Korea Construction All Risks Limit & Deductible Budget Calculator

Compare works, existing-property, and third-party PML with actual construction insurance limits and deductibles, then budget retained loss, a project extension, and three quote plans.

Scope first: the national-contract reference is not a universal construction limit

Use Chapter 14 of Korea’s National Contract Execution Standards only after the contracting officer and contract documents confirm scope. Private, local-government, public-enterprise, and overseas projects follow their own documents and policy wording. This tool does not decide placement, cover, liability, or claim payment.

1. Project and reference scope

The project label is a checklist aid and never selects a premium rate. Turn on the national-contract reference only after confirming applicability.

Project type

The national-agency construction-insurance standard is confirmed applicable

The tool does not decide Article 55 scope, including Decree Articles 78 and 97 or the specified KRW 20 billion-plus works.

KRW

For the national reference, the insured contract portion excluding VAT and insurance premium

KRW

Confirmed materials added to the national works reference amount

days

From commencement through takeover and commissioning when required

days

Additional days requiring a policy endorsement

2. Maximum probable loss scenario

Enter loss that could arise in one event. Amount, liability, and coverage remain subject to professional and insurer confirmation.

KRW

Modeled reinstatement cost for works and materials under construction

KRW

Principal-owned existing buildings or equipment requiring wording review

KRW

Modeled bodily injury outside the insured project parties

KRW

Neighboring buildings, vehicles, utilities, or other property

KRW

DSU/ALOP, delay damages, fines, or enhanced obligations kept outside the basic CAR payout

%

A user assumption, not a statutory or market-average rate

3. Actual limits and deductibles

Copy usable per-event values from the schedule, endorsements, or quote. Review aggregates, sublimits, and multiple deductibles separately.

Contract works cover

KRW
KRW

Existing-property endorsement

KRW
KRW

Third-party liability

KRW
KRW

PML limit rounding unit

4. Premium and extension budget

Use issued quotes instead of an invented project rate. A daily extension model appears only when an endorsement quote is unavailable.

KRW
KRW

Extension premium basis

%

User planning factor applied to the original daily premium

5. Deductible liquidity

Separate protected operating cash from the project budget assigned to the three deductibles in one event.

KRW

Cash available for reinstatement or third-party settlement

KRW

Cash retained for payroll, equipment, subcontractors, and site continuity

KRW

Budget for the combined deductibles in one event

Limit and deductible stress result

The model applies each deductible, then its coverage limit, while delay and penalty costs remain outside the basic payout.

Limit or endorsement review

Total modeled loss

KRW 1,850,000,000

Total candidate payout

KRW 1,580,000,000

Total retained loss

KRW 270,000,000

Premium plus expected retained loss

KRW 112,376,712

Protection ratio

85.4%

Maximum deductible cash in one event

KRW 35,000,000

Affordable combined ceiling

KRW 50,000,000

Works PML as project value

5%

Coverage and liquidity gaps

Coverage-limit gap

KRW 135,000,000

Uncovered or unconfirmed gap

KRW 0

Delay, penalty, and separate cost

KRW 100,000,000

Deductible capacity gap

KRW 0

Loss, deductible, limit, and candidate payout by coverage

Loss, deductible, limit, and candidate payout by coverage
CoverageStatusModeled lossDeductible appliedCurrent limitCandidate payoutRetained loss
Contract worksCover confirmedKRW 1,000,000,000KRW 20,000,000KRW 20,000,000,000KRW 980,000,000KRW 20,000,000
Existing propertyCover confirmedKRW 200,000,000KRW 5,000,000KRW 100,000,000KRW 100,000,000KRW 100,000,000
Third-party bodily and propertyCover confirmedKRW 550,000,000KRW 10,000,000KRW 500,000,000KRW 500,000,000KRW 50,000,000

Current, PML, and 120% stress limit plans

Current, PML, and 120% stress limit plans
Limit planContract worksExisting propertyThird-party bodily and propertyTotal
Current scheduleKRW 20,000,000,000KRW 100,000,000KRW 500,000,000KRW 20,600,000,000
Entered PMLKRW 980,000,000KRW 200,000,000KRW 540,000,000KRW 1,720,000,000
120% PML stressKRW 1,180,000,000KRW 240,000,000KRW 650,000,000KRW 2,070,000,000

Korean national-contract reference comparison

The reference is off, so official-reference gaps do not affect the assessment.

Works reference amount

KRW 21,000,000,000

Third-party per-event reference

KRW 500,000,000

Current works-limit shortfall

KRW 0

Current third-party shortfall

KRW 0

Premium, extension, and expected-risk budget

Base plus endorsement premium

KRW 90,000,000

Extension premium

KRW 8,876,712

Extension basis

Planning estimate

Total project premium

KRW 98,876,712

Total covered period

395 days

Premium per day

KRW 250,321

Expected loss without insurance

KRW 92,500,000

Expected candidate payout

KRW 79,000,000

Expected retained loss

KRW 13,500,000

Recheck schedules and contract documents

  • At least one claim candidate after deductible exceeds its entered limit.
  • Delay in start-up, delay damages, fines, and enhanced contractual liabilities remain outside the basic payout.
  • The extension premium is a planning value based on daily premium and a user factor, not an insurer quote.
  • Confirm insured parties, site, trade, method, commencement, takeover, commissioning and maintenance periods, existing property, vibration or removal of support, underground services, debris, cross liability, underinsurance, aggregates, and deductible mechanics.
  • The national-contract rule is not a universal limit for private, local-government, public-enterprise, or overseas works. The actual contract controls.

Core modeling assumption

The model applies a separate deductible and limit to contract works, existing property, and third-party loss, conservatively assuming all three deductibles can apply in one event. The 120% PML is a planning stress, not law. It does not interpret underinsurance, aggregates, sublimits, exclusions, or loss adjustment.

Related calculators

A construction insurance budget needs more than a premium quote

A Korean contractors’ all risks or construction all risks policy can combine accidental damage to the works with selected existing-property and third-party liability cover.
Matching the works sum insured to the contract value does not by itself prove that a maximum loss is affordable.
Category limits, deductibles, exclusions, policy dates, testing periods, and delay exposures can leave the project with a large cash obligation after one event.

What this calculator answers

  • How much the entered policy could pay under one simplified maximum credible loss scenario
  • How much remains because of deductibles, limits, missing cover, and excluded delay or penalty cost
  • Whether available liquidity and a project deductible budget can absorb the combined applied deductibles
  • How current, PML-sized, and 120% stress-limit plans compare before requesting quotes

The result is a planning scenario, not insurance advice, underwriting approval, a claim estimate, or a statutory-compliance certificate.
An insurer, mutual-aid association, broker, loss adjuster, engineer, and legal adviser may need to confirm the insured interest, cause of loss, wording, exclusions, valuation, other insurance, and liability.

The 2026 Korean national-contract reference is conditional

Article 53 of the Enforcement Decree of the Act on Contracts to Which the State Is a Party permits damage insurance or the relevant construction mutual aid for the contract works.
Chapter 14 of the Ministry of Economy and Finance Contract Guidelines, Government Tender and Contract Execution Standards, provides the detailed national-contract framework.
It is not a universal statutory limit for every private, local-government, public-enterprise, or overseas project.

Current Korean national-contract construction insurance references
ReferenceCalculator treatmentBoundary to confirm
Guideline Article 55Describes covered national works, including specified decree projects and certain works with an estimated price of at least KRW 20 billionThe calculator does not determine procurement type, trade, exception, or eligibility
Guideline Article 56Separates damage to the contract works from third-party liability coverExisting property, surrounding property, and delay loss require actual endorsements
Guideline Article 57Uses the insured net works value excluding VAT and insurance premium, plus government-furnished materials, and compares 1% of that amount with KRW 500 million for the per-event third-party referenceThe comparison appears only after the user confirms that the national-contract rule applies
Guideline Articles 59 and 60Highlights the period from commencement to takeover and the use of Insurance Development Institute or insurer data for ratesNo invented trade or market premium rate is built into the calculator
Guideline Article 73(4)Notes documented additional insurance cost for a qualifying extension not attributable to the contractorThe daily estimate is a provisional reserve, not the contractual adjustment or insurer invoice

Do not copy KRW 500 million or 1% into every project

The greater-of formula in Article 57 belongs to the applicable Korean national-contract guideline.
A private or differently governed public project can have a different owner requirement, loss profile, wording, and limit structure.
Leave the national-reference switch off unless the contracting officer or contract documents confirm its application.

Calculation method

Modeled policy payment

For a confirmed cover, the model subtracts the entered deductible and then applies the per-event limit.
For missing or unconfirmed cover, it sets the modeled payment to zero and treats the full loss as retained.

payment = min(limit, max(loss − deductible, 0))
retained loss = loss − payment

Cash deductible capacity

The capacity is the smaller of the project retention budget and liquidity remaining after the protected operating reserve.
It is rounded down to KRW 100,000 so a transient balance is not presented as precise capacity.

capacity = min(max(liquidity − protected reserve, 0), budget)
deductible gap = max(combined applied deductibles − capacity, 0)

Extension premium reserve

Quote mode uses the entered endorsement amount exactly, including a confirmed zero amount.
Planning mode prorates the actual base and optional-cover premium quotes together and applies the user’s extension risk factor.

reserve = (base premium + optional-cover premium) ÷ original days × added days × factor

Expected total risk cost

The incident probability is a user assumption, not a statutory or market average.
The model adds probability-weighted retained loss to the total premium budget for scenario comparison.

expected cost = total premium + probability × total retained loss

A low expected value is not permission to reduce catastrophic protection.
Review the one-event retained loss and the deductible-capacity result separately because a low-frequency event can still stop the project or impair payroll and subcontractor payments.

Step-by-step workflow

  1. Enter the project type, net insured works amount, government-furnished materials, original duration, and extension days.
    Turn on the national reference only after the contract documents or contracting officer confirm that the guideline applies.
  2. Enter one credible simultaneous loss for the works, existing property, third-party bodily injury, and third-party property damage.
    Keep penalties, liquidated damages, and DSU or ALOP exposure in the separate excluded-cost field unless an actual endorsement confirms cover.
  3. Copy each cover status, limit, and deductible from the policy schedule, endorsements, or insurer quote.
    Confirm whether third-party bodily injury and property damage share one limit and whether deductibles apply by event, cause, trade, or affected section.
  4. Enter actual base and endorsement premium quotes.
    Use quoted-extension mode when an endorsement offer exists and planning mode only as an internal reserve before that quote arrives.
  5. Enter current liquidity, the operating reserve that must remain untouched, and the amount formally budgeted for project retention.
    If the combined applied deductibles exceed capacity, compare different deductibles or a larger dedicated budget.
    Compare total retained loss, including limit and uncovered gaps, with separate reinstatement funding and review higher limits, endorsements, and engineering controls together.

Worked example using the default scenario

The default scenario is a KRW 20 billion works amount, KRW 1 billion of government-furnished materials, 365 original days, and a 30-day extension without confirmed national-contract application.
Its modeled loss is KRW 1 billion to the works, KRW 200 million to existing property, KRW 300 million bodily injury, KRW 250 million third-party property damage, and KRW 100 million of separate excluded delay or penalty cost.
These values are an arithmetic example and must be replaced by the project’s risk survey and quotes.

Default construction insurance scenario result
CategoryModeled lossModeled paymentRetained loss
WorksKRW 1.00BKRW 980MKRW 20M
Existing propertyKRW 200MKRW 100MKRW 100M
Third partyKRW 550MKRW 500MKRW 50M
Covered-loss totalKRW 1.75BKRW 1.58BKRW 170M

Adding KRW 100 million of excluded delay cost produces total retention of KRW 270 million and a modeled protection ratio of about 85.4%.
With KRW 200 million liquidity, a KRW 100 million protected reserve, and a KRW 50 million project deductible budget, deductible capacity is KRW 50 million.
The KRW 35 million of applied deductibles fits that capacity, so the deductible gap is zero, while the KRW 270 million total retained loss still needs comparison with separate reinstatement funding.
A KRW 80 million base quote, KRW 10 million endorsement quote, and a 120% planning factor produce an extension reserve of about KRW 8.88 million for 30 days and a total premium budget of about KRW 98.88 million.

The three limit plans are quote requests, not official recommendations

Current policy

Shows the entered limits and deductibles unchanged.
Use it to explain the current modeled gap before renewal.

PML-sized plan

Rounds each entered covered loss upward to the selected quote unit.
It does not guarantee capacity, price, or underwriting acceptance.

120% stress plan

Rounds 120% of each PML upward to the selected quote unit.
The 120% margin is an internal stress assumption, not Korean law or an industry standard.

A complete quote comparison should also identify existing and surrounding property, debris removal, professional risk, natural-peril sublimits, third-party bodily injury and property structure, aggregate limits, deductibles, and policy-period wording.
A higher numeric limit cannot fix an exclusion that removes the project’s main loss cause.

Project scenarios that deserve separate review

Renovation and existing property

A building or machine that is not part of the contracted works may not be automatically protected by the works sum insured.
Confirm the existing-property endorsement, vibration and weakening support, underground services, limit, and deductible before marking cover as confirmed.

Dense urban third-party exposure

One event can affect pedestrians, neighboring buildings, vehicles, retailers, and underground utilities.
This model combines bodily injury and property loss under one entered third-party limit, so verify whether the actual schedule uses separate, shared, per-person, or aggregate limits.

Typhoon, flood, and fire accumulation

Where one cause can damage several work zones at the same time, avoid using only the largest single-task repair amount.
Ask about natural-peril sublimits, water-control duties, waiting periods, debris removal, and the time needed to rebuild completed work.

Completion delay and owner loss

Physical reinstatement cost, financing cost, lost revenue, and liquidated damages are not necessarily the same cover.
Unless DSU or ALOP wording, waiting period, indemnity period, and insured amount are confirmed, leave delay cost in the separate uncovered field.

Frequently asked questions

Does insuring the full contract value eliminate underinsurance

Not necessarily.
Commercial Act Article 674 provides a default proportional approach to underinsurance unless otherwise agreed, while actual valuation wording, work progress, existing property, third-party sublimits, and endorsements can still change the outcome.

Is KRW 500 million always enough for third-party liability

No.
Even when Article 57 applies, the national-contract comparison is the greater of 1% of the relevant works amount and KRW 500 million.
A private project should use its contract requirement, credible loss, surrounding exposure, and actual quote.

Is one deductible always applied once per event

The policy’s event definition and category structure control the answer.
This simplified scenario applies one entered deductible to each of works, existing property, and third-party cover, so multiple sections, causes, trades, or catastrophe deductibles require a separate reconciliation.

Is the extension premium always a daily pro rata amount

No.
Progress, changed hazards, claims, endorsements, and underwriting terms can change the price.
A national-contract adjustment under Article 73(4) also depends on the cause, contractual conditions, and documented actual cost.

Does an insurance payment remove the duty to reinstate the works

Guideline Article 65 directs insurance proceeds toward reinstatement for the applicable national contract and does not treat delay or insufficiency of proceeds as an excuse from restoration.
A private contract can also separate the contractor’s completion duties from the insurance claim, so review the contract wording.

Documents to collect before relying on the result

Project evidence

  • Construction contract, priced schedule, furnished-material list, and programme
  • Policy schedule, endorsements, limit pages, and deductible terms
  • Risk survey and works, existing-property, and surrounding-property PML
  • Base, optional-cover, and extension quotes from the insurer or mutual-aid association
  • Cash-flow forecast, protected operating reserve, and approved risk reserve

Schedule questions

  • Are the owner, main contractor, subcontractors, and other named insureds correct
  • Are the site, full policy period, testing, and maintenance periods included
  • Are existing property, vibration, underground services, and debris removal covered
  • Are bodily injury and property limits combined, separate, per person, or aggregated
  • What exclusions and deductibles apply to flood, typhoon, fire, theft, and design defects

When sending the three plans for quotation, label every loss amount and margin as an internal assumption and compare the returned cover, exclusions, and premium in separate columns.
The cheapest premium may be poor value if the remaining one-event obligation exceeds the contractor’s actual cash capacity.

Official sources and verification date

The following current texts were checked through Korea’s National Law Information Center on August 9, 2026.
The Government Tender and Contract Execution Standards used here are Ministry of Economy and Finance Guideline No. 148, effective April 30, 2026.
Recheck amendments, special contract conditions, procurement instructions, and policy wording before contracting or renewal.

  • Enforcement Decree of the Act on Contracts to Which the State Is a Party, Article 53, law ID 002652, effective June 3, 2026.
  • Government Tender and Contract Execution Standards, Chapter 14 Articles 55–65 and Article 73(4), administrative-rule ID 34470, effective April 30, 2026.
  • Framework Act on the Construction Industry, Article 56(1)(5), law ID 001808, effective November 27, 2025.
  • Commercial Act Articles 674, 719, and 720, law ID 001702, effective July 23, 2026.
  • Civil Act Articles 750 and 758, law ID 001706, effective March 17, 2026.

Put the actual schedule beside the project PML

Reviewing category losses, limits, deductibles, extension cost, and liquidity together makes the next quote request easier to prioritize.
Save the source document and verification date behind each input so a stale assumption is not silently reused at the next renewal.