Contract Works Insurance

What is Contract Works Insurance? 

Contract Works Insurance is a type of insurance designed for businesses undertaking construction and/or property development projects. It provides protection against physical damage or third-party liabilities in the course of construction. 

Why is Contract Works Insurance important?

Whether it’s an alteration, extension, or renovation project, you need to obtain contract works insurance to protect you from risks associated with developing a property. Also known as builder risk insurance, contract works insurance serves as a cover to ensure your construction project is protected from the start through to completion, protecting the policyholder from sudden, unforeseen physical loss or damage during the construction period. 

What does Contract Works Insurance cover?

Contract works insurance can provide protection against the following perils: 

  • Fire 
  • Burglary and theft   
  • Accidental damage
  • Storm, Flood Damage and other weather-related losses 
  • Vandalism 
  • Natural disasters

The above perils are typically covered in most contract works insurance. Contact your insurance broker to see which insured events are covered in your policy.  

Contract works policies can also be extended to include people who are party to the contract, such as the owner, main contractors and sub-contractors. 

Contract works insurance can also be extended to include existing structures being worked on as part of the construction. 

Conversely, there are some risks that are not covered, such as: 

  • War and other acts of terrorism
  • Gradual deterioration, Wear and tear
  • Rot, mildew, rust and corrosion
  • Damages due to faulty design or specification
  • Faulty materials and workmanship

Undertaking a construction project comes with risk. Therefore, it’s imperative that you select or tailor a policy that has appropriate coverage and meets your requirements. At Insurance Advisernet, we’ll help you identify your risk exposures and recommend a policy suitable to your needs. Talk to your financial advisor. 

Frequently Asked Questions 

What is Builder’s Risk Insurance? 

Also known as contract works insurance, builders' risk is a type of insurance designed for construction and/or property development projects. It provides protection against physical damage to the construction project. The policy can also be extended to cover third-party liabilities. Builders' risk or contract works insurance is typically designed for property developers or SMEs engaged in the construction business. But also available for any business that is undergoing development. 

What is Public Liability insurance? 

Public Liability insurance cushions you from the financial impact of third-party claims for death, bodily injuries, and damage to someone else’s property. It often works together with a builder’s risk insurance as it protects you from costs associated with damages done to your property in the course of the works. 

Does a builder in New Zealand need Contract Works insurance?

Depending on the type and scale of work being performed, it may be covered under an existing property policy up to a certain sublimity. If your project falls under cosmetic renovation, contract works insurance may not be required. Cosmetic renovations work like painting, installing new carpet, replacing bathroom fixtures, and generally small construction works that do not require structural alterations. For any construction project you undertake, you should discuss insurance requirements with your Insurance Advisernet Broker.

How much does Contract Works insurance cost?  

The cost depends on the value and the type of construction project being undertaken and the risks associated with that. Also taken into consideration is the duration of the project.  


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