Contract Works Insurance

Contractors all risk and contract works insurance explained

Contract works insurance will help protect the work in progress on a construction site in the event of damage before responsibility has been handed to your principal. The cover can reinstate or repair the building works resulting from any type of damage, hence the cover is referred to as 'all-risks'.

 Contract works insurance from the Willis Towers Watson Network

What is contract works insurance?

If you are buildings a new house or extending an existing structure and the new structure is destroyed or damaged before it is finished, you would face a financial loss. Contract works insurance protects you against accidental loss, damage, or destruction to the work in progress. Covering the cost of the additional labour and materials required to put you back in the position you were in just before the damage occurred. The damage could occur at any point during the contract. 

 Allianz contract works logo
 Chubb contract works logo
 HSB contract works logo
 Zurich contract works logo

Why do you need contract works insurance?

Contract works insurance or contractors all risk insurance protects building works in progress for loss or damage during the construction period. If you are a builder or tradesman involved in the construction, then your contract could make you responsible for any unfinished work onsite.

You can buy insurance that protects you if a job is damaged or destroyed before it is finished, therefore avoiding the potential financial loss of losing work or materials already paid for. Contract works insurance puts you back in the position you were before the loss or damage occurred. 

The contract you sign, whether that is a JCT contract or not, should specify who is responsible for insuring what.

 What is contract works insurance?

How much does contract works insurance cost?

The cost of contract works insurance depends on a few things, the type of work you carry out, the scale of the project, and the level of construction insurance required. The cover level is the total cost of your largest project including the cost of labour and materials. A contract works insurance policy can be a stand-alone policy or combined with public liability, employers' liability, tools, and hired in plant insurance, depending on the nature of your business and your requirements.

 Contract works value

Contract value

The maximum size of the contract you will be undertaking should mirror the sum insured, the higher the cover the more expensive premium.

 Building construction

Building construction

Timber framed, modular construction, high rise buildings, commercial and industrial projects, will all increase the cost of contracts works insurance.

 Building site environment

Building environment

If the building site has a greater exposure flood, storm, or theft, insurers want to better understand how you have sought to mitigate the risk.

Secure the necessary contracts works insurance to meet your contractual obligations

When combined under a contractors all risk insurance policy, the combined cost can start at £468 annually

What can a contract works insurance policy cover?

Contract works

The core cover offered is contract works insurance which offers protection against accidental loss, damage, or destruction to the work in progress on site. Covering the cost of the additional labour and materials required to put you back in the position you were in just before the damage occurred.

Own plant or equipment

A contract works policy can also insure your plant or equipment against things such as accidental damage, fire, and theft. Own plant is usually covered in the UK and while in transit. The sum insured on the policy will be the market value of the machinery.

Hired-in plant or equipment

A contract works policy can also insure hired in plant, which could be large, or specialist machinery brought in to complete a job. If you hire machinery the conditions of hire can make you responsible for the plant while it is in your possession. Own plant insurance gives you peace of mind if the plant is damaged, lost, or stolen. The premium is based on your annual hire charges.

The lender has requested to be named as a first loss payee

Where there is a lender or someone with a financial interest in a property a clause can be added to a contract works insurance policy called “first loss payee” this gives lenders control over the payment of claims which means the insurer is required to make payment to the lender directly i.e., the lender gets paid first. There is sometimes a monetary limit so small claims are paid without delay or consultation.

Project specific contract works

To add a first loss payee to a contract works insurance policy, insurers will only provide cover on a project specific basis. They need to know the site address of the build, duration of the contract, the value of the contract, full registered company name of the lender and address.

Additional information to secure cover

If you have created a new company or SPV for the build, insurers will want a bio of the principals to appreciate if there is sufficient experience to manage the project. It is also preferable that site plans, a Gantt chart, fire safety controls, and flood risk assessments are also provided.

Frequently asked questions

How much contract works insurance do you need?

It is always important to buy the right level of cover, your contract works insurance sum insured should be the total cost of your biggest project, including materials and labour. It is important to get this right to avoid underinsurance.

How much as contract works insurance cost?

The price of your policy is then calculated on the contract value, the type of project, and any additional security features. Timber frame projects, modular builds, flood zones, and high value building projects, can have a significant impact on the price and availability of cover.

Can you provide an example contract works insurance claim?

Here are some of the types of claims we see on contract works insurance policies. (1.) A site is broken into, and an excavator is stolen. (2.) A storm causes damage to the roof of a house undergoing renovations. (3.) A generator is stolen from a trailer while parked in the services on its way to the site

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