Construction Insurance
Construction Works Insurance otherwise known as Contract Works insurance, is taken out to cover either a specific single project construction, or annually to cover all projects of a certain type.
Coverage is generally arranged by the principal or head contractor and provides access to two sections of coverage. Section one covers Material Loss or Damage and Section two covers both Public Liability and Products Liability for third party property damage or third party bodily injury arising out of the actions you are liable for.
What Is Construction Works Insurance?
Construction works insurance, also known as contract works insurance, provides essential protection for construction projects. Whether it's a single project or multiple projects under an annual policy, this coverage safeguards against material loss, damage, and liabilities arising during construction.
Designed for principals, contractors, and sub-contractors, this policy ensures that construction projects, materials, and third-party liabilities are protected from unforeseen risks.
How Does Contract Works Policy Insurance Work?
A contract works policy operates in two main sections:
- Material Loss or Damage: Covers accidental loss or damage to construction works, including formwork, scaffolding, temporary structures, and materials.
- Public and Product Liability: Protects against third-party bodily injury or property damage claims caused by construction activities.
Policies can be tailored as either:
- Turnover (Transfer) Policies: Covering all projects within the policy period but ceasing after the practical completion date.
- Run-Off (Contract Commencing) Policies: Covering projects initiated during the policy period until completion, including defect liability periods.
Types of Insurance Covered Within Construction Insurance
A construction works insurance policy can be tailored to include additional coverage such as:
- Builders Insurance: Coverage for builders to protect against unexpected risks.
- Contractors Insurance: Protection for contractors working on various projects.
- Design and Construct Insurance: Covers risks associated with design errors.
- Existing Structures Insurance: Protects pre-existing buildings undergoing renovation.
- Earthworks Insurance: Provides coverage for excavation and groundwork activities.
These options ensure comprehensive coverage for all aspects of a construction project.
Who is insured under Contracts Works policy?
Based on a Principal Controlled Insurance Programme (PCIP) the entities or persons normally insured by a Contract Works policy that will also reflect the provisions of the construction contract in place will include:
- The Principal
- Project Manager
- Any director or employee of above
- Any contractor or sub-contractor whereby a sub-contract or sub-agreement exists for the performance of any part or parts of the Contract Works.
What does Contract Works insure?
The policy schedule will describe the type of property or business activities that can be insured eg. Residential New Build, Renovations or Commercial construction project builds.
The actual work itself can comprises construction or erection itself including formwork, falsework, temporary works, temporary buildings, scaffolding, hoardings, principal supplied or free-issue materials, and materials for incorporation in the works. In some policies, insurers will agree to coverage for the pre-existing buildings or structure that is having renovation work or an alternation performed on it.
Advantages of Principal Controlled Insurance Programme (PCIP)
The major advantages of a principal having control over your construction insurances in comparison to individual contractors having separate Contract Works policies are that.
These include:
- Uniform level of coverage over a complete project. Individual contractors will have different cover levels.
- As a principal, you know if the policy is still in force, and not cancelled.
- Claim monies are paid to you as Principal unless you direct otherwise.
- Building construction insurance is covering in most cases significant dollar value assets.
- As insurers cover the complete project, there is no dispute between insurers and the proportion of liability following a claim.
- Massive reduction in your administration time, by not having to review individual contractor policies.
Standard Benefits within a Construction insurance policy
Standard automatic benefits in a Construction policy include:
- Removal of Debris - the costs of demolition and disposal of damaged Contract Works;
- Professional Fees - Architects’, surveyors’, consulting engineers’ fees necessarily incurred
- Expediting Expenses - the costs of overtime rates of wages, the hiring of additional labour and equipment, and the costs of purchasing resources necessary to repair or replace urgently damage to the Contract Works
- Mitigation Expenses - the reasonable costs and expenses incurred in containing, mitigating, suppressing or preventing further loss or damage to the Contract Works following insured damage.
What is not covered by Construction Policies
Construction insurance policies have various exclusions and limitations. In some cases these exclusions can be limited or restricted by agreement with insurers. We would recommend that the exclusions.
The major exclusions under Material Loss or Damage section are:
- Breakdown
- Consequential Loss
- Ocean Shipments
- Cessation of work after a certain period of time
- Defective Design, Material and Workmanship
- Wear, Tear and Gradual Deterioration
Major exclusions under the Liability section include
- Asbestos Liability
- Demolition greater than certain height
- Fines, Penalties
- Contractual Liability
- Use of Explosives
- Liquidated damages
Our experiences indicate the major exclusion that insurers apply upon, relates to incidents arising from Design, Material and Workmanship issues. We strongly recommend having a discussion on all exclusions, but certainly this one, when discussing coverage with your insurance broker. There are different types of exclusion wordings available in the market.
Additional coverage for Builders that may be added
Construction policies can be individually tailored to your needs and can include additional benefits such as:
- Contract of Sale extension
- Earthworks insurance
- Partially completed projects insurance
- Liquidated Damages (for Residential Buildings)
- Difference in Conditions insurance
- Contractors Pollution Liability insurance
- Display Homes insurance cover
- Construction Errors and Omissions insurance
- Existing Structure insurance
For a full discussion relating to these benefits, please discuss with Business Insurance Specialists.
Related covers to consider
There are other insurance products which can be considered by builders including:
- Design and Construct
- Builders Warranty Insurance
A residential Owner Builder who takes out their coverage can consider an Owner Builders policy also.
Why Choose Business Insurance Specialists?
Business Insurance Specialists is your trusted partner in securing comprehensive construction insurance solutions. We pride ourselves on delivering tailored coverage that addresses the unique risks and requirements of the construction industry. Whether you're managing a small renovation, a large-scale commercial project, or acting as an owner-builder, we have the expertise and resources to protect your investment.
Why Businesses Trust Us
- Industry Expertise
With years of experience, our team has an in-depth understanding of the complexities of the construction sector. From building and construction insurance to specialised policies like directors and officers liability insurance, we ensure you’re covered for the risks you face daily. - Tailored Policies
No two construction projects are the same, and neither are the risks. That’s why we offer bespoke solutions designed to fit your specific needs. Whether you’re seeking a comprehensive contract works insurance policy or coverage for individual contractors, we customise policies to provide the protection you need. - Comprehensive Support
From owner-builder insurance to contractors’ liability, we offer end-to-end coverage for every aspect of your project. Our policies include standard benefits like material damage, public liability, and additional options such as pollution liability and design coverage. - Risk Mitigation Advice
Construction projects come with inherent risks, but our proactive risk management advice ensures you’re prepared for the unexpected. We analyse your specific requirements and recommend policies that minimise potential liabilities while keeping costs under control.
Contact Us Today
Secure the right construction insurance policy with Business Insurance Specialists. Whether you need coverage for a single project or ongoing protection for multiple developments, our expert team is here to help.
Contact us today to speak with a specialist or request a no-obligation quote. Protect your projects, your team, and your business with confidence.