During the construction period, your project is particularly vulnerable to damage, so a Contract Works policy is often a contractual obligation of any building project. Even if this is not the case, registered builders, contractors and owner builders should always have a comprehensive insurance policy in place before stepping foot on the building site.
What is Contract Works Insurance?
Contract Works Insurance will cover any building works for loss or damage during construction. It generally covers loss or damage caused by theft, malicious damage, wind, storms, floods, cyclones, landslides or subsidence, fire and earthquake.
Contract Works Insurance can help you survive unexpected loss or damage during construction.
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The Importance of Contract Works Insurance
Statistics show that construction projects are exposed to risks and hazards that often arise from purely contractual and legal problems, unforeseen circumstances or natural hazards. Contractors are often faced with unexpected events, which could not be predicted and therefor not calculated in the initial quote for the project, leaving the contractor with unforeseen costs and losses.
These losses can have a huge financial impact on the business, which, for many, may be difficult to recover from. Contract Works Insurance can cover your out of pocket expenses to ensure the continued success of your company.
What Risks May a Contract Works Policy Cover?
Operating within the construction industry brings with it considerable risk. These risks should not be ignored, and contractors should be aware of all risks they are exposed to, whether contractual, political, or social before taking on any construction job. Certain risks can be allocated to suppliers and subcontractors, whereas other risks cannot be mitigated and therefore should be covered with a comprehensive insurance policy.
As a first step, risks should be recognised and assessed. The common risks faced during a construction project include:
- Adverse Physical Conditions: Construction sites are dangerous workplace environments. Workers have to navigate ground water, adverse soil conditions and contaminated ground, as well as being aware of any wells, pits, shafts and boreholes. These conditions can make it difficult to predict the outcome of the construction project, and may result in injury in the process.
- Delay and Disruption: Construction works are often delayed by third parties, due to late handing-over of the site by the employer, late working drawings or instructions from the engineer, waiting on machinery and equipment, inefficiency of nominated sub-contractor or labour disputes. This can result in huge costs being accumulated by the contractor.
- Defective Materials: A construction project can suffer a huge financial burden as a result of defective materials or poor workmanship of a sub-contractor or supplier. It is therefor imperative that your project is fully covered from the outset.
- Direction and Supervision: Construction projects can be greatly affected by the actions of the supervising employer or engineer. Incompetence, inefficiency, lack of communication or ambiguity within documents can have a serious negative impact on the entire construction project.
- Damage and Injury to Persons and Property: Operating within the construction sector brings with it great risk of accident and injury to employees or the general public. Accidents can occur due to negligence of the contractor, owner, engineer, or subcontractor, or due to matters that are out-with the parties’ control. Contract Works insurance could protect your business from suffering huge out of pocket costs.
- Payment: Issues with payment can arise as a result of devaluation, delay in settling claims and certifying, delay in paying certificates, legal limits on recovery of interest, insolvency of contractor, sub-contractor or owner, or Funding constraints.
The above are just some of the risks that may arise during your building project. Risk can, and should be managed to minimise potential costs to the business, however it’s important to back up your prevention strategies with a comprehensive insurance policy.
What Are the Key Things That May Be Covered By a Contract Works Policy?
Contract Works Insurance can be purchased as a one-off, contract-specific policy, or as an annual contract. Policies will vary depending on your circumstances, but will typically include:
- Construction of buildings and other structures
- Erection and installation of machinery, plant and equipment
- Dry and wet civil works
- Legal liability
- Advanced loss of profits
- Advanced loss of rental
- Delay in start up
- Holding costs and standing charges
- Professional fees
- Debris removal
- Coverage for public authorities
- Inland transit
- Off-site storage
- Plans, documents and data
Who Needs Contract Works Insurance?
Whether operating in the commercial, residential or civic sector, it is vital that you are protected in the event that something does go wrong during construction.
Cover is generally arranged by the principal or head contractor and will extend to include the contractor, the principal, sub-contractors, financiers and other interested parties to the contract. In the event that something does go wrong with the building project, an insurance policy can not only absorb the financial hit for your company, but also protect your employees and the general public.
How PSC Direct works for you
As specialist small business insurance brokers, PSC Direct uses our considerable experience to provide multiple quotes for you. Combining our expertise insuring thousands of other similar businesses with our detailed database of insurers and insurance products; we’re best placed to advise you on the right insurance for your business.
We have strong relationships with the leading underwriting agencies and insurance companies. We can source the most appropriate business insurance policy for you, covering you for what you really need, at the right price.
We can help sole practitioners, small, medium and large businesses protect the businesses you are growing and ensure your assets are covered in the event that disaster strikes.
With our strong relationships to a broad range of highly-rated insurers we are able to advise you on business insurance, professional indemnity insurance, and professional indemnity insurance specifically tailored to meet the risk exposure of your business.
We can also provide advice on a range of additional insurance policies and cover that can affect your business and make sure you have the right insurance at the right price.
72% of Australian businesses fail after experiencing a major loss.
The right business insurance will ensure you are not one of them.
While good insurance covers you for most things – Professional Indemnity, Professional Liability and Property, great insurance covers you for the specific risks that your business faces. We understand that every business is unique and you need a policy that addresses the specifics. We make sure that when you have a claim that’s out of the ordinary and complicated, you’re covered.