We have compiled answers to the questions we are asked most frequently by builders, contractors and owner-builders about contract works insurance in Australia. If your question is not answered here, get in touch and we will be happy to help.
Contract works insurance is a packaged construction policy covering physical loss or damage to building works during the construction period, along with public and products liability. It protects against risks such as fire, storm, theft, vandalism and water damage. It covers the interests of builders, principals (property owners), subcontractors and other parties involved in the project. For a detailed explanation, see our complete guide to contract works insurance.
Yes. The terms "contract works insurance" and "construction all risks insurance" refer to the same product. They are used interchangeably in the Australian market. "Contract works" is the more common term used by brokers and builders in everyday conversation.
While there is no specific law requiring contract works insurance in most states, it is effectively mandatory in practice. Standard building contracts (HIA, MBA, Fair Trading) require the builder to insure the works. Banks and lenders financing construction require evidence of cover. Head contractors require subcontractors to demonstrate insurance. Operating without it creates substantial uninsured financial exposure.
A typical policy covers the construction works themselves, building materials on site and in transit, temporary works (scaffolding, formwork, hoarding), employees' tools (subject to sub-limits), existing structures when declared, and legal liability for third-party injury or property damage. It is an all-risks policy — it covers any accidental loss not specifically excluded. See What Is Contract Works Insurance for a full breakdown.
Common exclusions include the cost of redoing defective workmanship (though resultant damage from defects is often covered under modern wordings), wear and tear, gradual deterioration, mechanical breakdown, war and terrorism, penalties and fines, and the builder's own loss of profit unless specifically extended. Existing structures not declared on the policy are also excluded.
The standard policy only covers new works. To cover the existing structure during renovations or extensions, it must be specifically noted on the policy with an agreed value. This is one of the most common coverage gaps we see — always confirm with your broker before starting renovation work.
Yes. Most contract works policies include a legal liability section covering public liability and products liability. The public liability cover within a contract works policy is often broader than a standalone policy, including sub-contractor liability, vibration and weakening of support cover, and property in care, custody and control.
Most policies include limited cover for employees' tools, typically with per-item and aggregate sub-limits (for example, $2,000 per item and $10,000 total). For higher-value tools, specialised trade equipment or construction plant, a separate policy may be needed to provide adequate cover.
Yes. Storm, tempest, flood, earthquake, cyclone and bushfire are typically covered. However, projects in high-risk natural hazard areas may have higher excesses or specific sub-limits. The rate may also be higher for projects in cyclone zones, flood-prone areas or bushfire-prone regions.
The defects liability period is a period after practical completion (typically 12 to 24 months) during which the builder is responsible for rectifying defects. Contract works insurance can be extended to cover this period, protecting against physical damage during the defects rectification phase. This is a worthwhile extension for most projects.
Premiums vary significantly based on project value, construction type, location, builder experience and claims history. As a rough guide, rates typically range from 0.15% to 0.5% of contract value for standard residential construction. A $500,000 home might cost $750 to $2,500 for cover. Read our full cost guide for detailed pricing information.
Generally yes. Annual turnover policies attract a lower rate per dollar of contract value 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 simpler to manage.
On most residential projects, the builder arranges and pays for the policy, with the cost factored into the contract price. On larger commercial projects, the principal (developer or owner) may arrange and pay for a project-wide policy. The building contract specifies who is responsible.
A single-project policy covers one specific construction project for a defined period. An annual turnover policy covers all projects commenced during a 12-month period, with premiums based on estimated annual turnover and adjusted at renewal. Annual policies are best for active builders with ongoing work; single-project policies suit owner-builders and one-off large projects.
Contract works covers damage during construction. Builder's warranty protects the homeowner after completion if the builder cannot complete or rectify defects due to insolvency, death or disappearance. They are completely separate products. Read our full comparison for a detailed explanation.
Subcontractors working under a head contractor are typically covered by the head contractor's policy for on-site construction risks. However, subcontractors running their own projects independently need their own cover. All subcontractors should maintain their own public liability insurance regardless of whether they are covered under a head contractor's contract works policy.
Yes. As an owner-builder, you take on the same construction risks as a licensed builder. Your home and contents insurance will not cover a building site. Contract works insurance protects your financial investment against physical damage and liability claims.
Homeowners can arrange contract works insurance if they are building as an owner-builder (with a permit) or if the building contract specifies that the principal arranges insurance. In most standard residential contracts, the builder is responsible for arranging cover.
Contact your broker as soon as possible after the loss or damage. Take photos, secure the site to prevent further damage, and keep damaged materials. Your broker lodges the claim with the insurer and manages the assessment process. Do not commence repairs until the insurer has assessed the damage unless emergency works are needed to prevent further loss.
Contact your broker before the policy's construction period expires. Most insurers will extend the period for an additional premium. If the policy lapses before the project is complete, you will have no cover. Do not let your policy expire without arranging an extension.
Yes, though premiums will be higher and fewer insurers may be willing to quote. A specialist broker can approach insurers who consider builders with claims history and negotiate the best available terms. Being transparent and demonstrating improved risk management helps.