Contract Works Insurance Explained
Contract Works Insurance (also known as Contractors All Risks insurance) provides cover for buildings and structures while they are under construction. It protects against physical loss or damage to the works in progress before the project is completed and handed over.
For developers, contractors and property owners, it is a fundamental part of managing construction risk.
Why is Contract Works Insurance Important?
Construction sites face significantly higher risks than completed buildings. Materials are exposed, structures are unfinished and multiple trades are operating simultaneously. Even a minor incident can cause major disruption.
Contract Works Insurance helps to:
✦ Protect project budgets from unexpected losses
✦ Avoid costly delays and re-work
✦ Reduce disputes between contractors, clients and subcontractors
✦ Meet contractual and lender requirements
Without this cover, the financial responsibility for repairing damage may fall entirely on the contractor or developer.
What Does Contract Works Insurance Cover?
Cover can be tailored to the specific project, but typically includes:
Contract Works (Permanent and Temporary)
✦ New buildings and structures under construction
✦ Extensions, refurbishments and fit-outs
✦ Temporary works such as scaffolding and hoardings
Insured Events
✦ Fire and explosion
✦ Storm, flood and escape of water
✦ Theft and vandalism
✦ Accidental damage
✦ Collapse during construction
Materials
✦ Materials stored on site
✦ Materials in transit (subject to policy terms)
Optional Extensions
✦ Existing structures (for renovations and alterations)
✦ Contractors’ plant, tools and equipment
✦ Off-site storage
✦ Delay in completion or loss of rent
Common Loss Scenarios
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Fire Damage
A fire damages partially completed works and stored materials on site.
Contract Works Insurance covers the cost of reinstating the damaged areas, allowing the project to continue.
Storm or Flood
Severe weather damages unfinished roofing and causes water damage to internal works.
The policy covers repairs and replacement of affected materials.
Theft From Site
High-value materials such as copper piping or cabling are stolen overnight.
The policy covers replacement costs, subject to agreed security conditions.
Accidental Damage
Completed sections of work are damaged during ongoing construction activities.
Contract Works Insurance responds to repair the damage.
Who Should Arrange Contract Works Insurance?
Responsibility depends on the contract, but cover is commonly arranged by:
✦ Main Contractors
✦ Developers or Property Owners
✦ Clients on design and build projects
Policies are often required in joint names, protecting the employer, main contractor and subcontractors under one policy. This helps prevent disputes and ensures all parties are adequately protected.
Is Contract Works Insurance a Contractual Requirement?
Yes, in many cases. Most standard construction contracts (including JCT and NEC) and lenders require Contract Works Insurance to be in place before work begins.
Failure to arrange adequate cover can:
✦ Breach contract terms
✦ Delay funding
✦ Expose parties to uninsured losses
Why Arrange Cover Through Alderley Insurance?
Every construction project is different. Our experienced team will advise you on the most appropriate solution for your project:
✦ Ensure correct contract values are declared
✦ Align cover with contract requirements
✦ Identify gaps between Public Liability and Contract Works insurance
✦ Arrange extensions for complex or high-risk projects
Whether you are undertaking a new build, refurbishment or extension, Contract Works Insurance is essential to protect your investment.
