Contract Works Insurance Australia

Protect your construction project against insured loss or damage while work is underway.

Clarke Lyons Insurance offers contract works insurance enquiries for builders, contractors, developers and property owners. Whether you are planning a new build, extension, renovation or commercial fit-out, the insurance should reflect the project, construction contract and parties involved.

Request a contract works insurance quote from Clarke Lyons Insurance.

What Is Contract Works Insurance?

Contract works insurance covers specified physical loss of or damage to construction works during the insured project period, subject to the policy’s terms.

Depending on the arrangement, it may insure work in progress, materials awaiting installation and selected additional expenses following insured damage.

It is also commonly called construction works insurance or construction all risks insurance. Some arrangements include public liability, while others require liability cover to be arranged separately.

“All risks” does not mean every event or expense is covered. The wording, exclusions and selected sections determine the protection.

Who Should Consider Contract Works Insurance?

Contract works insurance is relevant to parties with a financial interest in building or construction work.

These may include:

Residential and commercial builders.
Head contractors.
Property developers.
Renovation and extension contractors.
Commercial fit-out contractors.
Owner-builders.
Property owners commissioning construction.

The construction contract may allocate responsibility for arranging insurance. Check who must obtain cover, whose interests must be insured and which property is included before work begins.

What Can Contract Works Insurance Cover?

The scope varies between policies. Relevant areas to review include the following.

Work in Progress

Protection for insured physical loss or damage to the construction works during the covered period.

Potential events may include fire, storm, theft, malicious damage or accidental damage, depending on the wording.

Construction Materials

Materials intended for incorporation into the project may be covered, subject to their location, ownership and the policy definitions.

Check whether cover includes materials delivered early or held away from the site.

Debris Removal and Professional Fees

Some policies provide allowances for eligible debris removal or professional expenses following insured damage.

Review whether these allowances sit within the main sum insured or have separate limits.

Transit and Off-Site Storage

Protection may be available for certain materials in transit or temporary storage. It should not be assumed to apply automatically.

Public Liability

Where selected, liability cover may address specified legal liabilities for third-party injury or property damage arising from the insured activities.

Check the policy sections individually. Cover for damage to the works does not establish cover for a claim involving a neighbour or visitor.

Contract Works Insurance vs Public Liability Insurance

Contract works insurance and public liability insurance address different losses.

Contract works cover concerns insured damage to the project itself. Public liability concerns specified legal liability for injury to other people or damage to their property.

For example:

A fire damages partially completed building works: assess the contract works section.
Construction activity damages a neighbouring property: assess the relevant liability protection.
An employee is injured: consider workers compensation arrangements separately.

One policy may combine sections, but the triggers, exclusions and limits can differ.

Single-Project vs Annual Contract Works Insurance

The appropriate arrangement depends on the business and its construction activity.

Single-Project Contract Works Insurance

A single-project policy is arranged for a particular project and insured period.

It may be suitable for a one-off development, owner-builder project, renovation or construction contract requiring a separate placement.

Annual Contract Works Insurance

An annual arrangement may cover multiple qualifying projects, subject to the policy’s inclusion rules, declarations and limits.

Before relying on annual cover, ask:

Which projects qualify?
What is the maximum contract value?
Are there limits on project duration or construction type?
Must individual projects be declared?
How are projects continuing beyond renewal treated?
What happens if a project exceeds an agreed limit?

An annual policy should not be assumed to cover every project a business undertakes.

Renovations, Extensions and Existing Structures

Cover for new work does not automatically insure the existing building.

This distinction is important when extending a house, refurbishing an office or completing structural alterations.

Establish:

Who insures the existing property.
Whether the existing insurer accepts the proposed works.
Whether existing structures are included in the contract works arrangement.
What value applies to those structures.
How damage caused by construction activity is treated.

For example, a renovation may involve a relatively modest contract value while exposing a much more valuable existing building to damage.

The builder’s policy and the owner’s property policy should be reviewed together before work starts.

Owner-Builder Contract Works Insurance

Owner-builders should assess the project’s physical damage and liability exposures alongside their other responsibilities.

Provide details of the work you will perform, the trades you will engage and how the site will be managed.

Contract works insurance should not be confused with statutory home building compensation, warranty or similar schemes. These serve different purposes, and requirements vary by jurisdiction and circumstances.

Check relevant obligations before proceeding with the project.

Does Contract Works Insurance Cover Defective Work?

The answer depends on the defects exclusion or clause in the policy.

A wording may distinguish between:

The cost of correcting defective work, materials or design.
Resulting damage to other parts of the insured works.

Do not assume either is covered without reviewing the applicable clause.

Contract works insurance also does not replace professional indemnity insurance for design or professional services. Businesses undertaking design-and-construct work should assess these exposures together.

Theft of Materials, Tools and Equipment

Theft protection needs to be checked against the property involved and the policy conditions.

Materials intended for incorporation into the works may be treated differently from portable tools, hired equipment or construction machinery.

Ask:

Which property categories are insured?
Are there security requirements?
Does cover apply to unattended sites?
Are materials stored off-site included?
Do theft limits apply?
Is hired-in plant covered separately?

A policy covering the construction project should not be assumed to cover everything kept on site.

When Does Contract Works Cover Start and Finish?

Confirm the attachment and termination provisions before construction begins.

Relevant milestones can include commencement, practical completion, handover, occupation and use. Different parts of a project may reach those stages at different times.

Ask how the policy treats:

Early occupation or partial handover.
Testing and commissioning.
Delays beyond the planned completion date.
Suspension or abandonment of work.
Work continuing after the original insured period.

A maintenance-period extension, where included, usually has a defined scope. It should not be treated as a general warranty for every defect or post-completion loss.

What Does Contract Works Insurance Not Cover?

Exclusions and limitations vary. Important areas to review include:

Defective work, materials or design.
Wear and tear and gradual deterioration.
Existing structures not specifically insured.
Tools, plant or machinery outside the selected cover.
Delay, lost revenue and contractual penalties.
Employee injuries.
Professional advice or design liabilities.
Uninsured activities or project changes.
Damage outside the insured period.

If a project delay could materially affect income or financing, discuss that exposure separately. Physical damage cover does not automatically include the financial consequences of delayed completion.

How Much Should a Project Be Insured For?

The insured value should follow the policy’s valuation requirements and reflect the complete scope of the works.

Discuss the treatment of:

Labour and materials.
Principal-supplied or owner-supplied items.
Contract variations.
Escalation in project costs.
Temporary works.
Debris removal and professional fees.
Existing structures, where included.
Applicable tax treatment.

Keep the declared value current when the scope changes. A construction budget and an insurance valuation may not include exactly the same items.

How Much Does Contract Works Insurance Cost?

A meaningful quotation requires details of the project and the parties undertaking it.

Relevant information includes:

Contract value and construction period.
Location and surrounding properties.
Building type and construction methods.
Excavation, demolition or structural alterations.
Contractor experience.
Existing structures.
Site security and risk controls.
Claims history.
Required limits and excesses.

Compare the proposed wording alongside the premium. A lower price may accompany an exclusion or limit that matters to your project.

Construction Contracts and Insurance Responsibilities

Provide your broker with the insurance requirements in the construction contract.

Check:

Who must arrange the insurance.
Which parties and interests must be covered.
Required limits and deductibles.
Responsibility for existing property.
Treatment of subcontractors.
Any insurance requirements imposed by a financier.

A certificate of currency is evidence of specified insurance. It does not establish that every contractual obligation is covered.

Obtain legal advice on contractual obligations where needed, and discuss their insurance implications before signing.

What Information Is Needed for a Quote?

Prepare:

The project address and description.
Construction contract and insurance requirements.
Project value and expected dates.
Plans and construction details.
Builder and contractor information.
Details of existing structures.
Excavation, demolition and neighbouring-property information.
Security arrangements.
Claims history.
Any work already commenced.

Raise unusual features early, including occupied premises, heritage elements, substantial earthworks or staged handovers.

What Should You Do After Damage Occurs?

Prioritise safety and notify your broker or insurer promptly.

Document the damage where safe, preserve relevant records and take reasonable steps to prevent further loss. Seek guidance before substantial repairs or disposal of damaged materials.

Keep photographs, invoices, site records and evidence of additional expenses. These may help establish the circumstances and value of the claim.

Contract Works Insurance FAQs

Who arranges contract works insurance: the builder or the owner?

The construction contract should identify the responsible party. Confirm the actual insurance arrangements and whose interests are covered before work begins.

Does the builder’s insurance cover my existing house?

Not automatically. Existing structures may require specific inclusion or separate protection. Review this with the builder, broker and existing home insurer.

Is contract works insurance the same as construction all risks insurance?

The terms are often used for similar construction damage protection. The wording and selected sections determine the actual cover.

Does contract works insurance include public liability?

Some arrangements include it; others do not. Check that the liability section has been selected and reflects the project activities.

Can insurance be arranged after construction has started?

Insurer acceptance may be possible, but cover should not be assumed to apply retrospectively. Disclose completed work, current conditions and any known incidents.

Does it cover flood or storm damage?

Check the insured events, exclusions, excesses and site-specific conditions. Neither should be assumed covered solely because the policy is described as “all risks”.

Are subcontractors’ tools covered?

Do not assume so. Their tools, liabilities and interests in the works may be treated differently. Confirm each party’s insurance responsibilities.

What happens if the project takes longer than expected?

Notify your broker before the agreed period ends. An extension may require insurer approval and revised terms.

Can Clarke Lyons help with a contract works insurance quote?

Clarke Lyons Insurance offers contract works insurance enquiries. Provide the project scope, value, construction dates and insurance requirements to discuss available options.

Request a Contract Works Insurance Quote

Understand how the project, existing property and relevant liabilities will be insured before construction starts.

Contact Clarke Lyons Insurance to request a contract works insurance quote or review the arrangements for your next project.

This information is general. Cover depends on insurer acceptance, policy wording, schedules, endorsements, limits and excesses.

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