Contract Works Insurance Cost in Australia

Contract works insurance premiums vary significantly based on the project value, construction type, location, builder experience and claims history. There is no single fixed price — every project and every builder is assessed on its own merits. However, understanding how pricing works helps you budget appropriately and identify whether you are getting a competitive deal.

This guide provides an honest overview of what affects contract works insurance pricing in Australia, typical cost ranges you can expect, and practical steps to manage your insurance spend.

How Contract Works Insurance Is Priced

Contract works insurance premiums are calculated as a rate applied to either the contract value (for single-project policies) or the annual turnover (for annual policies). The rate varies based on the risk profile of the builder and the project.

Single-Project Pricing

For a single-project policy, the premium is calculated as:

The contract value should include the total cost of the works including materials, labour and GST. Under-declaring the contract value to save on premium is risky — if a total loss occurs, you may be under-insured and receive a reduced payout.

Annual Turnover Pricing

For an annual policy, the premium is based on estimated annual turnover. At renewal, you declare your actual turnover for the past year and estimated turnover for the coming year. An adjustment is made — if your actual turnover was higher than estimated, you pay additional premium; if lower, you receive a refund.

Factors That Affect Your Premium

The following factors have the most significant impact on contract works insurance pricing:

1. Contract value or annual turnover — The single biggest factor. Higher values mean higher premiums, though the rate per dollar often decreases for larger amounts.
2. Construction type — Standard residential construction is generally the lowest risk. Commercial, industrial and civil works attract higher rates due to increased complexity and exposure.
3. Building materials — Timber-frame construction typically attracts a slightly higher rate than concrete or steel-frame due to fire susceptibility.
4. Geographic location — Projects in cyclone-prone areas (north Queensland, northern WA, NT), flood zones or bushfire-prone areas attract higher premiums due to natural hazard exposure.
5. Builder experience and qualifications — Established builders with a proven track record and appropriate licensing typically receive better rates than new entrants.
6. Claims history — A clean claims record over three to five years will generally result in lower premiums. Frequent or large claims push rates up.
7. Policy excess — Choosing a higher excess (the amount you pay first in a claim) reduces the premium. Common excesses range from $500 to $5,000 depending on the insurer and project size.
8. Existing structures — Including existing structures in a renovation or extension project increases the sum insured and the premium, as the risk exposure is greater.
9. Maximum individual project value — For annual policies, the maximum value of any single project you undertake affects the rate. Builders who occasionally take on larger-than-usual projects may need to pay more to increase this limit.

Typical Cost Ranges

The following ranges are indicative only and should not be relied upon as quotes. Actual premiums depend on the specific circumstances of each builder and project. These figures are intended to help you budget and assess whether the quotes you receive are reasonable.

Project Type	Contract Value Range	Indicative Annual Premium Range
Owner-builder single project	$200,000 - $600,000	$500 - $2,000
Residential builder (annual)	$1M - $5M turnover	$2,500 - $10,000
Medium residential builder (annual)	$5M - $20M turnover	$8,000 - $30,000
Commercial builder (annual)	$10M - $50M turnover	$20,000 - $80,000
Large commercial / civil (annual)	$50M+ turnover	Individually rated

Note: These ranges include both material damage and legal liability cover. Government charges (stamp duty and GST) are additional. Actual premiums can fall outside these ranges depending on specific risk factors.

How to Reduce Your Contract Works Insurance Cost

While you cannot control every factor that affects pricing, there are practical steps to manage your premium:

1. Maintain a clean claims record — Avoid small, avoidable claims. A good claims history over three to five years is the most powerful tool for negotiating better rates.
2. Invest in site security — Secure fencing, locked storage containers, CCTV cameras and adequate lighting reduce the risk of theft and vandalism, which insurers recognise.
3. Choose appropriate excess levels — A higher excess reduces your premium. Consider what you can comfortably absorb in the event of a claim and set your excess accordingly.
4. Use a specialist broker — A broker who specialises in construction insurance has relationships with construction-focused underwriters and can negotiate rates that direct channels typically cannot match.
5. Declare turnover accurately — For annual policies, over-estimating your turnover means you pay more upfront than necessary. While you will receive an adjustment at renewal, your cash flow is affected in the meantime.
6. Bundle your insurances — Placing your contract works, public liability, tools and equipment, and motor vehicle insurance with the same insurer or broker can sometimes attract multi-policy discounts.
7. Review annually — Do not simply auto-renew. Have your broker re-market your insurance each year to ensure you are still getting competitive terms.

Single Project vs Annual — Which Is More Cost-Effective?

As a general rule:

• If you run one or two projects per year, single-project policies may be sufficient and avoid paying for cover during periods when you have no active projects.
• If you run three or more projects per year, an annual policy is almost always more cost-effective. The rate per dollar is typically lower, and you avoid the administrative burden of arranging cover for each project.
• For owner-builders, a single-project policy is standard since you are completing one build.

A specialist broker can run the numbers for your specific situation and advise which approach provides the best value.

Frequently Asked Questions About Cost

How much does contract works insurance cost in Australia?

Premiums vary significantly. As a rough guide, rates typically range from 0.15% to 0.5% of the contract value for standard residential construction. A $500,000 residential build might cost between $750 and $2,500 for contract works cover, depending on the builder's profile and project specifics.

What factors affect contract works insurance premiums?

Key factors include contract value or annual turnover, construction type (residential, commercial, civil), building materials, geographic location and natural hazard exposure, builder's experience and claims history, policy excess chosen, and whether existing structures are included in the cover.

Is an annual policy cheaper than single project policies?

Generally yes. Annual turnover policies attract a lower rate per dollar compared to individual single-project policies. For builders running three or more projects per year, an annual policy is almost always more cost-effective and administratively simpler.

Can I reduce my contract works insurance cost?

Yes. Maintain a clean claims history, invest in site security, choose appropriate excess levels, use a specialist broker to negotiate competitive rates, declare turnover accurately, and review your cover annually rather than auto-renewing.

Does the premium include public liability cover?

Yes. Contract works insurance is a packaged policy — the quoted premium typically includes both material damage and legal liability (public and products liability) components. You generally do not need a separate public liability policy for the construction activity. Learn more about what contract works insurance covers.