People often use the terms “contract works insurance” and “contractors’ all risk insurance” interchangeably. However, they are two distinct insurance products. To ensure you have all the cover you need for your project, it is important to understand the difference between the two.
What is Contract Works Insurance?
Contract works insurance provides cover for in-process construction projects. Usually, the cover lasts from a specified start date up to a specified completion, or handover date.
Contract works cover essentially provides cover for fire and other risks that might affect a structure while it is being constructed or renovated. The policy will provide enough cover to return the structure to the condition it was in before it was destroyed or damaged.
Who Needs Contract Works Insurance?
Certain construction contracts make contractors directly responsible for buildings and structures throughout the construction or renovation period.
For example, if a new home is being built, but the structure catches fire before it is completed, the contractor would be liable for damages. In this case, contract works insurance would give the contractor all of the cover they need to return the house to the condition it was in before the fire, so that they can finish the build.
What is Contractors’ All Risk Insurance?
Contractors’ all risk insurance gives contractors and property developers a diverse suite of cover. This can include cover for:
- Personal injury
- Professional liability
- Public liability
- Employer’s liability
- Tools, plant, and equipment – including any equipment hired specifically for the project
- Temporary buildings
What is the Difference Between Contract Works Insurance and Contractors’ All Risk Insurance?
The key difference is that Contract Works Insurance is cover specific to the destruction of an in-progress project, whereas Contractors’ All Risk Insurance is a suite of insurance cover for the broader range of risks of a construction project.
Essentially, contract works insurance covers in-progress construction projects for fires and other risks, in such contracts where the contractor would be liable for any destruction or damage. It covers the costs of repairing or redoing projects that have been affected by fire, flood, vandalism, theft, and other risks. This can include cover for any necessary tools, materials, and labour, but the policy will only provide enough cover to return the project to the state it was in before the incident.
While contractors’ all risk insurance gives contractors a suite of cover for the many risks associated with a construction project. This can include cover for personal injury, for loss or damage to tools, plant, and equipment (whether it is owned or hired), and for public, professional, and employer’s liabilities. This may even include contract works cover.
Do You Have All The Cover You Need For Your Construction Project?
Here are some key things to consider:
- Some contractors’ all risk insurance policies may include contract works cover. Check your policy wording for more information and talk to your insurer if it is not clear exactly what cover you have in place.
- Check the construction contract, to see who is liable for damage and destruction to the project while it is in progress. This may determine whether or not you need a dedicated contract works policy.
- If the construction project is an extension to, or renovation of, an existing building, then contract works insurance may not cover the costs of repairing the original building if it is damaged during the works. For this, the property owner may require specialist renovations cover as part of their home insurance policy.
If you are not sure whether you have all the cover you need for your construction project, we are here to help. We will take the time to understand your project and your contracts to ensure you get comprehensive insurance, with no gaps in your cover, at a competitive price.