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Contract Works insurance
Making sure you’re covered before putting pen to paper on a building contract is vital, and it’s important to know what you are and aren’t covered for. This article will explain everything you need to know about Contract Works insurance, the best places to find quotes and some examples of how it might apply to your business.
- What is Contract Works insurance?
- What should I know before buying a policy?
- Common exclusions
What is Contract Works insurance?
Contract Works insurance is a type of construction insurance, designed to protect any building works while they're in progress. Do keep in mind that you'll need to have a policy in place before undertaking any work, however. It can cover your work against a wide variety of the most common damages or losses that can occur on-site, such as theft, flooding or fires. While each Contract Works policy is different, a standard one might cover:
- Work in progress
- Building materials
- Plant (owned or hired)
- Tools and equipment
- Any temporary buildings/structures
Contract Works will cover the costs of repairing or redoing any work that is currently in progress, if, for example, damages occur that need to be repaired. If something does happen, your business will likely still be contractually obliged to complete the work at the agreed price, which may prove difficult if you have to redo work after an event outside of your control. Contract Works is designed to cover the additional materials, labour and equipment required if something does go wrong.
While not included in every policy, your Contract Works can also include up to 12 months of coverage post-handover if your contract requires it—so make sure you’re clear with your client what your responsibilities are after handing over the keys.
Examples of Contract Works insurance
- You’re building a new home, and a fire damages the roof and it needs to be rebuilt
- During the night, somebody breaks in to your secure lock-up and steals your tools
- A storm causes damages to a foundation you’ve started and puts you back to square one
- A cement mixer you’ve hired is waterlogged during heavy rain
Who needs Contract Works insurance?
Contract Works can be relevant to a number of different trades. These might include:
You may find that some clients insist you have a policy before allowing you to bid for a piece of work—Contract Works coverage can give your client peace of mind that you’ll complete the work even if something does go wrong, so having one can be a big boost to your chances of securing a contract—it's worth knowing where your Certificate of Insurance is at all times, to make sure you can present it should a client ever request to see it.
What should I know before buying a Contract Works policy?
Before signing up to a policy, you’ll likely need a few things to hand:
- Business Details
- Years operating
- Financial information
- Annual turnover
- Largest contract value
- Maximum/average contract duration
- Annual sub-contractor costs
- Temporary buildings
- Employee tools
- Annual equipment hire spend
- Plant owned
- Any prior claims, convictions or losses
The coverage of your Contract Works policy should be able to cover the highest-value project your business is currently working on, including the cost of labour and materials. You can expect your coverage level to reflect the cost of the contract— so whether you’re working on a £500,000 contract over 3 months or 2 years you’ll need the same coverage value (£500,000).
Common Exclusions and Limits
You may notice that, unlike a conventional insurance, your Contract Works does not require specific information about specific sums insured (compared to, say, Public Liability, where the policy you sign up for will clearly define how much you’re covered for). However, your insurer will set policy limits on the amount they’re willing to pay out, so make sure you’re clear on this before signing up.
Most insurers will increase these limits for a premium, so if you feel like you want additional protection then it shouldn’t be an issue.
Your Contract Works also won’t cover any damages to structures that already existed, so if you are building an extension on a home and a fire damages both the home and the extension, your business will be covered for the extension but the property owners Home insurance should cover the existing property.
And finally, like many Tradesman insurances, Contract Works is unlikely cover any defects due to workmanship, design or specification, nor any cost of repair for issues caused by these.
Zurich’s Contract Works summary can be used as an example of what a standard policy might look like.
While it changes from insurer to insurer, you'll likely need to notify your insurer within 14 days of stopping work so they can assess the security measures in place on-site. If the stoppage continues for more than 90 days then some insurers may suspend or reduce the cover.
Most policies offer cover for tools and equipment left in a van, even overnight (although do keep in mind that keeping tools overnight, as opposed to in a secure lock-up, may increase your costs). However, coverage will generally only apply if force is used to enter the vehicle and the alarms on the vehicle are working correctly.
Contract Works often makes up part of a larger Contractors All Risk insurance policy. These are popular if you want to cover any potential gaps in your insurance and keep the policies conveniently under one provider. These might include: