Candice has more than 20 years of insurance broking experience and specialises in construction insurance for builders, developers and trade businesses across Australia.
Starting a new building project is exciting, but it is also when some of the biggest financial risks begin.
For builders in Australia, Contract Works Insurance is one of the key covers to review before work starts. It can help protect the building works, materials and project-related risks while construction is underway. However, not every project is automatically covered in the same way.
Many builders assume their Contract Works Insurance will cover everything that happens on site. Unfortunately, that is not always the case.
Before you break ground, it is worth taking a few minutes to review whether your insurance matches the project you are about to undertake.
Here is a practical Contract Works Insurance checklist every builder should review before starting a new project.
What is Contract Works Insurance?
Contract Works Insurance is designed to cover building works while a construction project is in progress. It may respond to events such as damage to the works, theft of materials, fire, storm, vandalism or other insured events during the construction period.
For builders, contractors and construction businesses, Contract Works Insurance is often required before starting a project, particularly where contracts, principals, lenders or head contractors require evidence of cover.
The right cover depends on the type of project, contract value, location, materials, subcontractor use and the insurance requirements set out in the construction contract.
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Is your contract value accurate?
One of the most common issues we see is builders underestimating the value of a project when arranging insurance.
If the contract value is not declared correctly, it can create problems at claim time and may result in premium adjustments or gaps in cover.
Before starting a project, ask yourself:
- Have material costs increased since the project was quoted?
- Are labour costs higher than originally expected?
- Are there any owner-supplied materials that need to be included?
- Have variations already been agreed to before work starts?
- Does the insured value reflect the full replacement cost of the project?
Your Contract Works sum insured should reflect the full replacement value of the project, not just the original estimate.
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Have you included all projects?
Many builders work across multiple sites and complete different types of projects throughout the year.
If you are operating under an annual turnover Contract Works policy, make sure all projects fall within your policy’s scope of works, contract value limits and geographic limits.
It is important to disclose all activities to your insurer, including:
- Residential construction
- Commercial construction
- Fit-outs and refurbishments
- Civil works
- New builds
- Renovations and extensions
- Design and construct work, where relevant
If you are undertaking work that has not been disclosed, it could create issues if you need to make a claim. As your construction business grows and changes, your insurance should be reviewed too.
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Are your subcontractors properly insured?
Most builders rely heavily on subcontractors, but it is important that your insurer understands how subcontractors are used within your business.
Before work starts, collect current Certificates of Currency from subcontractors for relevant covers, including:
- Public Liability Insurance
- Professional Indemnity Insurance, where required
- Workers Compensation, where applicable
This helps demonstrate good risk management and may reduce your exposure if something goes wrong on site.
It is also worth checking whether your subcontractor agreements clearly set out insurance responsibilities before they begin work.
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Have you reviewed your contract requirements?
Many construction contracts include insurance obligations that go beyond a standard policy.
Common contract requirements may include:
- Higher public liability limits
- The principal noted as an interested party
- Contractual liability cover
- Cross liability clauses
- Joint insured requirements
- Specific Contract Works Insurance limits
- Professional Indemnity Insurance requirements
- Evidence of current Certificates of Currency
We have seen builders sign contracts only to discover afterwards that their insurance does not meet the project requirements.
A quick review before signing can save a lot of stress later.
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Are materials covered before they reach site?
Think about where materials are located before installation.
Builders should check whether materials are covered:
- While in transit
- While stored off-site
- While stored on site
- Before installation
- If they are stolen, damaged or vandalised
Building materials continue to represent a significant cost for construction businesses, so it is important to understand when cover starts and where it applies.
This is especially relevant if materials are delivered early, stored at a supplier’s premises, kept in a warehouse or left unsecured on site.
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Have you checked your excesses?
Many builders focus on the premium, but excesses can have a major impact when a claim occurs.
Before starting a project, review the excesses that apply to:
- Theft claims
- Storm and weather events
- Water damage
- Fire damage
- Malicious damage
- General property damage
- Tools, plant and equipment claims, if included
A cheaper policy is not always cheaper when a claim happens.
Understanding your excesses upfront can help you make better decisions about site security, material storage and risk management.
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Is your Public Liability Insurance still adequate?
Contract Works Insurance and Public Liability Insurance work hand in hand, but they are not the same thing.
Contract Works Insurance generally relates to damage to the works or materials during construction.
Public Liability Insurance generally relates to claims involving injury to another person or damage to someone else’s property.
Many construction contracts now require builders to hold $20 million in Public Liability Insurance. Before starting a project, confirm:
- Your liability limit meets the contract requirements
- Your business activities are correctly listed
- Any high-risk work has been disclosed
- Subcontractor arrangements are understood
- The principal or head contractor has any required evidence of cover
If your project is larger, more complex or higher risk than your usual work, your liability insurance should be reviewed before work begins.
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Have there been any changes to your business?
Insurers need to know about significant changes to your business.
These may include:
- Increased turnover
- Larger project values
- New services
- New types of construction work
- Labour hire usage
- Increased subcontractor usage
- New business locations
- Additional tools, plant or machinery
- More commercial or civil projects
If your business has grown but your insurance has not kept up, there may be gaps in cover.
Your Contract Works Insurance should reflect how your business operates today, not how it operated when the policy was first arranged.
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Do you understand your policy conditions and exclusions?
Not every loss or damage is automatically covered under a Contract Works policy.
Understanding your policy’s exclusions and conditions before a claim occurs can help avoid costly surprises.
Key areas to review include:
- Faulty workmanship
- Existing property damage
- Reasonable care conditions
- Hot works conditions
- Underground services conditions
- Defects exclusions
- Weather-related conditions
- Security requirements
- Unoccupied or unattended site conditions
If you are unsure how these provisions apply to your business or project, speak with your broker before work commences.
A small misunderstanding today can become a major issue at claim time.
Contract Works Insurance checklist summary
Before starting your next project, review the following:
- Confirm the contract value reflects the full replacement cost
- Disclose all projects and project types to your insurer
- Check that projects fall within policy limits and geographic limits
- Collect current Certificates of Currency from subcontractors
- Review contract-specific insurance requirements before signing
- Confirm cover for materials in transit and off-site storage
- Review excesses across different claim types
- Confirm Public Liability Insurance limits meet contract requirements
- Notify your insurer of business changes
- Understand key exclusions and policy conditions
- Check whether Professional Indemnity Insurance is required for design-related exposure
- Make sure Certificates of Currency are current and accurate
Frequently Asked Questions
Does Contract Works Insurance automatically cover everything on site?
No. Contract Works Insurance is subject to specific terms, conditions and exclusions. These may relate to faulty workmanship, existing property damage, underground services, hot works, theft, site security or other policy conditions. It is important to understand what is and is not covered before a project begins.
What does Contract Works Insurance cover for builders?
Contract Works Insurance can help cover the building works, materials and project-related risks while construction is underway. Depending on the policy, it may include cover for events such as fire, storm, theft, vandalism or accidental damage to the works. The exact cover depends on the policy wording, project type and insurer.
What Public Liability Insurance limit do builders typically need?
Liability requirements vary depending on the project and contract. Many construction contracts require $20 million in Public Liability Insurance, but some principals, head contractors or government projects may have different requirements. Always check the specific insurance requirements in your contract before work starts.
Do builders need to declare all projects under an annual turnover policy?
Yes. If you are operating under an annual turnover policy, your projects need to fall within your policy’s scope of works, contract value limits and geographic limits. Your business activities should also be disclosed to your insurer. Undisclosed work can create issues if you need to make a claim.
What is not covered under a standard Contract Works policy?
Common exclusions or limitations may relate to faulty workmanship, pre-existing property damage, defects, underground services, hot works, poor site security or failure to take reasonable care. Exclusions vary between policies, so it is worth reviewing these with your broker before a project starts.
When should builders review Contract Works Insurance?
Builders should review Contract Works Insurance before starting a new project, before signing a construction contract, when project values increase, when business activities change, or when taking on larger or more complex work. It should not be left until renewal or claim time.
Don’t wait until a claim happens
The best time to review your Contract Works Insurance is before the project starts, not after something goes wrong.
Every project is different. What worked for a $500,000 job may not be suitable for a $5 million or $10 million project.
At Be Covered Insurance Brokers, we specialise in construction and trade insurance. We work with builders, civil contractors and trades across Australia to help ensure their insurance program matches the projects they are undertaking.
Before your next project starts, let us review your Contract Works Insurance and identify any potential gaps.
A quick review today could save your business significant stress, delays and unexpected costs tomorrow.
Need help reviewing your Contract Works Insurance?
Whether you are building homes, commercial projects, fit-outs or civil works, our team can help ensure your insurance is structured correctly before work begins.
Contact Be Covered Insurance Brokers for a no-obligation review of your construction insurance program.
General information only: This article provides general information and does not take into account your specific business, projects, contracts or insurance needs. You should seek advice from a qualified insurance broker before making decisions about your insurance.
