What Is Contract Works Insurance?

Contractors face a number of risks when working on a construction or service project. Some of these risks can be managed by taking out insurance, but not all contractors know they may need cover in place before starting work. This article will help you understand what contract works insurance is and how it can protect you if something goes wrong on the job.

Contract works in short

• Contract works insurance is an insurance policy that can protect contractors and subcontractors against loss or damage to the works (the building or structure being built, and the materials on site) during the course of a project.
• It can apply when you are engaged to build on a building, land or other structure, such as an extension, a new house or a garage, depending on the policy.
• Contractors can take out contract works cover on its own, or as part of a package that also includes public liability insurance.
• Contract works insurance is also known as contractors all risks insurance.

What it pays for, in one line

Repairing or replacing damage to the works and the materials on site from insured events such as fire, theft, storm or accidental damage, up to the policy limits and less the excess. Injury to your workers is a workers compensation matter, and claims from other people are public liability. See what contract works insurance covers.

What a policy covers depends on its wording, limits, excesses and exclusions, and the insurer decides whether a claim is paid, so read the PDS (product disclosure statement) or policy wording before you decide.

When do you need contract works cover on a job?

Start with the contract: the head contract's insurance clause usually says who insures the works. Read what a head contract usually asks for before you sign.

• Builders and principal contractors on a head contract are usually the ones asked to insure the works, on an annual policy or one for a single project.
• Trades who contract directly with the owner on construction work, including renovations and extensions, may need cover for the works they build.
• Subcontractors are often covered by the builder's policy, but check your subcontract. Do subcontractors need contract works?
• Lenders and head contractors often ask to see contract works cover before work starts.

Cover usually runs until handover, so check the period the policy sets.

What are the components of contract works insurance?

Contract works insurance and the packages it is often sold in can provide cover for a number of potential risks, including:

• Cover for damage to the works under construction, from insured events.
• Cover for materials on site that are part of the works.
• Cover for your tools and equipment on site, under some policies or as an option.
• Public liability, when it is included in the package: it can protect against claims from other people who are injured, or whose property is damaged, because of the work you or your staff carry out.

Injury to you is not part of contract works cover; personal accident and illness insurance is a separate policy, and injury to your employees is a workers compensation matter.

Contract works insurance is worth a look if you build or renovate under contract and the contract makes you responsible for the works, including if you work for yourself. If you have questions about which cover suits your work, contact us.