Contract Works Insurance Explained

Contract works insurance (often called “contractors’ all risks”) helps protect a building project while it is being carried out. It can cover accidental loss or damage to the works, materials, and sometimes tools and temporary structures.

It is commonly needed for builders, trades, renovators, and property developers—especially where a client contract requires proof of cover.

This guide explains what contract works insurance is, what it typically covers, common exclusions, and how to choose limits and terms. This is general information, not personal insurance advice.

What “Contract Works” Means

“Contract works” refers to the project you are working on—everything that will become part of the finished build. This can include:

• New build works and extensions
• Renovations and refurbishments
• Fit-outs and internal alterations
• Materials delivered to site (sometimes offsite storage)
• Temporary works (scaffolding, hoarding) if included

The policy is designed to protect against sudden, unexpected events that damage the works while they are underway.

What Contract Works Insurance Typically Covers

Most policies cover “all risks” of physical loss or damage to the works, subject to exclusions. Common insured events include:

• Fire and explosion
• Storm and flood
• Escape of water
• Theft of materials from site (security conditions apply)
• Vandalism and malicious damage
• Impact damage (e.g. vehicle collision)

Some policies also include (or can add):

• Own plant and hired-in plant (separate section)
• Temporary accommodation costs (rare in trade policies, more in developer policies)
• Professional fees (architects/engineers) for reinstatement
• Debris removal and site clearance

What It Usually Does NOT Cover

This is where most disputes arise. Common exclusions include:

• Defective workmanship or poor workmanship itself (the “cost of making good”)
• Defective design, specification, or materials
• Gradual deterioration, corrosion, rot, wear and tear
• Theft where site security requirements were not met
• Consequential losses (e.g. lost profit / delay costs) unless specifically insured

Important distinction: if a wall collapses due to poor workmanship, the policy may cover resulting damage to other parts of the works, but not the cost of rebuilding the defective wall itself (wordings vary).

Who Should Arrange the Cover?

There are three common approaches:

• The contractor arranges contract works cover for the project
• The principal contractor arranges a project policy covering all subcontractors
• The client/developer arranges a project policy (often on larger developments)

Always check your contract. If multiple parties have cover, confirm how claims are handled to avoid gaps and disputes.

Choosing the Right Sum Insured and Limits

The key number is usually the “contract value” or “maximum value at risk”—the full cost to reinstate the works at the worst point in the project. Underinsuring can reduce payouts. Also check:

• Single project limit (maximum value per contract)
• Any limit for materials stored offsite
• Any limit for “existing structures” (important in refurbishments)
• Excess levels (often higher for theft/flood)

Refurbishments and “Existing Structures”

Many projects involve working on an existing building. Some contract works policies exclude the existing structure unless you add it specifically. Ask: does the policy cover:

• The new works only?
• The existing structure as well?
• The client’s materials already on site?

This is critical for extensions, loft conversions, and major refurbishments.

Security Conditions and Theft Claims

Theft cover is usually conditional. Typical requirements include:

• Locked perimeter fencing or hoarding
• Secure storage containers for materials/tools
• Doors/windows locked and alarm set (where fitted)
• No valuable materials left unsecured overnight

If you don’t meet security conditions, a theft claim may be declined even if theft is listed as an insured peril.

Contract Works vs Public Liability vs Employers’ Liability

Contract works protects the project itself. It is not the same as:

• Public liability (injury/property damage to third parties)
• Employers’ liability (injury/illness to employees)
• Professional indemnity (design advice/errors)

Most trades need more than one policy to be properly covered.

Practical Steps Before You Buy

• Read your contract requirements (who must insure what)
• Confirm whether you need to include existing structures
• Calculate realistic contract values and peak value at risk
• Document site security measures (and follow them)
• Keep a site diary and photos—useful for claims

If you’re unsure about what the policy covers, ask the insurer/broker to confirm in writing.

Key takeaways

• Contract works insurance protects the build while it is underway, not your liability to others
• The sum insured should reflect the full reinstatement value at peak project stage
• Refurbishments often need “existing structure” cover added explicitly
• Theft cover is usually conditional on strict site security requirements
• Defective workmanship is commonly excluded—check “resulting damage” wording