Insurance Requirements for Government Projects Malaysia: JKR, CIDB & MOF Compliance Guide
Malaysian government contracts require specific insurance coverage including Contractor's All Risks, performance bonds, workmen's compensation, and third party liability. This guide covers JKR, CIDB, and MOF requirements for contractors bidding on public sector projects.
Win a government tender in Malaysia, and you'll face insurance requirements that can make or break your project. Missing even one mandatory policy can disqualify your bid or trigger contract termination.
This guide breaks down exactly which insurance policies Malaysian government contracts require, the coverage amounts specified in JKR contracts, and how to structure your protection to meet MOF and CIDB compliance.
This guide covers:
- Mandatory insurance types for government projects
- Performance bond requirements by contract value
- JKR PWD 203/203A insurance clauses explained
- Coverage periods including defects liability
- Common compliance mistakes that cost contractors
Government Project Insurance Overview
Malaysian government contracts, particularly those administered by JKR (Jabatan Kerja Raya), require contractors to maintain several insurance policies throughout the project lifecycle. The standard PWD Form 203 and 203A contracts specify these requirements explicitly.
Failure to maintain required insurance allows the government to effect coverage on your behalf and deduct premiums plus on-cost charges from your payments. Worse, it can lead to contract termination and blacklisting from future government projects.
| Insurance Type | Requirement | Coverage Period |
|---|---|---|
| Contractor's All Risks (CAR) | Mandatory | Site possession to Certificate of Making Good Defects |
| Third Party Liability | Mandatory | Site possession to Certificate of Making Good Defects |
| Workmen's Compensation | Mandatory | Throughout contract period |
| Performance Bond | Mandatory for contracts over RM200,000 | Until 12 months after DLP expiry or CMGD issuance |
| Design Guarantee Bond | Design-build contracts only | 5 years from practical completion |
CIDB Registration: The Foundation of Government Tenders
Before discussing insurance, understand that CIDB registration is your entry ticket to government construction projects. Under Section 25 of Act 520 (Amendment 2011), all contractors must register with CIDB before undertaking construction work in Malaysia. Operating without valid registration carries fines between RM10,000 and RM100,000.
Your CIDB grade determines the maximum contract value you can tender for. This directly impacts your insurance requirements since coverage amounts scale with project value.
| CIDB Grade | Maximum Tender Value | Minimum Paid-Up Capital |
|---|---|---|
| G1 | RM200,000 | RM5,000 |
| G2 | RM500,000 | RM25,000 |
| G3 | RM1,000,000 | RM50,000 |
| G4 | RM3,000,000 | RM150,000 |
| G5 | RM5,000,000 | RM250,000 |
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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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