Over the past 12 months, the insurance landscape for civil contractors has shifted more dramatically since the hard-market conditions that emerged after 2020, writes Brenden Townsend, the managing director at Greenlight Insurance Brokers.
Competition, economic pressures, rising claims costs, supply-chain volatility, and increasingly stringent underwriting standards have all combined to reshape how insurers assess risk.
Across mobile plant, commercial motor, liability, and contract works, contractors have felt the effects in different ways.
In the past year, some premiums have reduced, while others continue to tighten. The result is a widening divide: risks insurers consider “vanilla” are easy to insure and attract competitive pricing, while risk received as more complex or higher hazard are becoming increasingly difficult to place.
Mobile plant
Last year we saw additional competition in the market, resulting in a softer environment and reduced premiums. Insurers are offering additional incentives to retain business, such as profit-share arrangements and extended limits for consequential loss, windscreens and tyres.
However, several factors may lead to pricing adjustments increases over the next 12 months.
Rising repair costs: Inflation on parts, steel, hydraulics, and labour have slowed but not reversed. Insurers continue to pay significantly more for repairs, particularly on late model machinery.
Long lead times: Delays on critical parts and components from overseas are prolonging repairs and increasing hire costs, which flow through to claims.
Higher purchase prices: As machinery replacement values rise, contractors are updating plant schedules, resulting in higher declared values and consequently higher premiums.
From an insurer’s perspective, ‘underinsurance’ – insuring machinery for less that its market value – has become a key concern.
Insurers are insisting on more accurate values and may offer Agreed Value in certain circumstances. On claims market-value settlements, we are seeing large variances between valuers, making it essential to keep valuations current.
Commercial motor
Commercial motor trends mirror those of mobile plant. Increased competition has driven down rates, and some insurers now offer the option to cover all plant and vehicles under a single commercial motor policy.
This provides the benefit of a combined rate, but the downside is that the coverage is not as broad as a true mobile plant policy – particularly regarding Agreed Value and consequential loss.
Despite the softer rating environment, pricing challenges remain. High claims frequency: Urban congestion, driver shortages and increased exposure hours continue to drive crash rates.
Repair-cost inflation: Modern vehicles require specialised diagnostics, expensive windscreens and often face supply chain delays. EV vans and Utes add further complexity.
Driver management: Insurers are rewarding contractors who use driver-behaviour monitoring, fatigue-management programmes, and formal fleet policies. Accounts with ad-hoc driver controls generally face continued premium pressure especially if they have high frequency of claims.
There has also been a noticeable shift by some insurers to support clients through driver training programmes and the use of driver simulators.
Overall, commercial motor premiums have softened but well-run fleets will benefit most.
Liability insurance
Liability insurance has not seen significant premium spikes, but underwriting standards have tightened – particularly for contractors involved in deep excavations; piling and shoring; bridge or structural work; and work near essential services (power, gas, fibre).
Claims inflation is also affecting liability. Legal costs and third-party property repair expenses have increased sharply. Even smaller incidents are more costly to resolve and more matters becoming litigious. A key regulatory change this year involved the Resource Management Act that was amended so that Statutory Liability insurance can no longer cover fines and penalties under the Act.
Contract works insurance
Contract Works remains one of the more volatile classes for civil contractors due to persistent challenges. Severe weather losses and several large building- related losses continue to drive insurer costs.
Key pressures include the following: Weather-related losses: flooding and heavy rainfall have reinforced the need for robust site protection and water-management planning. Insurers are scrutinising site location, erosion controls and wet-weather contingency plans – especially in flood-prone areas.
Escalating claims costs: longer build times caused by labour shortages and supply delays increase exposure and claims duration.
Geotechnical risks: slips, settlement and washouts remain major pain points. Many underwriters now require geotechnical reports for higher-risk projects before offering terms.
Despite these pressures, cover remains available, although higher deductibles are increasingly common in flood-prone or geotechnically sensitive areas.
How you can improve outcomes
Insurers across all lines are placing increased emphasis on risk management. Contractors who achieve the best results typically maintain accurate and details asset schedules; prioritise driver training, monitoring and behavioural programmes; keep up to date maintenance and inspection logs; engage early with brokers to present high-quality submissions; and undertake thorough project planning, especially for weather-exposed sites.
The common theme: The stronger the contractors’ risk-management story, the better the premium.
Looking Ahead
The insurance market for civil contractors – particularly in commercial motor and mobile plant is more favourable that it has been in many years.
Medium-term rate stability is possible, but much depends on claims costs, repair inflation and weather-related exposures.
Expect the year ahead to bring continued insurer focus on data, documentation and risk controls; gradual, but consistent, premium pressure in liability and contract works; stable or slightly increased terms for mobile plant and commercial motor; and increased scrutiny of liability for high-risk activities
Civil contractors who invest in systems, visibility and proactive risk management will be best positioned to secure competitive cover in the coming year.
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