Public Works Insurance: Engineering Risk, Insurability, and BDI

Understand how to structure insurance for public works, assess engineering risk and insurability, define coverage and deductibles, and reflect premiums coherently in BDI.

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Construction insurance is the contractual transfer of defined project risks to an insurer, in exchange for a premium and within previously established coverage, limits, deductibles, exclusions, and policy term. In public works, insurance does not replace the risk matrix, does not turn a generic risk into an insurable risk, and does not eliminate the Public Administration’s responsibility to identify, allocate, and quantify contractual exposures. A policy works when the event is technically definable, legally permissible, random, future, and capable of being underwritten by the market.

In practice, the most common mistake is to write only “mitigation: insurance” in the risk matrix. This does not state which insurance, which coverage, which indemnity limit, which deductible, who is insured, how long protection must remain in force, or whether the risk actually has a market. The TCU’s 2026 Guide to Cost Engineering in Public Works reinforces that insurance specifications need to be objective and that the corresponding premium must appear coherently in price formation.

Construction insurance starts with the risk matrix, not the policy

Insurance, insurability, and BDI connect to the risk matrix and reference-price formation. For a consolidated view of how these elements enter the procurement lifecycle, see What the TCU Reviews in Construction and Engineering Services Procurement.

The decision to purchase insurance should come after three questions: what event may occur, who bears its consequence under the contract, and is there an insurance product capable of transferring that exposure under economically reasonable conditions?

The order matters. If the Public Administration starts with the policy, it risks purchasing coverage that does not match the matrix. If it starts with the matrix, it can compare retained risk, risk transferred to the contractor, risk transferred to the insurer, and residual risk.

A minimum structure relates:

risk event;
cause and consequence;
contractually responsible party;
preventive measure;
mitigation mechanism;
applicable insurance coverage, where available;
maximum indemnity limit;
deductible or mandatory participation;
residual risk after insurance;
economic treatment in the estimate.

Engineering Risk Management is the layer that organizes this decision before any insurance quotation.

What makes a risk insurable

Insurance depends on a risk object that the insurer can understand, price, and limit. SUSEP’s position discussed in connection with TCU Decision 2,191/2025-Plenary and revisited in the TCU’s 2026 Guide emphasizes insurability conditions that can be summarized in five groups.

The event must be future and random

There is no insurance for a fact that has already occurred and whose loss has already materialized. Insurance deals with future uncertainty. It also makes no sense to transfer an inevitable and known expense as a risk, because it is a cost of the scope.

Randomness means that occurrence, severity, or timing of the event cannot be under the insured’s deliberate control. An insurance contract is not a mechanism for converting voluntary nonperformance into indemnity.

The risk must be lawful

Protection cannot cover an unlawful interest or serve to neutralize the consequences of intentional conduct contrary to law. Law No. 15,040/2024 consolidated Brazil’s new insurance-contract regime and requires clear delimitation of the protected interest and covered risks.

There must be a legitimate insurable interest

The party purchasing or named in the insurance must have a legitimate economic interest in preserving the protected property, liability, or result.

In public works, this requires careful contractual design because the Public Administration, contractor, designer, subcontractors, equipment owners, financiers, and exposed third parties may coexist.

The risk must be precisely defined

“Construction risks” is too broad an expression. To underwrite, the insurer needs to know project type, location, values, construction method, schedule, exposure to natural events, history, protective measures, contractor experience, and coverage characteristics.

The risk matrix should make the same effort toward precision. The more generic the description, the greater the probability of a gap between what the tender imagines is transferred and what the policy actually covers.

The market must have underwriting capacity

A risk may theoretically be insurable and still lack sufficient market capacity for the desired limit, term, or concentration. Major projects, severe geological risks, catastrophic events, and highly concentrated exposures may depend on reinsurance, sublimits, or special structures.

For this reason, the Public Administration should validate insurability before converting a particular coverage into a tender requirement.

Engineering risks insurance is not the same as surety insurance

Two products often appear together in public works, but they protect different interests.

Instrument	Main subject	Typical event
Engineering risks insurance	property damage and covered events during construction, erection, or installation	accidental physical damage to the works, according to policy conditions
Liability insurance	damage to third parties attributable to covered activities	bodily injury, property damage, or other covered liability
Surety insurance	performance of contractual obligations assumed by the principal	default on the guaranteed obligation
Surety insurance with takeover clause	performance security with possible insurer intervention under statutory conditions	material contractor default and step-in mechanisms
Equipment insurance	machinery and equipment under the contracted modality	covered damage to insured equipment

The article on surety insurance with a takeover clause addresses specifically the step-in mechanism under Law No. 14,133/2021. Here, the focus is broader: how to specify insurance in a project, identify what is insurable, and reflect the premium in the estimate.

Engineering risks insurance: the logic of coverage

Engineering risks insurance was designed for projects under construction, erection, or installation that are exposed to accidental damage during execution. The exact content depends on the registered product, contractual conditions, and additional coverage purchased.

This rules out statements such as “insurance covers any problem in the project.” A policy is delimited.

A technical analysis needs to verify:

insured property and interests;
coverage period;
maximum guarantee or indemnity limit;
deductibles;
sublimits;
excluded risks;
additional coverage;
extension to testing and commissioning;
extension to the maintenance period, when contracted;
treatment of pre-existing equipment;
liability coverage;
natural events;
notice and claims-adjustment criteria.

The tender should state the required insurance outcome without creating requirements disconnected from the market.

Geotechnical risk: insurance works only after the baseline is defined

Subsurface conditions illustrate the difference between risk allocation and insurance. A policy does not replace geotechnical investigation, boring, design, GBR, or the risk matrix.

GBR and geological risk in construction help define the baseline condition. From that point, the contract can separate ordinary variation, which should be priced, from a differing condition.

Only then does it make sense to assess which consequences can be covered by insurance and which will remain as residual contractual risk.

Generically transferring “any soil condition” to the contractor and writing “mitigation: insurance” does not resolve the uncertainty. It may merely hide the absence of a baseline.

A matrix that merely states “mitigate with insurance” has not yet converted risk into a contractible requirement. Before the tender, event, consequence, coverage, limit, deductible, and residual risk need to be decomposed. This structuring avoids requiring a policy the market cannot underwrite or that does not protect the exposure the Public Administration intended to transfer.

Engineering Risk Management to structure the matrix, mitigation, and residual risk

A risk matrix with “insurance” in one column is insufficient

TCU Decision 1,182/2025-Plenary criticized generic treatment of risk mitigation. The point is relevant to any tender: stating “insurance” is not the same as specifying mitigation.

Where applicable, the matrix should answer:

which policy is expected;
which risk must be covered;
who must be named as insured or beneficiary;
which minimum limit is compatible with the exposure;
which deductible is acceptable;
the required coverage period;
which extensions are necessary;
which evidence will be required before mobilization;
how renewal, endorsement, or loss of coverage will be treated;
who bears the risk that is uncovered or above the limit.

This specification reduces the chance of procuring a policy that formally exists but is materially inadequate.

Not every risk should be transferred to the insurer

Risk engineering should assess the cost and efficiency of transfer. An excessive premium may make it more economical to retain part of the exposure. Likewise, high deductibles may mean frequent events essentially remain the contractor’s responsibility.

Depending on the market and project configuration, some risks may have limited transfer capacity, coverage restrictions, or disproportionate cost.

Points requiring caution include:

events that have already occurred;
intentional misconduct;
virtually certain events;
poorly defined exposure;
risks lacking minimum underwriting data;
catastrophic concentration;
regulatory or contractual risk without a suitable product;
purely commercial losses not covered by the policy;
consequences above limits and sublimits.

The correct approach is to record residual risk after the policy. Insurance rarely eliminates 100% of exposure.

Requiring insurance without recognizing the premium in the estimate shifts a technical obligation into the bid without demonstrating its cost. The BDI memorandum should reconcile coverage, premium, deductible, contingency, and risk allowance to prevent double counting or underestimation of the procurement.

Cost Engineering to validate insurance, guarantees, risk, and BDI in the estimate

The premium should be estimated coherently

The TCU’s 2026 Guide states that engineering risks insurance and surety insurance should not be recorded as direct costs of physical execution. They form part of BDI under the corresponding insurance and guarantees component, according to the methodology adopted.

This classification matters because direct cost should represent a resource incorporated into or directly identifiable with the service. Insurance protects the contract and project against events, but it is not a physical input to the structure.

BDI in construction and engineering services should demonstrate the insurance and guarantees rate in a calculation memorandum, rather than hiding a material premium within an arbitrary percentage.

A reference BDI rate does not replace a premium quotation

TCU Decision 2,622/2013-Plenary established references for BDI components, including insurance, guarantees, and risk. These references do not authorize the Public Administration to ignore the characteristics of a specific project when insurance requirements are material.

An ordinary building, a dam, a tunnel, an operating hospital, and an energized substation have completely different profiles.

When the required insurance has special characteristics, the estimate should seek market evidence compatible with:

project value;
term;
location;
execution method;
coverage;
deductibles;
limit;
company experience;
claims history of the risk type;
reinsurance capacity.

The final rate needs to be justifiable.

Surety insurance with a takeover clause requires additional estimating care

Law No. 14,133/2021 allows surety insurance and, for high-value procurements, permits a takeover clause under the statutory conditions.

A policy that gives the insurer additional obligations and powers may cost more than conventional security. This difference should not be silently absorbed by a generic rate.

The requirement needs to be supported, and the estimate should reflect the expected premium. Otherwise, the tender creates an economic obligation without recognizing its cost.

The deductible is part of the risk matrix

If a policy has a BRL 500 thousand deductible, the first BRL 500 thousand of a given loss does not disappear. Someone remains responsible for that portion.

For this reason, the deductible needs to be read as residual risk.

A complete matrix may record:

Layer	Treatment
loss up to the deductible	risk retained according to the contract
loss above the deductible and within the limit	potentially indemnifiable under the policy
loss above the limit	residual risk according to the matrix
excluded event	treated directly by the contract
damage resulting from non-transferred risk	responsibility of the allocated party

This reasoning prevents “there is insurance” from being interpreted as “there is no more risk.”

The indemnity limit is also an engineering and cost decision

The limit should not be selected merely as an administrative percentage. It needs to be compatible with the maximum plausible loss or with the exposure intended to be transferred.

The total contract value is not always the best indicator. Certain events may produce a maximum loss below the total value, while others may affect existing facilities, third parties, or high-value equipment.

An assessment may consider:

value at risk by phase;
physical concentration;
probable maximum loss;
criticality of the existing facility;
third-party damage;
replacement time;
restoration cost;
extent of testing;
environmental exposure.

The result supports a defensible limit in the tender.

The project duration needs to match the insurance period

Schedule and insurance need to align. If the project is extended, coverage may require an endorsement or renewal.

The Public Administration should not discover at the end of the contract that the policy expired while the works remained exposed.

The Terms of Reference may require:

coverage from the defined mobilization milestone;
maintenance throughout execution;
extension to testing, when applicable;
obligation to report a material change in risk;
obligation to submit endorsements;
deadline to renew coverage before expiry;
contractual consequence of lack of coverage.

Inspection should monitor validity as it monitors a guarantee, license, or other critical document.

A scope change may alter the insured risk

Amendments, changes in method, extensions of time, equipment changes, or increases in contract value may alter the risk originally underwritten.

This means that a contract change may require a policy review.

The process should verify simultaneously:

scope change;
change in value at risk;
change in term;
change in location or method;
need for endorsement;
impact on premium;
economic allocation of that impact.

Technical Analysis of Amendments helps maintain consistency among technical change, matrix, and coverage.

Insurance and contingency are not the same reserve

Contingency is an amount intended for identified and quantified risks within the estimating methodology. Insurance is a mechanism for transferring certain consequences to an insurer.

The same risk should not be fully covered three times: contingency, insurance premium, and risk allowance.

The contingency reserve in engineering projects should be reconciled with insurance and deductibles.

Example: if a portion of risk was effectively transferred, residual contingency should reflect the deductible, exclusions, limit, and other uninsured exposures.

Insurance and risk allowance also cannot be duplicated

Risk allowance remunerates exposure assumed by a party according to the contract methodology. If a particular risk has been transferred to the insurer and the premium is fully budgeted, it is necessary to verify whether there is still justification for remunerating the same portion of exposure as retained risk.

This does not mean automatically eliminating every risk component. The policy has deductibles, limits, and exclusions.

The control is reconciliation: which portion was transferred and which portion remains.

An insurance requirement is executable only when the tender, Terms of Reference, risk matrix, and inspection criteria say the same thing. An independent technical review can identify incompatibilities in coverage, term, limit, beneficiary, deductible, and evidence before they appear as requests for clarification, challenges, or disputes during construction.

Technical Review of Terms of Reference for Construction and Engineering Services

How to specify insurance in the Terms of Reference

An adequate technical clause should start with the risk and end with the evidence.

Identify the exposure

Describe the material events that justify protection.

Define the insurance product or outcome

State the modality, minimum coverage, and protected interest without imposing unnecessary commercial characteristics.

Size the limit and deductible

Use the exposure and market capacity as the basis.

Define the term

Connect coverage to the schedule, testing, and maintenance when applicable.

Define evidence requirements

Require the policy, certificates, endorsements, and evidence of premium payment when appropriate.

Define change governance

Explain how contract changes should be reflected in coverage.

Define residual risk

Record in the matrix who bears the deductible, exclusions, and amounts above the limit.

Eight checks before publishing the tender

Before bidding, the Public Administration should answer:

Is the risk described objectively?
Is there a suitable insurance product in the market?
Does the required coverage match the risk matrix?
Is the limit technically justifiable?
Is the deductible compatible with the contractor’s financial capacity?
Does the term match actual execution?
Is the premium reflected in the estimate and BDI?
Does the obligation avoid creating an unnecessary barrier to competition?

If any answer is unknown, the solution is not simply to retain the requirement. It is to investigate before publishing the tender.

How to research the insurance market without turning quotation into a formality

The inquiry should provide enough information for insurers or brokers to assess the same risk.

The package may contain:

scope and project type;
estimated value;
location;
schedule;
main methods;
risk studies;
risk matrix;
available history;
intended coverage;
limits;
deductibles;
special conditions;
known loss history of existing assets, when relevant.

Quotations obtained from different descriptions are not comparable.

The insurer’s role does not replace inspection

Insurance addresses a covered financial consequence. Inspection addresses execution, compliance, documentation, quality, and contractual obligations.

A project with a robust policy still needs inspections, testing, site diaries, change management, schedule control, and acceptance.

Engineering Contract Inspection produces evidence that may also be relevant in a future claim adjustment.

A loss event needs contemporaneous evidence

When a covered event occurs, incomplete documentation may make it difficult to demonstrate cause, extent of damage, and amounts.

The response plan should preserve:

date and time;
location;
photos and videos;
site diary;
prior condition;
services being performed;
emergency measures;
affected materials;
initial estimate;
technical reports;
formal communications;
mitigation evidence;
documents required by the insurer.

Claims governance should be defined before the first event occurs.

Work on existing facilities requires special attention

Retrofits, expansions, and interventions in operating assets combine the risk of new construction with the risk to existing property.

The policy needs to clarify whether and to what extent pre-existing property is covered. Otherwise, an event at the interface may fall outside the expected protection.

This point is especially critical in hospitals, data centers, substations, industrial plants, and critical infrastructure.

Integrated contracting does not eliminate the need to specify insurance

Under integrated or semi-integrated contracting, the contractor may assume greater responsibility for the solution. This does not make a generic insurance clause appropriate.

Design freedom must be compatible with performance requirements and the matrix. If the chosen solution materially changes the exposure, the contract needs to state how coverage will be updated.

The article on Integrated and Semi-Integrated Contracting in Engineering helps separate solution risk, contracting-authority risk, and transferred risk.

Insurance does not correct an immature design

A policy does not compensate for missing borings, inconsistent quantities, incompatible design, or incomplete planning.

Insurers may increase the premium, restrict coverage, or decline a poorly characterized risk.

For this reason, design maturity improves not only estimating and execution, but also insurability. The iPMP is one way to assess maturity before bidding.

How Owner’s Engineering acts in the insurance strategy

Owner’s Engineering does not replace a broker, insurer, or legal counsel. Its role is to organize the technical basis that makes it possible to procure insurance correctly.

This includes:

identifying risks;
qualifying causes and consequences;
defining interfaces with design and method;
quantifying exposure;
comparing retention and transfer;
reviewing tender requirements;
verifying consistency with BDI;
monitoring changes that affect coverage;
structuring execution evidence.

Owner’s Engineering connects insurance to the rest of project governance.

Construction insurance specification checklist

A technically mature specification should record:

risk to be transferred;
insurable interest;
insurance modality;
coverage;
known critical exclusions;
limit;
sublimits;
deductibles;
insured parties and beneficiaries;
term;
extension to testing;
extension to maintenance, if necessary;
need for liability insurance;
endorsement requirements;
treatment of contract changes;
evidence to be submitted;
renewal deadline;
treatment of cancellation or loss of coverage;
premium in the estimate;
residual risk in the matrix.

How to review insurability before turning insurance into a tender obligation

Insurability analysis should take place during the preparatory phase. The objective is not to purchase the policy in advance, but to test whether the risk the Public Administration intends to transfer has a sufficiently clear description, suitable coverage, and market capacity. When this verification is left to the bidder, the tender may discover too late that the requirement is ambiguous, excessive, or economically incompatible with the estimate.

This work belongs to a broader architecture of risk management in public works. Insurance is only one possible response. Before insurance, the risk may be eliminated through design review, reduced through preventive measures, consciously retained by the Public Administration, contractually transferred to the contractor, or addressed through a combination of these alternatives.

An insurability review should start from concrete documents: design and technical memorandum, schedule, estimate, risk matrix, existing conditions, geotechnical studies, interfaces with operating assets, procurement strategy, and known history of similar events. The absence of these inputs does not prevent every analysis, but it reduces underwriting quality and increases the probability of defensive premiums, high deductibles, or relevant exclusions.

Input	What it makes possible to verify	Risk when absent
Risk matrix	event, responsible party, and consequence	coverage disconnected from contractual allocation
Design and execution method	nature and concentration of exposure	generic underwriting and defensive premium
Schedule	exposure window and critical phases	insufficient term or unpriced extension
Estimate	value at risk and indemnity basis	arbitrary limit
Survey of existing assets	pre-existing assets and interfaces	damage outside expected coverage
Geotechnical and environmental studies	baseline conditions and relevant events	exclusions or disputes over known risk

Gross risk, prevention, insurance, and residual risk need one integrated memorandum

A robust way to document the strategy is to break each event into layers. First, record the gross exposure. Then apply preventive engineering measures. Next, identify the portion transferable to insurance. What remains after deductibles, limits, and exclusions is residual risk.

This memorandum prevents prevention, insurance premium, contingency, and risk allowance from being treated as independent percentages. The Complete Guide to Cost Engineering and Estimating serves as the HUB for this relationship among price, uncertainty, and estimate structure.

Layer	Question	Document or evidence
Gross risk	what is the exposure before measures?	risk register, technical study, matrix
Prevention	what reduces probability or impact?	design, procedure, mitigation plan
Transfer	which portion can be insured?	market conditions, indicative proposal, policy
Retention	which portion remains with the parties?	risk matrix, deductibles, and limits
Price	how does the cost appear in the estimate?	BDI, insurance and guarantees memorandum
Execution	how is maintenance of coverage demonstrated?	policy, endorsement, receipt, validity control

How to verify whether the policy actually complies with the tender

The check should not stop at the existence of a PDF called “policy.” Inspection needs to compare the insurance document with the contractual obligation. This comparison should be made before mobilization and repeated whenever there is an endorsement, extension, material scope change, or change in value at risk.

confirm the insurer and policy identification;
verify insured parties, beneficiaries, and protected interests;
compare the project scope and location;
verify coverage start and end dates;
compare required minimum coverage;
check limits and sublimits;
assess deductibles and mandatory participations;
identify materially relevant exclusions;
verify extensions for testing, maintenance, and pre-existing property;
confirm subsequent endorsements;
verify evidence of payment where required by the contract;
record any discrepancy before authorizing the exposed activity.

The result of this review should be a compliance record, not merely a checkbox stating “policy received.” Where there is a discrepancy, inspection needs to state exactly which requirement was not met and which risk remains uncovered.

Evidence matrix for monitoring insurance during execution

Coverage needs to exist throughout the contract, not only on the signature date. For this reason, insurance control should be integrated into the project’s document governance.

Moment	Minimum evidence	Control
Before mobilization	policy, conditions, certificate, and required evidence	validation against tender and matrix
During execution	validity, endorsements, and reported changes	periodic validity control
After an amendment	endorsement of value, term, or scope when necessary	review of new exposure
Before critical testing	confirmation of applicable coverage	document readiness
In case of an event	site diary, photos, report, notice, and mitigation records	preservation of evidence
At closeout	status of claims and maintenance extensions	contractual handover

This control can be incorporated into Technical Support for Inspection of Construction and Engineering Contracts, especially when coverage depends on milestones, changes, and technical documentation produced during the project.

When a project change requires insurance reassessment

Not every contract change modifies the policy, but every material change should trigger a check. A small quantity increase may not materially change exposure; a change in execution method, inclusion of a pre-existing asset, or extension of energized testing may completely change the risk.

The most common triggers are changes in value, term, method, location, testing phase, responsibility for third-party property, inclusion of high-value equipment, and changes in environmental or geotechnical conditions. The Engineering Change Management process helps record these changes before they become coverage gaps.

How to procure technical support for structuring project insurance

When the Public Administration does not have a specialized team to connect risk, estimate, and contract, external support should be procured as a technical engineering service focused on structuring the information. The scope should not promise to “guarantee coverage” or replace activities reserved to the insurer or broker. The engineering deliverable is the technical basis that makes the insurance requirement consistent.

A well-defined scope may include diagnosis of insurable risks, review of the matrix, analysis of design data, assessment of value at risk, survey of critical interfaces, support for market research, definition of minimum requirements, premium-estimate memorandum, technical review of tender documents, and inspection criteria.

Inputs that should be made available

current designs and technical memoranda;
estimate and schedule;
risk matrix;
delivery model and draft contract;
field surveys and studies;
security requirements already defined;
information on existing assets;
relevant history of claims or events, when available.

Expected deliverables

insurability matrix by event;
map of coverage, limits, deductibles, and residual risks;
memorandum of estimating assumptions;
technical requirements for the Terms of Reference and tender;
policy-compliance checklist;
review triggers for contractual changes;
evidence matrix for inspection;
record of interfaces with insurance, contingency, and BDI.

Service acceptance criterion

Acceptance should not be based only on delivery of a report. The Public Administration needs to be able to trace each insurance requirement to the risk that originated it, identify its calculation basis, verify consistency with the estimate, and use the material directly in procurement and inspection.

When the product makes it possible to answer “which risk, which coverage, which limit, which cost, which evidence, and who controls it,” the structuring has fulfilled its function.

When specialized support becomes necessary

The need increases when the project combines high value, a long term, operating assets, relevant natural hazards, geotechnical interfaces, complex testing, responsibility for third-party property, or high-value surety-insurance requirements.

It is also a warning sign when the tender uses generic expressions such as “necessary insurance,” when BDI contains a rate with no memorandum, when the matrix does not identify deductible and residual risk, or when the insurer requests technical information the Public Administration has not yet consolidated.

In these situations, technical support should occur before bidding. After signature, the available correction alternatives are narrower and may require a tender change, endorsement, amendment, or renegotiation of a requirement that should have been stabilized during the preparatory phase.

Final considerations

Construction insurance should not be a generic word in the risk matrix. It is a contractual instrument for transferring specific exposures that works only when risk, coverage, limit, deductible, term, and responsibilities are consistent.

Good structuring begins before quotation: investigate the project, identify risks, define the baseline, choose what to retain and what to transfer, and test whether market capacity exists.

From that point, the policy stops being merely a documentary requirement and becomes part of the engineering of the contract.

In the estimate, the premium needs to be traceable and compatible with the requirement. During execution, coverage needs to follow time, changes, and value at risk. And if a loss occurs, inspection needs to have produced sufficient evidence to demonstrate cause, damage, and response.

The result is not “more insurance” in a bureaucratic sense. It is clearer, priceable, and verifiable risk allocation.

Technical references

[1] BRASIL. Lei nº 14.133, de 1º de abril de 2021. Lei de Licitações e Contratos Administrativos. Available at: [Planalto — Lei nº 14.133/2021](https://www.planalto.gov.br/ccivil_03/_ato2019-2022/2021/lei/l14133.htm).

[2] BRASIL. Lei nº 15.040, de 9 de dezembro de 2024. Establishes rules for private insurance. Available at: [Planalto — Lei nº 15.040/2024](https://www.planalto.gov.br/ccivil_03/_ato2023-2026/2024/lei/l15040.htm).

[3] SUPERINTENDÊNCIA DE SEGUROS PRIVADOS. Insurance Contract Law enters into force, bringing greater clarity and legal certainty to the market. Dec. 11, 2025. Available at: [SUSEP — Insurance Contract Law](https://www.gov.br/susep/pt-br/central-de-conteudos/noticias/2025/dezembro/lei-do-contrato-de-seguro-entra-em-vigor-trazendo-mais-clareza-e-seguranca-juridica-ao-mercado).

[4] TRIBUNAL DE CONTAS DA UNIÃO. Engenharia de Custos em Obras Públicas — Um guia de perguntas e respostas. Brasília: TCU, 2026. Available at: [TCU — Infrastructure](https://portal.tcu.gov.br/infraestrutura).

[5] TRIBUNAL DE CONTAS DA UNIÃO. Acórdão nº 1.182/2025-TCU-Plenário. Risk matrix, mitigation, and insurance in engineering procurement. Available at: [TCU — Case-law search](https://pesquisa.apps.tcu.gov.br/).

[6] TRIBUNAL DE CONTAS DA UNIÃO. Acórdão nº 2.191/2025-TCU-Plenário. Risks, contingencies, insurance, and procurement criteria in public works. Available at: [TCU — Case-law search](https://pesquisa.apps.tcu.gov.br/).

[7] TRIBUNAL DE CONTAS DA UNIÃO. Acórdão nº 2.622/2013-TCU-Plenário. Reference BDI parameters for construction and engineering services. Available at: [TCU — Acórdão 2.622/2013](https://pesquisa.apps.tcu.gov.br/documento/acordao-completo/Acord%C3%A3o%202622%2F2013/%20/DTRELEVANCIA%20desc%2C%20NUMACORDAOINT%20desc/0).

Frequently asked questions

What is construction insurance?

It is the transfer, in exchange for a premium, of the financial consequences of defined project risks to an insurer, within the policy’s coverage, limits, deductibles, exclusions, and term.

Is engineering risks insurance the same as surety insurance?

No. Engineering risks insurance protects against damage and covered events during construction or erection. Surety insurance protects performance of the principal’s contractual obligations.

Can every construction risk be insured?

No. The risk needs to be lawful, future, random, technically definable, and capable of being underwritten. In addition, every product has its own exclusions, deductibles, limits, and conditions.

Where does the insurance premium enter the construction estimate?

According to TCU guidance, engineering risks insurance and surety insurance form part of BDI under the insurance and guarantees component, not the direct cost of physical execution.

Can the risk matrix indicate only ‘insurance’ as mitigation?

That is insufficient. The type of coverage, limit, term, deductible, responsibility, required evidence, and residual risk need to be defined.

Does insurance eliminate the need for contingency?

Not necessarily. Contingency should reflect the risks that remain after considering coverage, deductible, exclusions, and limits, avoiding double counting.

What happens if the project is extended and the policy expires?

The contract should provide for renewal or endorsement when necessary. Coverage needs to remain consistent with the project term and value at risk throughout execution.

Who should define insurance requirements in a public works project?

Definition should integrate planning, risk engineering, estimating, and procurement, with legal and insurance support where necessary. The requirement should be technically justified and compatible with the market.

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