Many business owners have limited understanding of exactly what is covered by their public liability insurance policy, which can leave them with a financial dilemma if they need to make a claim only to discover that what they are claiming for isn’t covered. Because of this, Contract Works insurance is often overlooked as an essential form of cover yet it can prove to be a very astute investment in your business to carry this type of cover.
Contract works insurance, sometimes known as Contractors All Risks, is an insurance specific to builders and other tradespeople and is a cover designed to protect building works in progress.
The policy will cover the cost of having to re-do work that is part of a contract, including the cost of the tools, materials and the labour required for the work, should the existing work be damaged by instances such as fire, flood, or theft during construction.
Whether or not you require Contract Works insurance depends on your client contracts and whether your clients hold you responsible for unfinished work on a construction site. Therefore, you should check all of your contracts carefully prior to beginning any work.
If you’re working on a new house build and a fire damages part or all of the property, or if a storm damages roof tiles that you have already placed, then Contract Works insurance could cover the cost of redoing the work from events such as:
Typically Contract Works insurance does not cover existing structures, e.g: you’re building an extension for a client and there’s a fire which damages the property. Contract Works insurance could cover the cost of rebuilding the extension, but not the cost of rebuilding the existing property. The rest of the damaged property would need to be covered by the client’s home insurance.
It is important to make yourself fully aware of what is not covered in the policy document. The policy will not pay for:
(See the policy document for the in-depth list of exclusions)
What should you consider when purchasing your Contract Works insurance?
It is important to insure the value of your largest project, including all the labour and materials etc. If you purchase the correct level of cover you can work with peace of mind, whereas being underinsured could cause you significant problems in the event of a claim.
For example, if your largest project is worth £1.5 million over two years, then you will need £1.5 million of cover.
The excess is the amount you pay towards a claim you make on your insurance policy. For example, if you make a claim for £1,000 for stolen tools and your excess is £200, then your payout will be £800.
|Insurance policy||Lowest excess||Highest excess|
|Public liability insurance||£250||£250|
|Employers’ liability insurance||£0||£0|
|Tools & trade materials cover (can only be purchased with the public liability policy)||£250||£250|
|Personal accident insurance||£0||£0|
|Professional indemnity insurance||£250||£500|
Please note the figures shown are for illustrative purposes only and any excess applied to your quote may differ.
Protects against claims of alleged negligence in your professional services, advice and designs.
Protects against claims of injury to third-parties or damage to a third-party's property.
A legal requirement for anyone employing staff. Protects your business in-case an employee is injured at work.
Cover for work injuries, illnesses caused by work and compensation awards.