Understanding owner’s liability insurance in Switzerland
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When an individual acquires a property or a developer undertakes construction, conversion or renovation works, they become liable for any damage caused to third parties during the project. In Switzerland, this liability is covered by a specific insurance policy: owner’s liability insurance.
What is owner’s liability insurance?
This insurance is designed to protect the project owner – whether a property owner, future owner or company – against the financial consequences of bodily injury, material damage or immaterial losses caused to third parties during or after construction works.
It applies, for example, if:
- A passer-by is injured by a poorly secured scaffold
- A building site causes cracks in a neighbouring property
- A design error leads to water infiltration into a third party’s premises
Note: This insurance is different from standard private liability insurance, which does not cover risks related to a construction site.
Is owner’s liability insurance mandatory?
Although not mandatory at the federal level, owner’s liability insurance is strongly recommended, and sometimes required:
- By cantons as part of granting a building permit
- By banks before approving a mortgage loan
- By construction companies or partner architects
This coverage is especially important if the project involves a high budget or if the construction site is located in a dense or complex environment.
What does it cover?
Owner’s liability insurance generally covers:
- Damage caused to third parties by the works
- The project owner’s legal defence costs in the event of a dispute
- Damage occurring after the handover of the site, within a defined period (e.g. landslides or structural defects caused by the works)
For complete protection, it is often recommended to combine this insurance with construction works insurance, which covers damage to the site itself (theft, weather events, construction defects).
Who should take out this insurance?
It is generally the project owner – i.e. the property owner or the client commissioning the works – who must take out the insurance. In the case of a real estate project managed by a developer, it is often the developer who handles the insurance.
At FGP Swiss & Alps, we support our clients at every stage of their project, from finding the right property to securing the construction site. We systematically recommend taking out owner’s liability insurance to ensure peace of mind and effective risk management throughout the project.
FAQ – Owner’s liability insurance in construction projects
Is owner’s liability insurance mandatory in Switzerland?
No, it is not mandatory at the federal level. However, some cantons, banks or municipalities require it in order to obtain a building permit or a mortgage loan. It is strongly recommended for any construction or renovation project involving third parties.
Who must take out this insurance: the project owner or the contractors?
It is the project owner (property owner, future buyer, or developer) who must take out this insurance, not the commissioned contractors. It covers the owner’s liability in case of damage caused to third parties.
What exactly does this insurance cover?
The insurance covers:
Bodily injury and material damage caused to third parties
Consequential immaterial losses (loss of income, neighbourhood disturbances, etc.)
Legal defence costs in case of claims or legal proceedings
What is the difference between this insurance and construction works insurance?
Owner’s liability insurance protects against damage caused to third parties, while construction works insurance covers damage to the site itself (theft, fire, construction defects, etc.).
Can this insurance be taken out for small renovation works?
Yes. Even for minor works, an incident can lead to significant costs. This insurance is useful as soon as there is any risk of impact on neighbouring people or property.
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