What is the difference between contract works insurance and builder's warranty insurance?

Contract works insurance covers physical damage during construction (fire, storm, theft, vandalism). Builder's warranty insurance (also called home warranty or domestic building insurance) protects the homeowner after completion if the builder cannot complete or rectify defective work due to insolvency, death or disappearance.

Why should I use a broker for contract works insurance?

A specialist broker has access to multiple insurers and can compare policy wordings, not just price. Brokers tailor cover to your specific project risks, negotiate better terms, and advocate for you at claims time. A direct insurer can only offer their own product.

Contract Works Insurance Australia

Contract works insurance is a packaged construction policy that covers physical loss or damage to building works during the construction period. It typically includes material damage cover for the works themselves and legal liability cover for third-party injury or property damage arising from the construction activity.

Whether you are a licensed builder constructing a $500,000 home in Sydney, a subcontractor managing your own renovation projects, or an owner-builder taking on a major extension in Melbourne, contract works insurance is a fundamental part of managing your construction risk.

What Does Contract Works Insurance Cover?

A standard contract works insurance policy in Australia generally provides two core sections of cover:

Section 1 — Material Damage

Physical loss or damage to the construction works (the building itself during construction)
Materials and supplies on site or in transit
Temporary works such as formwork, scaffolding and hoarding
Existing structures being altered or renovated (when noted on the policy)
Employees' tools and equipment (subject to sub-limits)
Principal-supplied materials

Section 2 — Legal Liability

Public liability — injury to third parties or damage to third-party property
Products liability — cover for defective products installed
Vibration, weakening and removal of support
Property in care, custody and control in some wordings

For a comprehensive breakdown of coverage, exclusions and how the policy actually works, read our detailed guide: What Is Contract Works Insurance?

Who Needs Contract Works Insurance?

Licensed Builders

Most building contracts require the builder to hold contract works insurance covering the full contract value. An annual turnover policy is typically the most cost-effective approach for builders running multiple projects.

Owner-Builders

If you hold an owner-builder permit and are managing your own build, you are responsible for insuring the works. Owner-builder contract works insurance protects your investment during the construction period.

Subcontractors

While the head contractor usually arranges project cover, subcontractors running their own projects need their own policy. Even when covered under a head contractor's policy, having independent cover protects your tools and equipment.

Property Developers

Developers financing commercial construction projects often need to arrange principal-arranged contract works insurance to protect their financial interest in the development.

Why Use a Broker Instead of Going Direct?

A specialist insurance broker offers significant advantages over purchasing contract works insurance directly from an insurer:

Access to multiple insurers — We compare wordings and pricing from a panel of construction insurers, giving you genuine choice rather than a single product.
Tailored advice — Every project is different. We assess your specific risks and structure cover accordingly, ensuring you are not under-insured or paying for cover you do not need.
Claims advocacy — When you need to make a claim, your broker works for you, not the insurer. We manage the process and advocate for the best outcome on your behalf.
Industry expertise — Having placed hundreds of contract works policies across residential, commercial and civil projects, we understand the nuances that generic insurers often miss.
Ongoing support — As your business grows, we adjust your cover to match, whether that means stepping up from single-project to annual policies or adding commercial project cover.

Annual Policies vs Single-Project Cover

Contract works insurance is available as either a single-project policy or an annual turnover policy. Understanding which is appropriate depends on the volume and value of work you undertake:

Feature	Single-Project Policy	Annual Turnover Policy
Best for	One-off projects, owner-builders	Active builders with ongoing work
Coverage period	Duration of the specific project	12 months, covering all projects
Pricing basis	Rate applied to contract value	Rate applied to estimated annual turnover
Administrative effort	New policy per project	Single policy; declare turnover at renewal
Cost efficiency	Can be higher per-dollar for small projects	Generally more cost-effective at volume

Not sure which option suits your situation? Read our guide to contract works insurance costs or get in touch for tailored advice.

Frequently Asked Questions

Contract works insurance is a packaged construction policy that covers physical loss or damage to the building works during construction, along with public and products liability. It protects builders, contractors and owner-builders against risks such as storm damage, fire, theft and vandalism on site.

Licensed builders, subcontractors running their own projects, owner-builders and property developers all typically require contract works insurance. Many building contracts and head contractors require proof of cover before work can commence on site.

Premiums vary based on project value, construction type, location, builder experience and claims history. A single residential project may cost from a few hundred dollars, while annual policies are priced as a rate per dollar of declared turnover. Read our full cost guide for more detail.

Contract works insurance covers physical damage during construction (fire, storm, theft). Builder's warranty insurance protects the homeowner after completion if the builder cannot complete or rectify defective work due to insolvency, death or disappearance. They cover completely different risks — most residential builders need both. See our detailed comparison.

A specialist broker has access to multiple insurers and can compare policy wordings, not just price. We tailor cover to your specific project risks, negotiate better terms, and advocate for you at claims time. A direct insurer can only offer their own product. Learn more about our approach.