Insurables — Australian business risk, sourced and dated
Cover type

Contract works insurance: what it covers and who carries it

Cover for the works under construction, materials and sometimes existing structures for the duration of a contract.

Data as at · refreshed by scripts/seed-graph.mjs

In short

  • Contract works insures the thing being built while it is being built, along with materials on site and often existing structures being worked on.
  • It is project cover with a start and an end, not an annual policy about a business.
  • It answers a different question from liability cover, and contracts frequently demand both.

Contract works, sometimes called construction works or contractors all risks, covers the works themselves during construction. If a half-built structure burns down, is damaged by storm, or is vandalised before handover, this is the cover that rebuilds it.

The distinction that matters is direction. Liability cover looks outward at what the work damaged; contract works looks inward at the work itself.

Also called: contract works, construction works insurance, contractors all risks

What sits inside the cover

The insured property is the works in progress, the materials waiting to be installed, and frequently the existing structure where the job is an extension or a renovation. Temporary works and site huts are commonly included, and plant is usually covered separately.

Because the value of the works rises as the job proceeds, the sum insured has to reflect the completed contract value rather than the value on the day the policy started.

Who arranges it, and who is named

On residential work the builder usually arranges the cover; on larger projects a principal may take out a single policy covering everyone working on the site. Which of those applies changes who can claim and who bears the excess.

Where a principal arranges the cover, subcontractors are commonly named or covered as insureds, and the waiver of subrogation clause is what stops the insurer recovering from them afterwards.

What people get wrong about it

The first error is assuming public liability covers damage to the works. It does not; the works are what the contractor is being paid to produce, not third party property.

The second is letting the policy expire at practical completion when a defects liability period still runs, leaving a gap exactly when rectification work is most likely.

The third is insuring the contract price rather than the cost of reinstatement, which are not the same number once demolition, debris removal and professional fees are counted.

Questions

Do I need contract works if I already have public liability?
They cover different things. Public liability responds to injury and to damage to property belonging to others; contract works responds to damage to the works being built. Construction contracts commonly require both, and the contract is the document that says which.
Does it cover my plant and tools on site?
Usually not as the main insured property. Mobile plant is generally written under plant and equipment cover, and hand tools under tools of trade, though policies vary and the schedule governs.

Clauses that turn up in this cover

  • Interested party — A person or entity noted on a policy because they have a financial interest in the insured property or work.
  • Waiver of subrogation — A clause under which the insurer gives up its right to recover from a named party after paying a claim.
  • Average or co-insurance — A clause reducing a claim payment proportionally where the sum insured is less than the value at risk.
  • Contract works compared with liability cover — The distinction between insuring the work itself and insuring liability to others for damage caused by the work.

Occupations that commonly carry it

Ordered by how central this cover is to each occupation in the graph. A pattern in the data, not a statement that any business is required to hold it.

  • Builders — Licensed building work as principal contractor on residential or commercial projects.
  • Civil contractors — Roads, drainage, subdivisions and utilities work, usually under principal-supplied contracts.
  • Swimming pool builders — Construction of in-ground and above-ground pools, including barriers and certification.
  • Shopfitters — Fit-out of retail and commercial tenancies, usually working to a landlord’s conditions.
  • Structural steel erectors — Erection of structural steel frames, portal frames and mezzanines.
  • Formworkers — Construction and stripping of formwork for suspended slabs, walls and columns.
  • Carpenters — Structural and finish carpentry, framing, formwork and fit-out.
  • Roofers — Roof installation, restoration and plumbing-adjacent roof drainage work at height.
  • Asphalt contractors — Surfacing and resurfacing of roads, car parks and driveways with hot-mix and bitumen.
  • Waterproofers — Membrane and tanking work to wet areas, balconies, roofs and below-ground structures.
  • Steel fixers — Placing and tying reinforcement before concrete pours.
  • Consulting engineers — Structural, civil and services engineering design and certification.
  • Landscapers — Hard and soft landscape construction, including retaining, paving and irrigation.
  • Architects — Registered architectural design, documentation and contract administration.
  • Irrigation contractors — Design and installation of irrigation systems for farms and grounds.
  • Signwriters — Design, fabrication and installation of signage, often at height or on shopfronts.
  • Quantity surveyors — Cost planning, measurement and progress certification on construction projects.
  • Building designers — Residential and light commercial design outside the registered architect pathway.
  • Interior designers — Interior specification, documentation and procurement for homes and workplaces.
  • Agricultural contractors — Contract farm work such as sowing, baling and cultivation using own machinery.

How it is evidenced

Sources