The insurance clause of a public procurement notice is often the least-read paragraph, yet it is the source of one of the costliest misunderstandings: who may request a policy, when, from whom and for what amount. The Public Procurement Authority's guidance entitled “Construction insurance”, published on 12 February 2026, systematises the rules, while Section 26 of Government Decree 322/2015 (X. 30.) provides the mandatory basis. As a broker, I see that a good part of contractors' bidding risk stems from these few paragraphs – and that contracting authorities also often ask for more, or for something different, than the rules allow.
- Under Section 26 of Government Decree 322/2015 (X. 30.), the winning tenderer must take out liability insurance or extend its existing cover by the time the contract is concluded at the latest – or by a date set in the contract that precedes the start of the activity.
- According to the Public Procurement Authority's guidance of 12 February 2026, a policy may not be requested together with the tender, separate liability insurance may not be demanded from subcontractors, and the deductible should also be specified in forints.
- For state construction investments, Government Decree 55/2025 (III. 26.) prescribes minimum sums insured tied to the construction cost budget and three years of run-off cover after handover.
The mandatory basis: Section 26 of Decree 322/2015
Under Section 26 of the decree, for construction investments the tenderer “is obliged, by the time of conclusion of the contract at the latest – or by a date specified in the contract that follows the entry into force of the contract but precedes the start of the activity affected by the liability insurance – to conclude a liability insurance contract or to extend its existing liability insurance to liability insurance of the extent and scope prescribed by the contracting authority in the contract notice or in the procurement documents”. For design and engineering services, Section 11 states the same. Two things follow from this: the insurance is a condition for concluding the contract, not a suitability (selection) requirement, and its extent and scope are set by the contracting authority – but not without limit. Citing Section 65(3) of the Kbt. (Public Procurement Act) and the principle of proportionality, the guidance states that the contracting authority may not prescribe an indemnity limit higher than the reasonable and necessary value.
From whom, when and what may the contracting authority request?
The most important practical points of the guidance, from the contractor's perspective:
- Only from the winner. Since only the winning tenderer must hold insurance by the time the contract is concluded, “no insurance policy may be requested from tenderers at the time the tender is submitted either”. The guidance specifically emphasises: “the contracting authority should under no circumstances request a valid insurance policy for a specific job that is still under tender/procurement procedure, as this cannot be interpreted for a risk that does not yet exist”.
- Not from subcontractors. The contracting authority may not require the subcontractors involved in performance to take out separate liability insurance – the main contractor's cover must extend to them, as Section 21/C of Government Decree 191/2009 in any case requires for compulsory insurance.
- Deductible in forints. It is “advisable to specify the deductible required of the winner also in forints (not only as a percentage)” – a deductible given only as a percentage means an unpredictable burden for the contractor in a large loss.
- Annual or project policy. The contracting authority may require fixed-term insurance covering only the given project, but it may also accept a certificate of cover issued under the main contractor's annual (framework) policy – I wrote about this in the comparison of project CAR and the annual policy.
- Consortium. With joint tenderers, the insurance arrangements must be coordinated so that every element of the investment is covered – see the consortium article.
Why is liability insurance not enough?
The guidance clarifies a much-misunderstood point: “general liability insurance in itself covers only personal injury and property damage caused to third parties outside a contract, not damage caused by the party at fault to the contracting authority”, and “liability insurance does not provide cover for warranty and defect-liability claims under the Civil Code (Ptk.)”. Damage occurring in the works under construction – in the incorporated materials and in the work performed – therefore falls outside it. This is why the guidance recommends that the contracting authority prescribe contractors' all risks insurance (CAR) containing both property and liability elements, under which the developer, the main contractor and the subcontractors can all be insured. As early as its President's notice of 2013, the Authority recommended that the property insurance be for the value of the project and that “the insurance policy may not come into existence before the construction contract is signed” – unless the contractor has a framework insurance agreement – and that a letter of intent from an insurer may be requested at the tender stage. The article on insurance certificates in tenders describes the same logic.
State construction investments: Government Decree 55/2025
Projects falling under the Act on the rules of state construction investments are governed not by the general obligation of Decree 191/2009 but by Government Decree 55/2025 (III. 26.), which applies to procurement procedures launched after its entry into force (26 April 2025). Here the contractor's liability insurance covers the main contractor, its staff, its subcontractors and the responsible site manager, and the minimum sum insured is aligned with the construction cost budget (per event / per year): up to HUF 100 million, HUF 25 / 50 million; between HUF 100 and 500 million, HUF 50 / 150 million; between HUF 500 million and HUF 5 billion, HUF 100 / 200 million; between HUF 5 and 10 billion, HUF 250 / 500 million; above HUF 10 billion, HUF 500 million / HUF 1 billion. The contract must run from the start of construction until the completion of the handover, and – in the words of the guidance – “run-off cover must be ensured for 3 years after the completion of the technical handover”: for damage caused during the term of the contract but – according to the Authority's guidance – occurring and reported within three years at most. The mandatory content of the certificate of cover is the policy number, the developer's name, the name of the project, the dates of the risk period and the sums insured; the existence of the insurance must also be recorded in the main e-construction log. Meanwhile, the general compulsory insurance continues to apply to the company's other work – the two run in parallel.
What does this mean at the tender stage?
The contractor is in a paradoxical position: the tender price must include the cost of the insurance, but the policy can be taken out only as the winner. The insurance clause of the notice must therefore be read through before tendering – limit per event and per year, deductible in forints, the circle of insured parties (whether the contracting authority is a co-insured), existing property, run-off cover, territorial scope, exclusions – and where it is unclear, supplementary information should be requested. If the notice requires the full construction value as the CAR sum insured, this must be consistent with the tender price. The tender checklist lists these questions with deadlines. Important: the insurer typically issues the certificate of cover after the policy is concluded or the premium is settled, so the deadline for concluding the contract must be planned together with the lead time for taking out the policy.
What should you do?
Before tendering, ask insurers for a preliminary letter of intent on the parameters of the notice, so that you do not find out only as the winner that the required limit or deductible is not available on the market, or only at a different price. Do not sign a contract in which the duration or scope of the insurance obligation differs from what the insurer can undertake. If I receive the notice before the tender deadline, I review the insurance clauses and help obtain the letters of intent – the content of the tender and the signing of the declarations remain your decision.
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Sources
- Public Procurement Authority (Közbeszerzési Hatóság): Construction insurance – guidance (2026-02-12)
- Government Decree 322/2015 (X. 30.) on the detailed rules of public procurement for construction investments (Sections 11 and 26)
- Government Decree 55/2025 (III. 26.) on the detailed rules of liability insurance for state construction investments
- Act CXLIII of 2015 on Public Procurement (Kbt.), Section 65(3)
- Notice of the President of the Public Procurement Authority on project-type all-risks property and liability insurance (2013)
- Government Decree 191/2009 (IX. 15.), Section 21/C (extension to subcontractors)
