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  • Writer's pictureAmanda Bird

Understanding the Insurance Policy for Contract Works

Contract works insurance provides general liability and a separate portion called Material Damage, which protects the covered construction project against loss or damage. This covers the cost of materials and labour necessary to restore a project to its pre-insured status.

If you're unsure whether you need contract works insurance or what it covers, continue reading for a more profound definition, some claim examples, and a quick way to obtain it.

Why Is Contract Works Insurance Important for Licensed Builders?

Contract works insurance is an exceptional insurance policy that’s necessary when you're a licensed builder who has signed an agreement to build a house or structure.

When an insurance company pays out a claim on a contract works policy, it's usually in the form of a check from the insurance company to you. This check covers the cost of materials, labour, and other losses due to accidents or events on the job site.

The contract works insurance policy typically covers any damage to the structure, missing materials, and those employed on the job.

What Does Contract Works Insurance Cover?

Beyond the costs of repairing damages to the project, contract works insurance covers liability for the project owner if an employee, a visitor, or a third party is injured on the site.

The project owner is covered from any legal fees the homeowner might incur if legal action is required. The policy also protects the contractor if the unfinished structure is damaged by weather and covered if the site is damaged by fire, vandalism, or a natural disaster.

How Much Does Contract Works Insurance Cost?

The cost of contract works insurance depends on the amount of coverage you want, the amount of coverage you already have, the length of the range, and your contractor's experience. The cost is typically a percentage of the value of the project.

Claim Examples

Below are some examples of a contractor's claims that the contract works insurance policy might need to be covered.

  • A nail on the floor injured a visitor, and the injured party sued you for negligence.

  • The supply of materials is lost, and you need to buy more and pay your employees to work overtime.

  • A worker fell from a ladder and was issued to you for negligence. The worker is suffering from a career-ending injury and will need long-term medical care.

  • A fire broke out on the job site and damaged the structure.

What Is Not Covered by Contract Works Insurance?

There are some exclusions in a general contractor's contract works insurance. Some of these exclusions include:

  • Property damage caused by an insured person

  • Property damage caused by the contractor's employees if they're not on the job site

  • Property damage caused by anyone who is not an employee or an independent contractor of the contractor

  • Property damage caused by an insured person's family members

  • Property damage caused by an insured person's subcontractors or other employees

  • Property damage caused by a subcontractor or other employee-related to a subcontractor or other employee's job (related to their job, not the contractor's job). For example, if a plumber comes to your job site to fix a leak and damages your home, it's most likely not covered.

How to Get Contract Works Insurance

When you're ready to get contract works insurance, you can contact an agent with the insurance company you already work with or an independent broker. If you choose to contact an agent, you'll need to speak with one that deals specifically with contractor insurance.

New Wave Insurance offers insurance for contract works. We've helped a lot of individuals and small businesses find the right insurance for them. To save you time and money, we'll take care of the hard work for you. Contact us right away for a free quote.

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