Site manager and technical inspector: do they need their own liability insurance?

Since 15 January 2025, liability insurance has been compulsory for building contractors, and from January 2026 the rules on designers' insurance have also changed – yet far less is said about two key players on a project: the site manager (responsible technical manager; in Hungarian felelős műszaki vezető, FMV) and the construction technical inspector (the client's supervisor). Both are licensed practitioners registered with a professional chamber, with personal liability for what they sign. As a broker, I see the question arriving from two directions: the contractor does not know whether its employed or contracted site manager is included in the company's compulsory insurance, while the project owner assumes that an error by the technical inspector will be settled by the contractors' all risks (CAR) policy taken out by the contractor. Based on the January 2025 information sheets of the Hungarian Chamber of Architects (MÉK) and Government Decree 191/2009, this article sorts out who is covered for what.

Two roles, two sides

The site manager works on the contractor's side: under Government Decree 191/2009 (IX. 15.) on construction activities, the site manager directs the construction work and is responsible for keeping the construction log – if the contractor has given them this task –, for the professional quality of the work and for ensuring that the completed structure can be used safely. The site manager may be the company's owner, managing director or employee, or an external professional engaged by it. The construction technical inspector, by contrast, is the building owner's on-site agent: under the points of Section 66(2) of Act C of 2023 on Hungarian Architecture quoted by the MÉK, the inspector is responsible, in place of the building owner, for compliance with the construction documentation, for handing over the work site and for checking the construction work. On the same job, the inspector may not be the contractor's site manager, nor a member or employee of the contracting company – the two roles are deliberately set against each other. Under Government Decree 191/2009, appointing a technical inspector is compulsory, among other cases, where the construction work is carried out by more than one main contractor, where the investment falls under the Public Procurement Act (Kbt.), or where a construction escrow agent (építtetői fedezetkezelő) is involved. For a family house it is not compulsory, but there too the inspector stands on the project owner's side.

Is their own liability insurance compulsory?

The answer is the same for both roles. The MÉK's January 2025 information sheets state, for the site manager and the construction technical inspector alike: ‘having professional liability insurance is not a requirement for this activity, although it is recommended because of the nature of the activity’. Proof of insurance is not among the conditions of the licence. This is in sharp contrast with the contractor, for whom Section 21/B of Government Decree 191/2009 has prescribed compulsory liability insurance since 15 January 2025, and with the designer, for whom Government Decree 266/2013 – according to the rules of the Hungarian Chamber of Architects, from 1 January 2025 – prescribes compulsory designer's liability insurance, which from January 2026 is tied to the design activity.

The information sheets themselves stress that the absence of an obligation does not mean protection. For the site manager, the chamber writes that in the event of a construction defect, the site manager and the contractor are jointly and severally liable towards the building owner, and if the contractor has ceased to exist in the meantime, the site manager may have to answer for the full amount. The logic is similar for the technical inspector: if the inspector could have recognised a defect in the design received from the client but did not point it out, and construction went ahead on the basis of the defective design, the inspector is liable together with the contractor and the site manager – ‘the obligee may claim the full amount from any of them’. For a sole trader, this puts their own personal assets at stake.

What does the contractor's compulsory insurance cover – and whom does it not cover?

Under Section 21/C of Government Decree 191/2009, the contractor's compulsory liability insurance must also extend to damage arising from the activities of employees and subcontractors. Damage caused to a third party through the fault of an employed site manager is therefore typically covered as part of the contractor's liability – the policy covers the company's liability, and under the rule of the Hungarian Civil Code (Ptk.) on damage caused by employees, it is the employer that is liable towards third parties for the employee's fault. Two questions remain open, and both depend on the policy conditions: whether an external site manager working under a service contract counts as an insured under the policy, or falls under the cover only as a ‘subcontractor’; and whether the insurer can recover the amount it has paid from the professional who made the error. Hungarian policy conditions typically limit recourse to damage caused intentionally or through gross negligence, but this differs from insurer to insurer – which is exactly why a contracted site manager should look at their own cover independently of the contractor's policy.

The contractor's policy does not apply to the technical inspector: the inspector is not the contractor's employee or subcontractor but the other side's agent. The inspector's cover may be either the project owner's own liability insurance (if it extends to professional activities) or – as an external agent – their own professional liability insurance. I wrote about what compulsory contractors' liability insurance generally covers and does not cover in the article on compulsory contractors' liability insurance.

What does the CAR not cover?

The two sections of a CAR policy answer a different question from professional liability. Section I pays for physical damage to the works under construction, but Hungarian policy conditions typically exclude damage to the defective part itself caused by faulty design, material or workmanship, and give cover only for the resulting consequential damage – often only by way of a clause. If the technical inspector overlooked that a concealed structure was not built according to the design and the defective part has to be torn out, that is not a CAR loss but defective performance; the article on design defects maps this out. Section II covers damage caused by the insureds to third parties: the insureds here are the contractor, the subcontractors brought in and, in many policies, the project owner as well, but the technical inspector engaged by the project owner is typically not listed among the insureds, and the inspector's liability towards the building owner arising from their service contract is not ‘damage caused to a third party’.

The most important difference, however, is the nature of the loss. The typical error of a site manager or technical inspector is not a collapsed crane but a missed inspection, an incorrectly issued certificate of performance or a design defect that was not reported: the consequence is often pure financial loss – extra costs, delays, tearing out work –, which the CAR and general contractors' liability insurance typically do not extend to, whereas professional liability insurance is designed specifically for this. The article on how contractors' liability insurance relates to the CAR describes the boundary between the two project covers; the practitioner's personal liability is a third layer.

Professional liability insurance: what should you look out for?

Professional liability insurance covers losses arising from professional errors in an activity that requires a licence – property damage and bodily injury caused to the client and to third parties and, depending on the conditions, pure financial loss. Since years can pass between the error and the loss (poorly inspected waterproofing lets water in three years after handover), the most important question is the time scope of cover: some policy conditions look at when the loss occurred, others at when it was reported, and the length of run-off cover after the policy ends differs from insurer to insurer. The other question: the sum insured, the deductible, and whether the policy extends to every registered specialist field. In practice, the chamber's word ‘recommended’ means that the client can ask for proof of insurance in the contract – and in that case the wording of the policy decides.

How does the project's cover structure fit together?

As a project owner, it is worth asking for proof of insurance from three places: from the contractor, for its compulsory liability insurance and the project CAR; from the technical inspector, for their own professional liability insurance; and from the designer – if they also carry out design supervision on site – for the insurance tied to the design activity; under the MÉK's rules, compulsory designer's liability insurance must also extend to design supervision on site – how a particular policy handles this can be seen from the wording of its conditions. As a contractor: an employed site manager is part of the company's policy, but it is worth asking a contracted site manager for their own proof of insurance. And as a practitioner: if you take on site manager or technical inspector assignments as a sole trader or through your own limited company (kft.), your own professional liability insurance is the only cover that is in your name. The article on points for project owners to check explores the contractor's side.

What should you do now?

If you work as a site manager or technical inspector, check whether you have professional liability insurance in your own name and whether it matches your current specialist fields; if you are employed by the contractor, ask how the company's compulsory insurance handles errors by employees. If you are a project owner, write the obligation to provide proof of insurance into the technical inspector's service contract, and do not expect the contractor's CAR to settle the consequences of the technical inspector's error. In the event of a claim, the primary route for reporting it is the insurer's claims line; if a case gets stuck, I help where I can. If you let me know, I prepare the request for quotes and the comparison.

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Sources

• Hungarian Chamber of Architects (MÉK) – Information sheet on site managers (responsible technical managers) (January 2025)
• Hungarian Chamber of Architects (MÉK) – Information sheet on construction technical inspectors (January 2025)
• Government Decree 191/2009 (IX. 15.) on construction activities (site manager, technical inspector, Sections 21/B–21/C compulsory contractors' liability insurance)
• Government Decree 266/2013 (VII. 11.) on professional practice in construction and construction-related activities
• Act C of 2023 on Hungarian Architecture (Section 66 – responsibilities of the building owner and the technical inspector)
• Hungarian Civil Code (Ptk., Act V of 2013) – liability for damage caused by employees
• Hungarian Chamber of Architects (MÉK) – Checking designers' liability insurance (17 December 2024), 2.1, 2.5, 2.7: compulsory from 2025, incl. design supervision

Related articles

• Compulsory contractor's liability insurance: who does it apply to, and where does CAR fit in?
• Contractor's liability insurance vs the CAR
• Design defects: what CAR covers, and what it doesn't
• As a principal, checking the contractor's policy