Can builder's risk insurance be passed on to the tradespeople?
In short
Can builder's risk insurance be passed on to the tradespeople? Yes, if the building contract says so. The German standard terms for building works (VOB/B) contain no such charge. Usual deductions are about 0.15 to 0.5 percent of the invoiced sum. Without an agreement the client may not deduct anything from the final invoice, and flat charges in pre written contracts do not always stand up in court.
Rates and amounts from contract practice, a law firm article and case law, as of October 2026.
Example
Typical range
Charge for builder's risk insurance only, per trade
about 0.15 to 0.5 percent of the invoiced sum
Combined charge for cleaning, water, power and insurance
often over 1.5 percent
Flat charge for power, water and similar rejected by the OLG Brandenburg
0.8 percent of the gross invoice
Premium the client pays for a 250,000 euro building sum
from about 220 euros once
The range for the insurance charge and the figures in the example are guide values from our
quoting practice.
The other figures come from the sources listed.
Not legal advice; in a dispute over a deduction,
a lawyer specialising in construction law can help.
Worked example
Client with eight separate trades, 350,000 euro building sum, 0.3 percent charge agreed
How the premium is shared when every trade has the same rate deducted from its net final invoice.
Builder's risk premium
about 400 euros once
Shell construction, 120,000 euros net
360 euros deducted
Electrics, 25,000 euros net
75 euros deducted
All trades together, 300,000 euros net
900 euros deducted
Here the deductions clearly exceed the premium. As a tradesperson you may ask to see the policy; as a client, set the rate so it covers the premium rather than exceeding it.
Why clients pass the premium on
Until formal acceptance of the works (Abnahme), the contractor carries the risk for his work under section 644 of the German Civil Code (BGB). If strangers rip out freshly laid cables, the electrician has to lay them again. Under section 7 VOB/B he is only relieved for events that were objectively unavoidable, and section 4 (5) VOB/B obliges him to protect his own work until acceptance.
If the client takes out builder's risk insurance (Bauleistungsversicherung) covering all trades, the tradespeople's work is co insured. That takes part of their own risk off them, which is why sharing the premium is seen as fair, as long as it is clearly agreed.
What the contract must say
A charge only applies if it is fixed before the contract is signed, ideally in the tender or the quote, so the firm can price it in. A deduction that first appears on the final invoice has no basis.
The contract should state the percentage, the basis for the calculation, when the deduction is made and who carries the excess in a claim.
Contract wording
Assessment
0.3 percent of the net final invoice for the client's builder's risk policy
clear and common
Flat 1.5 percent for power, water, cleaning and insurance in pre written terms
open to challenge, depending on wording
Deduction not mentioned in the contract, only on the final invoice
no basis
Charge agreed but no policy taken out
deduction not justified
Firm that caused the damage pays the excess
allowed if agreed, often overlooked
When a charge can be challenged
Courts review pre written contract terms under section 307 BGB for unfair disadvantage. The Higher Regional Court of Brandenburg (OLG Brandenburg, judgment of 20 August 2020, 12 U 34/20) held a flat deduction of 0.8 percent of the gross invoice for site power, water and similar items invalid. Insurance was not part of that case.
For the insurance premium itself, legal writers tend to accept a charge, because only the client can take out one policy for all trades. We know of no Federal Court of Justice ruling on this exact point. The closer the total charge is to the real premium, the easier it is to defend.
What tradespeople should check before signing
Ask to see the policy, whether your work is co insured and whether the insurer waives recourse against co insured firms. Clarify who pays the excess. If your firm has its own annual builder's risk contract, you would otherwise pay twice for this site.
Treat the deduction as a cost item in your quote. At 0.3 percent of a 40,000 euro job, it is 120 euros. It gets expensive when the excess lands on you.
What private clients should know
If you build privately with separate trades, you usually sign the firms' own contracts, which contain no such charge. To pass the premium on, you have to write it into each contract beforehand, and each firm has to agree.
Often it is not worth the effort: for a family house the policy costs a few hundred euros, and firms simply build the charge into their prices. With a general contractor, the contractor usually insures the works, so there is nothing to pass on.
Step by step
As the client, take out builder's risk insurance before work starts.
Put the rate, the basis and the excess rule into the tender or quote.
As a tradesperson, price the charge in and ask for the policy.
Check whether your work is co insured and recourse is waived.
Compare the deduction on the final invoice with the contract.
Checklist
Charge agreed in writing before signing
Rate and calculation basis clear
Policy exists and covers all trades
Excess rule in a claim known
No double cover with your own annual contract
Total deductions match the real premium
Common mistakes
Deducting the charge on the final invoice without a contract clause
Bundling insurance, power and cleaning into one high flat rate
Paying the charge as a firm without knowing your excess in a claim
Collecting the charge although no policy was taken out
Questions and answers
Frequently asked
Is the charge for builder's risk insurance in the VOB/B?
No.
The VOB/B deals with risk and the duty to protect the works, not with sharing the premium.
It has to be agreed in the building contract.
Can the client deduct it without an agreement?
No.
Without a contractual basis the deduction is not justified and the firm can claim the full amount.
What rate is reasonable?
There is no fixed limit.
About 0.15 to 0.5 percent of the invoiced sum is common.
The closer all deductions are to the real premium, the harder they are to challenge.
Do I need my own builder's risk insurance as a tradesperson?
Not for this site if the client's policy covers all trades.
Your own annual contract still matters for sites without such a policy.
Who pays the excess if a tradesperson causes the damage?
The building contract decides.
It is often shifted to the firm that caused it.
If nothing is agreed, it stays with the policyholder at first.
