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If you’re unsure whether you need contract works insurance or what it covers, keep reading for an easy-to-understand definition, some claim examples, and a quick guide to purchasing this insurance.

Contract works insurance is insurance for builders and other tradespeople that covers ongoing work on a job site. It may pay to repair or redo ongoing work if it is damaged by an insured event such as fire, flood, storm, vandalism, or theft.

Is contract works insurance required?

Check your client contracts because you may need to purchase contractor insurance if your contracts hold you liable for unfinished work.

Building contractors, property developers, electricians, bricklayers, carpenters, plasterers, and tilers are among the companies that purchase this type of insurance. However, it can be useful for a variety of purposes.

What is covered by contract works insurance?

A contractor’s insurance covers you while you’re working on a construction site.

If the work is damaged or destroyed, it may cover the cost of repairing or redoing it. As long as you have the appropriate level of insurance, this can include the cost of labor, materials, and tools to restore the work to its pre-damage state.

You’ve almost finished a house extension when a fire breaks out and partially destroys it. The cost of repairing the work is covered by your contractor’s insurance.

Or perhaps you’re constructing a new commercial building when high winds and storms rip the roof off. The cost of replacing the roof is covered by your contract works insurance.

What is not covered by the contractor’s insurance?

Existing constructions on the site are not covered by the contractor’s insurance. For example, if you’re constructing an extension and a fire breaks out at the property, your contract works insurance may cover the cost of repairing the extension in progress but not damage to the rest of the house. Instead, your customer’s home insurance should cover this.

This insurance typically covers damage caused by risks such as fire, flood, storm, vandalism, or theft, but it does not cover damage caused by terrorism. Other exclusions should be checked in the policy documents.

Purchasing contractor’s insurance

It’s critical to purchase the appropriate level of contract works insurance so that you’re covered if you need to make a claim. To do so, choose a coverage level equal to the total cost of your largest project, including labor and materials. This is true even if your largest project lasts more than a year.

You can create a customized insurance policy to cover your construction company, including coverages such as public liability insurance, employers’ liability insurance, tool cover, plant, and machinery insurance, and contractor’s insurance. We can help you find quotes from the UK’s top insurers.

Construction project insurance types

This note focuses on these types of insurance that are frequently considered when parties undertake a construction or engineering project:

  • Insurance against all risks.
  • Indemnity insurance for professionals.
  • Insurance for product liability.
  • Insurance for latent defects.
  • Insurance against public liability.

All Risk Insurance

Physical damage to the works and site materials is covered by all risks insurance. It can be taken out by either the contractor or the employer, and the construction or engineering contract should specify who is responsible. The contract typically specifies the specific insurance requirements, such as which risks must be insured against and the amount of insurance required. Regardless of who gets the insurance, the contract frequently requires it to be kept in the joint names of the employer and the contractor.

Professional indemnity insurance

Professional indemnity insurance covers you against liability resulting from the professional failure. This typically includes contractual liability comparable to professional negligence, such as a breach of a contractual obligation to exercise reasonable skill, care, and diligence in design execution. Architects, engineers, other professional consultants, and building contractors who owe their employers a design responsibility are usually required to carry such insurance.

Insurance for product liability

Product liability insurance protects against liability for bodily injury or property damage caused by a company’s products. Suppliers of equipment, such as lifts or escalators, to a construction or engineering project may be required to maintain such insurance, sometimes in lieu of professional indemnity insurance.

Insurance against public liability

Public liability insurance covers liability for death or personal injury to third parties other than the insured’s own employees, as well as damage to third-party property.

Insurance against latent defects

Latent defects insurance typically lasts ten years from the date of a building’s original construction. A building owner must usually arrange the cover ahead of time, and it typically protects the owner against the cost of repairing a building’s structure due to a defect.

Understanding contractor’s insurance

There are several insurance policies available to cover property owners, developers, and contractors during the various stages of a construction project. Many projects, in fact, require specific types of construction insurance policies. 

Insurance for Workers’ Compensation

Workers’ compensation insurance, also known as workers’ comp or workman’s compensation, is a type of insurance that protects businesses and contractors when their employees are injured on the job. It accomplishes this by covering the following costs following a covered incident:

  • Medical costs
  • Unpaid wages
  • Ongoing medical expenses resulting from an injury
  • Legal fees incurred when an injured party sues the policyholder
  • Funeral expenses and bereavement benefits

Workers’ compensation insurance, like the others, extends beyond the construction industry, but it is a critical piece of coverage for developers and contractors who intend to hire others who may be injured on the job. In fact, in some states, workers’ compensation insurance is required by law.

Our professional liability insurance covers a wide range of claims, including negligence and confidentiality. Tell us about your business, and we’ll collaborate with you to develop an estimate and determine your insurance needs. We can get you insurance quotes in a matter of minutes. Simply contact us and we will assist you in arranging the best policy for your needs.

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