House building is one area where insurance is not just market practice but, from time to time, a statutory requirement too: compulsory arrangements to protect home buyers appear in the regulations. This area changes – so this article deliberately doesn't offer a "current list of rules", but an orientation framework: what's worth knowing, and where you always need to check.
- There is a compulsory insurance requirement linked to house building – for residential buildings subject to the simplified notification procedure, professional liability insurance for the designer and the main contractor (under Government Decree 155/2016 (VI. 13.), Section 6/A; that decree ceased to be in force as of 1 October 2024, and the obligation is broader today: since 15 January 2025, Government Decree 191/2009 (IX. 15.), Sections 21/B–21/G, has required every contractor – subcontractors included – to hold liability insurance, and since 1 January 2025, Government Decree 266/2013 (VII. 11.) has required the same of designers) – but this covers the designer's/contractor's liability, not the buyer's direct protection; the buyer is protected by the mandatory warranty (Decree 181/2003) and the statutory guarantee.
- What applies to a given project is always decided by whichever legislation is in force at the time.
- The compulsory element typically doesn't replace CAR: it serves a different purpose (buyer protection) and covers a different risk.
- At the start of a project, checking the relevant legislation should be part of the legal due diligence.
Why does this layer exist?
In house building, the buyer is particularly exposed: they pay in advance, over a long lead time, and any insolvency or defective performance by the contractor-developer hits them directly. That's why the legislator protects home buyers from time to time with compulsory insurance and warranty-type arrangements – though the scope, application and detailed rules of these arrangements change. Checking the rules currently in force against a specific project is a job for a lawyer – for a specific project, ask your legal adviser to confirm the position.
What does this mean for the developer-contractor?
Two separate circles that shouldn't be blurred together. The compulsory arrangement – where it applies to the given project – serves the purpose set out in legislation, typically protecting the buyer. CAR/EAR, independently of that, covers the risks of delivering the project: storm, fire, theft, liability losses. Neither replaces the other; in a well-structured project, both have their place. The basics on the CAR side: the basics article, residential block construction.
The practical routine
At the start of a project, three questions need clarifying – with legal input: whether a compulsory insurance arrangement applies to the project; if so, who is required to take it out and certify it, when, and with what content; and how this fits into the contractual structure (the construction contract, buyer contracts). On the insurance side, the CAR cover is built up in parallel – the timing of the two needs to be coordinated, because sales and financing may also call for the certificates.
Where I can help
As a broker, I can help map out the solutions available on the market, run a competitive comparison of quotes, and build up the CAR side – interpreting legislation is the lawyer's territory. Together, the two give the project a sound structure: the clause article, or a consultation with your project's details: book an appointment.
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