Ten-year and all-risks construction insurance: At last, something concrete

With the entry into force on December 30, 2024 of the “”All Site Construction Risks“” and “”Ten-Year Civil Liability“”  insurance policies, the construction industry has reached a new milestone. These two guarantees, provided for since 2011 as part of the insurance program contract, were awaiting a ministerial decree to clarify their terms and conditions, including deductibles, exclusions, and coverage ceilings.

This measure, enshrined in Law 59-13 amending and supplementing Law 17-99 on the Insurance Code, is designed to secure investments, enhance the quality of works and better protect third parties. Henceforth, any project owner carrying out construction work or having it carried out will be required to take out insurance to cover, for the entire duration of the work, damage affecting the structure, as well as civil liability for damage caused to third parties. In addition to its role in securing projects, the introduction of these two guarantees opens up new business opportunities for insurance companies, who see their market extended to a multitude of construction projects. This new regulatory framework is helping to generate new business.

The recently published decree issued by the Ministry of Finance sets out the amounts of compulsory guarantees. For civil liability coverage on construction sites, the amounts vary from 4 million to 40 million dirhams (between USD 400,000 and 4 million), depending on the scope of the work. Article 4 of this decree states that the minimum cover must correspond to 50% of the cost of the construction work, with a floor of 4 million dirhams (USD 400,000), and a ceiling of 40 million dirhams (USD 4 million) for damage caused to third parties.

For structural damage cover, the minimum limit corresponds to the value of the work, i.e.: the total cost of the work, if this is less than 500 million dirhams (USD 50 million), and 500 million dirhams (USD 50 million), if the cost of the work is equal to or greater than this threshold.

For contracts covering several structures, the minimum guarantee must be equivalent to the total amount of the guarantees provided for each structure. However, if the total sum is less than 1 billion dirhams (USD 100 million), the minimum guarantee is set at 1 billion dirhams  (USD 100 million) in cases where this sum is equal to or higher.

Khadija MASMOUDI