What Every Builder Should Know About Contract Works Insurance

Upgrading your qualifications to become a builder is a fantastic achievement and means you can now delve into those larger projects you may have been wanting to manage. It’s important to know that with your new qualification comes new responsibilities and this can raise some questions, particularly with regards to insurances.

Below are some commonly asked questions and a brief overview to get you started…

What is Contract Works Insurance?

Contract Works Insurance, sometimes referred to as construction insurance, is a familiar term to many builders. This insurance is a common requirement for building contracts, and financial institutions generally need it for loan security.

But something you need to be aware of is: there is no one policy that suits all situations. Therefore builders should take particular care when arranging a policy.

Contract Works Insurance policies insure the construction-related activities of a construction project in one package policy. The policy covers the interests of all parties involved in the development. Covered parties include:

• the project owner
• general contractor
• subcontractors
• materials and equipment suppliers (in some cases)

What does Contract Works Insurance cover?

Contract Works Insurance covers accidental risks of physical loss or physical damage to the contract works during construction, as well as third party liabilities.

Limits under Contract Works Insurance policies are based upon the full estimated contract value. Sub-limits apply to certain coverage extensions, and a specific limit will apply to the Public and Products Liability section.

Public and Products Liability provides protection for amounts you may become legally liable to pay for compensation in respect of third party personal injury or property damage (as a result of an occurrence in connection with your business activities).

Contract Works Insurance is an all-risk policy that is subject to policy conditions.

This article was supplied by Kerri Day, ANZIIF (Snr Assoc) CIP, DipIB. Kerri is the Managing Director for Paragon Insurance Solutions.

Paragon Insurance Solutions Pty Ltd ABN 89 611 364 222 is a Corporate Authorised Representative No.1240843 and Kerri Day is an Authorised Representative No. 309302 for Oracle Group (Australia) Pty Ltd ABN 75 131 025 600 AFSL 363 610. Information provided in this fact sheet is of a general nature and may not suit your circumstances.