What is Contract Works Insurance?
Simply put, Contracts Works Insurance has two key sections, the first provides cover for physical loss or damage to the works and the second covers personal injury or damage to third parties' property. It can also cover tools and equipment owned by the business on and off-site.
This insurance can cover contractors from preparation at the workshop through to onsite construction, then maintenance, testing and commissioning.
With this in mind, Contract Works Insurance can easily be customised to each contractor’s individual needs, from civil, commercial, new building or refurbishment to individual trades such as electrical, plumbing or formwork.
Why is Contract Works Insurance important?
Contract Works Insurance is a package of insurance covers designed specifically for builders and contractors of any size. This insurance can help contractors financially survive if there is an accident or some type of damage to the works during construction, someone is injured, or valuable plant & equipment is lost or damaged. This insurance is an invaluable way to transfer your larger financial risks to an insurer for a fixed premium, and so minimise your risk. Many head contractors and principals also require builders to have this insurance in place
What does Contract Works Insurance cover?
Section 1 Material Loss or Damage - provides cover for physical loss or damage to:
• The works under construction;
• Materials to be incorporated into the project, either at the site or stored off-site;
• Temporary structures; and
• principal’s existing buildings.
Section 2 – Public and Products Liability - provides cover for injuries to other contractors working on the site during the construction (public liability), also damage to property which was built or completed, once for have left the site (your product). For example, support for a wall was not built correctly, and the wall collapses a year after the work was finished. Damage to the wall would be covered.
Section 3 – Plant & Equipment – provides cover for loss, damage or theft of your Construction Plant, Tools & Equipment.
What doesn't it cover?
While contract works policies are designed to cover accidents, it is important to note that they will contain exclusions, such as faulty workmanship, materials or faulty design, or any asbestos-related losses that will not be covered by this insurance. So, in the above example with the wall, the cost to rebuild the faulty support would not be insured, only the resulting damage to the wall and clean-up costs. Policy wordings differ, so it’s important to read and understand the exclusions in your policy.
Lastly, contract works insurance can also be specifically extended to cover principals and financiers, also your contractors or sub-contractors etc., while working at the site, to ensure that your policy cover loss or damage, even though it was caused by a contractor or sub-contractor such as the owner, the contractor, subcontractors, architects, and others.
While contract works policies are designed to cover loss, damage and accidents, it is important to note that the policy will, like any insurance policy, have exclusions. For example, faulty workmanship, faulty materials or faulty will not be covered by this insurance. So, for example, if a wall collapsed due to faulty workmanship, the cost to rebuild the wall would not be covered, however, if anyone was injured or the surrounding property was damaged, your insurer will pay for these costs and any legal expenses. Policy wordings and cover differ from insurer to insurer, so it’s important to talk to your insurance adviser about your policy.
At Insurance Advisernet, your insurance adviser is a qualified professional and will discuss with you your business objectives, goals and financial situation to create a risk profile. This will form the basis of their recommendation as to the type and amount of insurance, excess, and potential retention of any risks by you, so you can make a fully informed decision on your risks and insurance.
Frequently Asked Questions
● What is construction insurance?
Contract works insurance, also known as Construction insurance, is part of a package of insurance designed specifically for builders and contractors of any size. It covers material loss or damage to the works under construction, materials to be incorporated into the project, and temporary structures.
Finally, the policy usually also covers the builders' or contractors’ tools, plant & equipment against accidental loss, damage or theft.
● What is public liability insurance?
Public & Products Liability insurance for builders provides cover for injuries to other contractors working on the site during the construction (public liability), also damage to property, which was built or completed, once for have left the site
● Does a builder need contract works insurance?
This type of insurance package is standard for the building and construction industry and is well known. Many head contractors, principals and financiers require this insurance to be in place before starting on-site. This insurance is specifically designed to limit your financial risk relating to personal injury, accidental loss or damage happening on-site. You can also be insured for loss or damage caused by your contractors or subcontractors while working at the site. In addition, once you leave the site, personal injury or property damage arising from the completed works are also insured.
● How much does contract works insurance cost?
The cost of purchasing contract works insurance varies depending on the type of work, is it near or on water, or is it plumbing, roofing or a high-rise building? Other underwriting factors include prior claims, the length of the project, the defects liability period, the total sum insured, and is it a one-off project or is the building doing these throughout the year. Your Insurance Advisernet adviser is a specialist in construction insurance and can work with you to assess your risks and recommend the best solutions, including any insurance coverage.