visibility | High |
| Urban construction sites | Proximity to public & properties | High |
| Road and civil engineering works | Traffic management & public access | Very High |
| Commercial and residential developments | Contractual requirements | Medium-High |
| Projects involving public access | Increased third-party exposure | High |
In reality, almost every professional construction project in Kenya requires it.
Risks of Operating Without Contractors Liability Insurance
1. Unlimited Compensation Claims
Courts may award:
- Medical expenses
- Loss of income
- Property replacement costs
- Legal costs
There is no legal cap on these amounts.
2. Personal Financial Exposure
Without insurance:
- Company assets may be seized
- Directors may be held personally liable
- Many contractors collapse financially after a single claim
3. Tender and Contract Loss
Lack of insurance leads to:
- Tender disqualification
- Contract termination
- Loss of future opportunities
Who Needs Contractors Liability Insurance in Kenya?
- Main contractors
- Subcontractors
- Civil, electrical, mechanical, and plumbing contractors
- Road and infrastructure contractors
- Small contractors and fundis
👉 Project size does not remove legal responsibility.
Contractors Liability vs Other Construction Insurance Covers
| Feature | Contractors Liability | WIBA | Contractors All Risks (CAR) |
|---|---|---|---|
| Covers employees | ❌ No | ✅ Yes | ❌ No |
| Covers public/third parties | ✅ Yes | ❌ No | ❌ No |
| Covers property damage | ✅ Third-party property | ❌ No | ✅ Project works |
| Legal requirement | Effectively mandatory | Legally compulsory | Contractually required |
Contractors Liability vs Professional Indemnity
- Liability = accidents & physical damage
- PI = professional errors & design faults
👉 All serve different legal purposes.
At Step by Step Insurance, we help contractors combine the right covers to ensure full legal protection. Learn more about legal considerations for construction insurance in Kenya.
How Much Does Contractors Liability Insurance Cost in Kenya?
Premiums depend on:
- Type of construction work
- Contract value
- Risk exposure
- Claims history
- Required coverage limits
Costs are typically calculated as a percentage of the project value.
Important Warning
Choosing the cheapest option often results in dangerous coverage gaps that fail during claims. Always ensure your policy is properly structured to meet legal and contractual requirements.
How Step by Step Insurance Helps Contractors Get It Right
At Step by Step Insurance, we:
- Assess your project risks
- Arrange tender-compliant policies
- Ensure correct policy wording
- Help with fast approvals (often within 24–72 hours)
- Support you during claims
Our goal is not just to sell a policy, but to protect your business and reputation.
Frequently Asked Questions
Is Contractors Liability Insurance legally compulsory?
Not named directly in law, but required in practice for almost all construction projects in Kenya.
Can one policy cover multiple projects?
Yes, depending on structure and insurer terms. We can arrange annual policies for contractors with multiple projects.
Is it required for small projects?
Legal liability applies regardless of project size. Even small projects can result in substantial claims.
Does it cover subcontractors?
Only if they are specifically included. It’s crucial to ensure all parties on site are properly covered.
Final Verdict: Is Contractors Liability Insurance Required by Law in Kenya?
There is no single law that explicitly names Contractors Liability Insurance as compulsory.
However, Consider These Facts:
- Kenyan law imposes liability for injury and damage
- Regulators expect risk management
- Tenders and contracts require it
- Courts enforce compensation claims strictly
👉 For any serious contractor in Kenya, Contractors Liability Insurance is not optional.
Talk to Step by Step Insurance Today
Before you start your next project or submit a tender:
- ✔ Ensure legal and contractual compliance
- ✔ Protect yourself from unlimited liability
- ✔ Secure the right cover for your construction risks
Contact Step by Step Insurance
Talk to Step by Step Insurance today for expert guidance on Contractors Liability Insurance in Kenya.
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