CGL Insurance for Contractors Malaysia: What Projects Actually Require It (2026 Guide)
Commercial General Liability (CGL) insurance isn't legally mandated in Malaysia, but it's often contractually required for government tenders, oil and gas projects, and work with multinational clients. This guide explains exactly which projects require CGL coverage, typical limits, and how to structure your policy correctly.
You've won a tender. The contract lands on your desk. Then you spot it buried in the fine print: "Contractor must provide valid CGL insurance coverage of not less than RM1,000,000."
Without the right Commercial General Liability policy, that contract you worked months to win becomes worthless.
This guide covers:
- Which Malaysian projects actually require CGL insurance
- The difference between CGL and the third-party liability in your CAR policy
- Typical coverage limits by project type and industry
- How to structure your CGL policy to meet tender requirements
- Common mistakes that get contractors disqualified
What Is CGL Insurance and Why Do Malaysian Contractors Need It?
Commercial General Liability (CGL) insurance protects contractors against legal liability for property damage or bodily injury to third parties caused by your business operations. It covers claims arising from accidents at work sites, damage to client property, and injuries to members of the public.
Here's the critical distinction: CGL is not the same as the third-party liability section in your Contractor's All Risks (CAR) policy. CAR covers project-specific risks during construction. CGL covers your ongoing business operations, including work at multiple sites and completed operations after project handover.
A contractor in Malaysia might have CAR insurance for a specific building project, but still need separate CGL coverage if a ceiling panel they installed six months ago falls and injures someone. CAR won't cover that claim because the project is complete.
Is CGL Insurance Legally Required in Malaysia?
No, CGL insurance is not mandated by Malaysian law for all businesses. The government doesn't require contractors to carry CGL coverage the way it requires SOCSO contributions or workmen's compensation.
But here's the catch: while it's not legally required, it's often contractually required. Government tenders, oil and gas projects, and contracts with multinationals routinely specify minimum CGL coverage as a tender condition.
| Requirement Type | CGL Requirement | Typical Minimum Limit |
|---|---|---|
| Malaysian Law | Not required | N/A |
| Government Tenders (PWD/JKR) | Often required | RM1,000,000 - RM5,000,000 |
| Oil & Gas (PETRONAS licensed) | Required | RM5,000,000 - RM10,000,000+ |
| Multinational Clients | Usually required | RM2,000,000 - RM5,000,000 |
| Commercial Landlords | Often required | RM1,000,000 - RM2,000,000 |
| Private Sector (General) | Varies by contract | RM500,000 - RM2,000,000 |
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If you're managing a construction project, industrial facility, or commercial property in Malaysia and need insurance coverage, we can help structure a program that works.
Foundation Insurance Solutions is a registered and licensed insurance intermediary in Malaysia specialising in property and engineering insurance for industrial operations. We provide comprehensive coverage for manufacturers, contractors, and facility owners across construction, electronics, food production, and high-risk industrial sectors.
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