Comprehensive Construction Works Insurance for Every Project
Construction works insurance, also referred to as contract works insurance, offers vital protection for construction projects—whether you're undertaking a single job or require annual coverage across multiple developments of a similar nature.
Generally arranged by the principal or head contractor, this insurance provides two key areas of cover. Section one protects against material loss or damage to the works, while section two includes public liability and products liability cover for third-party property damage or personal injury arising from your legal responsibility during the construction process.
At Business Insurance Specialists, we tailor construction works insurance solutions to suit the specific needs of your project—ensuring your site, materials, and liabilities are covered with confidence.
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?
Construction works insurance, also known as contract works insurance, provides essential protection for construction projects. Whether you're managing a one-off build or multiple developments under an annual policy, this cover safeguards against material loss, structural damage, and third-party liabilities that may arise during construction.
Designed for principals, contractors, and sub-contractors, this policy delivers coverage for on-site damages—including tools, building and construction materials, and temporary works—along with risk mitigation for construction activities. It helps ensure continuity on-site in the event of fire, theft, storm damage or other unexpected setbacks.
Construction works insurance is a vital part of managing risk and protecting your investment throughout the life of the project.
How Does Contract Works Policy Insurance Work?
A contract works policy operates in two main sections, providing essential coverage for on-site damages and comprehensive risk protection throughout the construction lifecycle:
- Material Loss or Damage: Covers accidental loss or damage to construction works, including formwork, scaffolding, temporary structures, plant and equipment coverage, and Principal supplied material.
- Public and Product Liability: Protects against third-party bodily injury or property damage arising from your construction activities, offering risk mitigation for construction teams and stakeholders.
Contract works policies can be tailored to suit different project requirements and timelines. For Annual Construction covers, the two different types of Contract Work policies to consider are.:
- Turnover (Transfer) Policies: Designed to cover all projects for incidents occurring within during the policy period, with coverage ceasing at the policy expiry date.
- Run-Off (Contract Commencing) Policies: Cover projects that commence within the policy period, extending through to completion and including any applicable defect liability periods.
Who Is Insured Under a Contract Works Policy?
Under a construction works insurance policy, mainly when governed by a Principal Controlled Insurance Programme (PCIP), the following entities or persons are typically covered. These parties are insured in alignment with the provisions outlined in the construction contract:
- The Principal: The main party overseeing the project, ensuring the insurance covers their interests.
- Project Manager: The individual or company managing the project on behalf of the principal.
- Any Director or Employee of the Above: Including anyone employed by the principal or project manager who is involved in the project.
- Any Contractor or Sub-contractor: This includes contractors or sub-contractors working on any part or parts of the contract works, as long as a formal sub-contract or agreement exists for the specific tasks.
This coverage ensures that all parties involved in the construction project are protected under the construction works insurance, providing peace of mind throughout the entire process.
What Does Contract Works Insurance Cover?
The policy schedule for construction works insurance will outline the types of property or business activities that are covered. This may include:
- Residential New Build
- Renovation
- Commercial Construction Projects
The actual work itself can include the construction or erection processes, such as:
- Formwork, falsework, and temporary works
- Temporary buildings, scaffolding, and hoardings
- Principal supplied or free-issue materials
- Materials for incorporation into the works
In some policies, insurers may also agree to coverage for pre-existing buildings or structures undergoing renovation or alteration.
For more extensive protection, policies may also provide contractors all risk insurance and construction project insurance to cover broader or additional risks associated with the entire project lifecycle.
Advantages of Principal Controlled Insurance Programme (PCIP)
The major advantages of a principal having control over your construction works insurance—in comparison to individual contractors having separate Contract Works policies—include:
- Uniform level of coverage across the entire project. Individual contractors may have different levels of coverage, which can cause inconsistencies.
- As a principal, you are assured that the policy is still in force and has not been cancelled.
- Claim monies are paid directly to you as the principal, unless you direct otherwise, ensuring smoother claims management.
- Building construction insurance typically covers significant dollar-value assets, providing robust protection for high-value projects.
- Since the insurer covers the complete project, insurers have no dispute regarding liability following a claim.
- A massive reduction in administration time, as you no longer need to review individual contractor policies, simplifying management.
Standard Benefits within a Construction insurance policy
Standard automatic benefits in a construction works insurance policy include:
- Removal of Debris – The costs of demolition and disposal of damaged Contract Works.
- Professional Fees – Architects', surveyors', and consultants' engineers' fees that are necessarily incurred during the project.
- Expediting Expenses – The costs of overtime rates, the hiring of additional labour and equipment, and the costs of purchasing resources necessary to repair or replace urgently damaged 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, ensuring risk mitigation for construction and coverage for on-site damages.
What is not covered by Construction Policies
Construction insurance policies have various exclusions and limitations. These exclusions can sometimes be limited or restricted by agreement with insurers. We would recommend discussing the exclusions thoroughly.
The major exclusions under the 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 a certain height
- Fines, Penalties
- Contractual Liability
- Use of Explosives
- Liquidated Damages
Our experiences indicate that the major exclusion insurers apply relates to incidents arising from Design, Material, and Workers Compensation issues. We strongly recommend discussing all exclusions with your insurance broker, especially those related to Builder’s risk insurance and Construction project insurance, as there are various 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 the experts of 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?
- Design and Construct Insurance: Protects against risks associated with design errors and defects in construction work.
- Builder's Warranty Insurance: Ensures that building and construction meet regulatory standards and offers peace of mind for homebuyers regarding defects.
- Owner Builder Policy: Tailored coverage for residential owner-builders, covering risks during the construction process.
- Coverage for On-site Damages: Protects against material loss or damage during construction, helping to avoid project delays.
- Insurance for Construction Delays: Covers financial implications of delays caused by weather disruptions or unforeseen damages.
- Structural Damage Protection: Covers repair costs for any structural damages that occur during or after construction.
Contact Us Today
Secure the right construction works 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.
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