contractors liability insurance 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.

Short 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.

👉 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:

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

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.

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.

👉 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