Key Person Insurance for ConstructionProtecting Key People in Construction

Key person insurance for construction companies is important because the industry has unique risk factors:

• Contract dependencies - Many construction contracts name specific project managers or directors as key personnel. Losing them can trigger contract reviews or termination
• Tender relationships - Winning new work often depends on personal relationships between directors and clients/architects
• Specialist knowledge - Estimators, quantity surveyors, and technical directors hold critical pricing and project knowledge
• Project continuity - Losing a project manager mid-build can cause significant delays and cost overruns
• Higher occupational risk - While directors may be office-based, the industry context can affect underwriting

Key people to consider for construction key person insurance:

• Managing Director/Owner - Often the face of the business and key relationship holder
• Senior Estimator - If they handle most of your tender pricing and their knowledge of costs and margins is critical
• Project Managers - Particularly those managing your largest or most complex projects
• Contracts Manager - If they manage key client relationships and negotiations
• Technical Director - If they hold specialist engineering or design expertise

In many construction SMEs, the managing director and senior estimator are the two most critical key people.

When arranging key person insurance for construction, consider:

Occupation Classification

Insurers classify occupations by risk. Construction industry roles may attract higher premiums if the person spends time on site. However, office-based directors and estimators are usually classified as standard office risk regardless of industry. Be honest about the person's actual duties when applying.

Income Protection

For construction professionals who spend time on site, key person income protection may be particularly relevant. If a site manager suffers an injury that prevents them working for months, income protection provides regular payments to the business.

Contract Requirements

Review your major contracts for key person clauses. If specific individuals are named, ensure they have adequate cover to protect the business if they cannot fulfil their contractual role.

Calculating key person insurance cover for construction businesses:

• Project value at risk - If losing a project manager could delay or forfeit a major project, cover should reflect the financial exposure
• Tender pipeline - Revenue from future tenders that depend on the key person's relationships and expertise
• Penalty clauses - Any liquidated damages that could be triggered by project delays
• Recruitment costs - Experienced construction professionals are in high demand and expensive to recruit
• Business debts - Loans, plant finance, or bonds that depend on the key person

For construction SMEs, cover amounts typically range from £250,000 to £1.5 million for key directors and estimators. Use our calculator for a personalised estimate.