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What Contract Works Insurance Covers
Contract works insurance, also known as construction insurance or contract works and liability insurance, covers building projects against physical loss or damage during the construction phase.
It covers works in progress, materials, plant and equipment, plus the legal liabilities that arise during construction. Principals, builders and contractors use it to manage the financial risk of fire, storm, theft and accidental damage on site.
On residential, commercial or civil projects, contract works insurance protects the works from site commencement to completion. Vehicles and plant on public roads need commercial motor insurance. It sits within our business insurance range at Fortis Risk Solutions.
Contract Works Insurance: Cover Sections and Benefits
What Contract Works/Construction Insurance does not cover
Contract works insurance pays for damage to the project while it is being built. It is not a warranty on the standard of the building work, and it stops where another policy is meant to pick the loss up. Typical exclusions are:
- The cost of putting right faulty workmanship or defective materials, although damage those defects cause to finished parts of the works is usually covered
- Wear, tear, rust, corrosion and gradual deterioration
- Plant, tools and hired equipment, which belong under a mobile plant or construction equipment section
- Loss or damage after practical completion, or once the principal has taken possession
- Liquidated damages and penalties for running past the completion date
- Existing structures the builder is working on or around, unless they are listed on the policy
- Theft from an open site where there is no sign of forced entry and no site security
FRS reads the contract before placing cover, so the sums insured, the maintenance period and the parties named on the policy match what the contract actually asks for.
How Contract Works/Construction Insurance premiums are set
Insurers rate contract works insurance on the job, not on annual turnover alone. The things that move the price are:
- The estimated contract value, including materials supplied free of charge by the principal
- The type of work: new residential build, commercial fit out, civil works, or renovation of a building that stays occupied
- The contract period and the length of the maintenance or defects liability period
- Height, excavation depth, and whether hot works, piling or demolition are part of the scope
- Site security, including fencing, lighting, cameras and how materials are stored overnight
- Claims history, particularly water damage and theft from earlier sites
- The excess chosen and any separate excess for water damage or storm
An annual turnover policy suits a builder with a steady run of similar jobs. Single project cover suits one large or unusual contract. FRS prices both on the same scope and fits the result to the rest of your business insurance programme.
How to claim on Contract Works/Construction Insurance
Most site losses are storm, water, fire or theft, and the evidence disappears the moment trades start clearing up. Report anything that could become a claim on the day you find it, even if the cost is still unclear. The FRS process:
- Call FRS as soon as the damage is found, before the site is cleaned up or repairs are started
- Make the site safe and stop further damage, keeping receipts for any emergency work
- Photograph the damage, the site conditions and any forced entry, and hold damaged materials where it is safe to do so
- Report theft or malicious damage to police and record the reference number
- Do not admit liability and do not agree a cause with the principal or a subcontractor
- FRS lodges the claim, briefs the loss adjuster and chases progress payments so the build keeps moving
Delivery dockets, variation orders and the site diary all support the claim. Start at our make a claim page.
Contract Works/Construction Insurance compared with Public Liability
| Question | Contract Works | Public Liability |
|---|---|---|
| What it covers | Physical damage to the works, materials and temporary structures on site | Injury to other people and damage to their property caused by your work |
| Who buys it | Builders, subcontractors and principals for a specific project or an annual programme | Any trade or business that works on other people’s premises |
| Typical trigger | Storm, fire, water damage or theft on site before handover | A neighbour’s wall cracks, or a passer by is injured by falling material |
| Sits with | Plant and equipment, transit cover | Business pack, professional indemnity |
Most contracts require both, and the two are usually written on the same programme. If a wall collapses, contract works insurance rebuilds your works while the public liability section answers the claim from whoever was standing next to it.
Contract Works Insurance FAQs
It is usually arranged by the principal contractor or head contractor. Project owners and developers may also arrange the cover, depending on the contractual obligations and risk allocation in the building contract. Owners who hold commercial property owner insurance often arrange it for a refurbishment.
Cover varies by insurer, but common exclusions include:
- Defective workmanship or materials, meaning the cost of rectifying the defect itself
- Normal wear and tear
- Mechanical or electrical breakdown, unless it results in insured damage
- Delays not caused by insured physical damage
Resultant damage caused by defective work may still be covered, subject to policy terms.
Most contract works policies include public liability insurance for construction activities. Check the limits, exclusions and named insured parties against the building contract before you rely on them.