What does contractors all risk insurance cover in Kenya?
Contractors all risk (CAR) insurance in Kenya covers the contract works, materials and site plant against fire, flood, theft, collapse and accidental damage during building or civil works, plus third-party injury and property damage around the site. It usually runs from the start of work to handover. Lower-risk projects typically pay about 0.5% of the contract sum, before levies.
What it covers
Contract works
Permanent and temporary works and materials on site, against fire, flood, storm, earthquake, theft, collapse and accidental damage.
Contractors' plant
Construction plant, equipment and machinery on site, if added.
Third-party liability
Injury to the public and damage to neighbouring property caused by the works. It is limited and does not replace general public liability.
Existing and surrounding property
The employer's existing buildings and nearby property, where included.
Debris removal
The cost of clearing the site after an insured loss.
Maintenance period
Optional cover during the defects period after handover.
What is not covered
- Faulty design, and the cost of replacing defective materials or workmanship themselves
- Delay penalties, liquidated damages and loss of profit, unless delay in start-up cover is bought
- Wear and tear and mechanical breakdown of plant
- Licensed road vehicles (these need motor insurance)
- Injury to your workers (WIBA must be held separately)
- Stoppage of work, war, nuclear risks and wilful acts
Who requires CAR
- Developers and project owners, often in the joint names of the employer and contractor
- Banks and financiers funding the project
- Public and private tenders, which increasingly ask for proof of insurance before work starts
- Main contractors, who require it from subcontractors or cover them under the main policy
CAR can be arranged by either the project owner or the contractor. Check the contract to see who must insure and for how much.
Other engineering covers
Erection all risks (EAR)
Machinery, plant and steel structures during erection, testing and commissioning until handover, plus third-party liability.
Plant all risks
Contractors' plant and machinery against sudden accidental damage while working, at rest or in storage, on or off site.
Machinery breakdown
Sudden breakdown of generators, boilers, lifts, compressors and production machinery from electrical or mechanical causes, which fire policies exclude.
Electronic equipment
Computers, servers, POS and medical electronics, with data restoration and increased cost of working.
Boilers and pressure vessels
Explosion or collapse of boilers and pressure plant, including surrounding property and third-party liability.
Tender security and bonds
Public tenders may require tender security of up to 2% of the tender value, and a guarantee from an IRA-licensed insurer is an accepted form (Public Procurement and Asset Disposal Act, s.61; Regulations 2020, reg. 45). Tenders reserved for small and micro enterprises and AGPO groups use a Tender Securing Declaration instead.
Bonds insurers issue
A bond is a guarantee to your client, not cover for you. If the insurer pays, it recovers the money from you.
Bid or tender bond
Guarantees you will sign the contract if you win. Public tenders may ask for up to 2% of the tender value.
Performance bond
Pays your client a set sum if you fail to complete the work as agreed; often 10–20% of the contract price.
Advance payment bond
Protects an advance your client pays you before work starts.
Retention and maintenance bonds
Release retention money early, or guarantee repairs during the defects period.
Customs bonds
Guarantee duty to KRA for importers, clearing agents and goods under bond.
What CAR and bonds cost
| Cover | Typical premium | Basis |
|---|---|---|
| Business interruption | about 0.25% of the annual gross profit insured | Market estimate |
| Fidelity guarantee | about 0.85% – 1% of the limit a year; one published minimum is about KES 10,000 | Published package rate + market estimate |
| Group personal accident (added to WIBA) | about 25% – 40% of the WIBA premium | Market estimate |
| Contractors all risks | about 0.5% of the contract sum for lower-risk projects | Market estimate |
| Insurance bonds (bid, performance) | about 1% – 2.5% of the bond value a year; minimums from about KES 2,500 | Published insurer rates |
Indicative rates for other business covers
- Typical premium
- about 0.25% of the annual gross profit insured
- Basis
- Market estimate
- Typical premium
- about 0.85% – 1% of the limit a year; one published minimum is about KES 10,000
- Basis
- Published package rate + market estimate
- Typical premium
- about 25% – 40% of the WIBA premium
- Basis
- Market estimate
- Typical premium
- about 0.5% of the contract sum for lower-risk projects
- Basis
- Market estimate
- Typical premium
- about 1% – 2.5% of the bond value a year; minimums from about KES 2,500
- Basis
- Published insurer rates
Bonds also need a counter-indemnity and, depending on the insurer, audited accounts, directors' guarantees or collateral.
Machinery breakdown and electronic equipment
| Cover | Typical premium | Basis |
|---|---|---|
| Burglary / theft | about 0.45% of stock and contents value | Market estimate; first-loss cover costs less |
| Money (cash on premises and in transit) | about 1 per mille (0.1%) of annual cash carried; minimum around KES 3,000 | Published SME package rate |
| All risks (laptops, phones, tools) | about 0.75% of replacement value; minimum about KES 5,000; 10% excess | Market estimate |
| Electronic equipment (office IT) | from about 0.25% of replacement value | Market estimate |
| Machinery breakdown | about 0.3% of new replacement value | Market estimate |
Indicative rates for other business property covers
- Typical premium
- about 0.45% of stock and contents value
- Basis
- Market estimate; first-loss cover costs less
- Typical premium
- about 1 per mille (0.1%) of annual cash carried; minimum around KES 3,000
- Basis
- Published SME package rate
- Typical premium
- about 0.75% of replacement value; minimum about KES 5,000; 10% excess
- Basis
- Market estimate
- Typical premium
- from about 0.25% of replacement value
- Basis
- Market estimate
- Typical premium
- about 0.3% of new replacement value
- Basis
- Market estimate
Related covers
Frequently asked questions
What does contractors all risk insurance cover?
Contractors all risk (CAR) covers the contract works, materials and temporary works on site against fire, flood, storm, theft, collapse and accidental damage during construction. It can include contractors' plant, existing or surrounding property, debris removal and third-party injury or damage. Cover usually runs from the start of work to handover, with an optional maintenance period.
Is contractors all risk insurance compulsory?
No law we reviewed requires CAR. It is a contract requirement: developers, financiers and many tender documents ask for it before work starts, often in the joint names of the employer and contractor. Public tenders may also require tender security of up to 2% of the tender value, which an IRA-licensed insurer can provide as a guarantee.
What insurance bonds can contractors get in Kenya?
Insurers issue bid or tender bonds, performance bonds, advance payment bonds, retention and maintenance bonds, and customs bonds. A bond is a guarantee to your client, not cover for you: if the insurer pays, it recovers from you, so expect to sign a counter-indemnity and sometimes give collateral. Premiums are about 1%–2.5% of the bond value a year.
What do electronic equipment and machinery breakdown insurance cover?
Electronic equipment insurance covers computers, servers, POS terminals, telephone systems and medical electronics against sudden damage, including electrical faults, and can pay to restore data and the extra cost of working. Machinery breakdown covers sudden damage to generators, boilers, lifts, compressors and production machinery from electrical or mechanical failure, which fire policies exclude. Both are insured at new replacement value.
Is WIBA insurance mandatory in Kenya?
Yes. Section 7(1) of the Work Injury Benefits Act requires every employer in Kenya to insure its liability to employees for work injuries and occupational diseases. There is no exemption for small employers, so a business with one employee needs cover, and casual workers engaged for your business count. Not insuring is a criminal offence.
What is public liability insurance?
Public liability insurance pays compensation and legal costs if your business is legally liable for injury to, or the death of, a customer, visitor or other member of the public, or for damage to their property. Claims usually arise from slips, falls, falling objects or work done at a client's site. It does not cover your own employees, which is WIBA and employers' liability.
What documents do I need to buy business insurance?
Expect to provide a completed proposal form, your KRA PIN, a certificate of registration or incorporation, a CR12 for limited companies, and the ID or passport of the person signing (some covers, such as bonds, ask for every director's ID). The insurer will also want a list of what you are insuring and its value, staff numbers and annual earnings for WIBA, your premises' construction and security, and three years' claims history.
How much does business insurance cost in Kenya?
Published minimum premiums for SME packages start at about KES 10,000 a year, and market estimates put a small office from about KES 20,000, a shop from about KES 25,000 and a restaurant from about KES 45,000 a year, before levies. Your price depends on what you insure and its value, your trade, location, construction, security and claims history. Statutory levies and stamp duty are added on top.
Your contract asks for CAR?
Send us the contract sum, project type, location and duration, plus any insurance clause in the contract. We compare insurers for CAR, plant and bonds.
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Sources
- PPADA 2015 s.61; PPAD Regulations 2020 reg. 45
- Work Injury Benefits Act 2007, s.7(1)
- Work Injury Benefits Act 2007, s.5(3)(a)
- Work Injury Benefits Act 2007, s.7(4)-(5)
- Itemised insurer quotes, Oct 2026 (same fact as the live PI cluster)
- Indicative premium rates published by Kenyan insurers and anonymised market estimates, gathered October 2026
Facts and published prices checked 17 Oct 2026; last reviewed October 2026 by Naveah Capital. Premiums shown are indicative published rates and market estimates before levies, not a quote or a promise. Naveah Capital Insurance Agency is an IRA-licensed insurance agency in Nairobi; this page is general information, and your policy wording decides your cover.
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