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Compulsory Professional Liability Insurance for Designers and Contractors in Hungary

Compulsory Professional Liability Insurance for Designers and Contractors in Hungary

Hungary
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A Government decree has been published recently on the compulsory professional liability insurance of designers and contractors relating to the construction of buildings under 300 sqm subject to simple notification.

Under the Government decree, the construction and the design contract shall contain, as an obligatory element, a declaration of the contractor or the designer stating that he has or will have the necessary professional liability insurance at the time of handover of the work site at the latest. According to the new rules, as long as the contractor does not provide the professional liability insurance, the construction work site shall not be handed over to the contractor, the construction log-book shall not be opened and the construction shall not be commenced. 

The Government decree amends the competence of the construction supervisory authority, which now checks or may check whether the designer or the contractor has the necessary professional liability insurance. Failing to obtain such insurance shall be considered as a serious infringement, and in this case, the authority may prohibit continuing the construction activities. The Government decree also determines in detail the damages that shall be covered by the professional liability insurance, the insurance amount and the period of maintaining the insurance policy. The new rules will enter into force on 1 January 2017. 

By Eszter Kamocsay-Berta, Partner, KCG Partners Law Firm

Hungary Knowledge Partner

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