Written by Candice Klau, Managing Director, Be Covered Insurance Brokers
Candice has more than 20 years of insurance broking experience and specialises in construction insurance for builders, developers and trade businesses across Australia.
Moving into larger commercial projects is an exciting stage of growth for a construction business. It can also change your insurance exposure faster than your annual turnover suggests.
A builder that has been comfortably delivering smaller projects may find that a single larger contract introduces higher project values, more demanding head contract requirements, additional design responsibility, greater reliance on subcontractors and new insurance conditions.
Before tendering for a significantly larger commercial project, it is worth asking one simple question: is your insurance program built for the projects you are tendering for now, or the projects you were doing two years ago?
1. Your Maximum Project Value Has Increased
A larger project can change the level of exposure under your Contract Works Insurance. Check whether your policy is suitable for the value, duration and type of work you are now tendering for, including any relevant variations or project specific requirements.
2. The Head Contract Has More Demanding Insurance Requirements
Larger commercial head contracts often contain detailed insurance schedules. These may specify Public Liability limits, Contract Works requirements, additional insured provisions, policy periods, Professional Indemnity requirements and Certificates of Currency.
Reviewing these requirements before signing can help identify changes that may need to be made to your existing insurance program.
3. You Are Taking on Design and Construct Responsibility
Larger commercial projects commonly involve Design and Construct responsibilities. Even where architects and engineers perform the technical design, the builder may accept responsibility for consultant coordination, shop drawings, specifications, product substitutions, performance requirements or design management.
These responsibilities can create professional exposure and may make Professional Indemnity Insurance an important part of the project insurance review.
4. You Are Working Around Existing Structures or Occupied Premises
Commercial fit outs, refurbishments and extensions can create different risks from a new build. Existing structures, neighbouring tenancies, client equipment, employees and members of the public may all be exposed while work is underway.
Builders should consider how Contract Works and Public Liability arrangements respond to the actual project environment.
5. You Are Relying on More Subcontractors
Larger projects often involve a broader subcontractor network. Builders should understand the insurance requirements being imposed on subcontractors, collect current Certificates of Currency where required and consider how subcontractor activities interact with the builder’s own insurance and contractual responsibilities.
6. Your Plant and Equipment Exposure Has Increased
Bigger projects can mean more plant, hired equipment, access equipment, tools and assets moving between sites.
Review whether new equipment has been declared, insured values remain appropriate and hired in plant or project specific equipment has been considered.
7. Your Overall Business Profile Has Changed
Growth can affect more than project size. Turnover, payroll, employee numbers, subcontractor use, locations, project types, design responsibilities and contractual obligations may all have changed since your insurance was originally arranged.
An insurance program that was appropriate for the business two years ago may not reflect the construction business you operate today.
Insurance Checklist Before Tendering for a Bigger Project
- Check the maximum project value against your Contract Works arrangements
- Review the insurance schedule in the proposed head contract
- Confirm Public Liability limits and any specific policy requirements
- Identify any Design and Construct or professional responsibilities
- Review existing structures and occupied premises exposures
- Check subcontractor insurance requirements
- Review plant, equipment and hired in plant exposures
- Consider whether turnover, payroll, locations or business activities have changed
- Discuss material changes with your construction insurance broker before signing
Frequently Asked Questions
When should a commercial builder review insurance before tendering?
Ideally, insurance requirements should be reviewed before the builder commits to a contract. This gives the business time to understand required limits, policy conditions, availability of cover and potential insurance costs.
Can one larger project affect a builder’s insurance requirements?
Yes. A single project can introduce a higher contract value, new design responsibilities, different project conditions or more demanding insurance requirements even before the builder’s annual turnover changes significantly.
What insurance should builders check when moving into larger commercial projects?
Depending on the project, builders may need to review Contract Works Insurance, Public Liability Insurance, Professional Indemnity Insurance, Workers Compensation, plant and equipment arrangements and any additional policies required by the head contract.
Can an insurance broker review tender requirements before a builder submits a price?
A construction insurance broker can review the insurance requirements contained in a tender or proposed contract and help identify requirements that may affect the builder’s existing insurance arrangements. Contractual interpretation may also require legal advice.
Is Your Insurance Ready for Your Next Commercial Project?
At Be Covered Insurance Brokers, we work with commercial builders and construction businesses across Australia as they grow into larger and more complex projects.
If your project values, contracts or responsibilities are changing, speak with the Be Covered team before your next major tender or contract.
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 and, where appropriate, a legal adviser before making decisions about your insurance or contractual obligations.
