Understanding Contract Works Insurance: Protecting Your Business & Customers

• Adroit Insurance and Risk
• - November 3, 2025

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Contract works insurance is essential for anyone involved in building or construction projects. It covers the works, materials to be incorporated, and the builder’s plant and equipment. It also provides cover for the financial costs related to people being injured on-site, with the potential for large legal fees and damages being awarded by courts.

What does Contract Works Insurance cover?

 Section 1 – Material Loss or Damage to the Works

Covers the cost of temporary protection, repairs or replacement of work if damaged due to storm, hail or general accidents. The insurance covers:

• The full value of works under construction, up to practical completion;
• Materials to be incorporated into the project, both on and off-site;
• Your plant, tools & equipment, and
• Any principal’s existing buildings on the site.

For an additional premium, additional cover for Professional Fees, Removal of Debris, and Temporary Protection can also be included.

 Section 2 – Public and Products Liability

Public Liability insurance for builders and contractors is designed to protect you against legal costs and damages if you are found responsible for someone being injured on-site or property being damaged.

 Product Liability is designed to protect you against legal costs and damages if you’re found responsible for any personal injury that occurs or property that is damaged that was caused by the completed works. For example, a wall was not built correctly and fell onto cars after the defect’s liability period ended. Under the Product Liability cover, damage to the vehicles would be covered, but not the cost of rebuilding the faulty wall. 

 What doesn’t it cover?

 Home warranty insurance is usually required in all states and territories for residential work that is over $10,000 in value.

• Loss or damage due to defective materials or workmanship;
• Workers’ Compensation is required in all states and territories for employees, casual workers, and sometimes contractors.
• Professional errors and mistakes require separate Professional Indemnity insurance to be in place.

 Who Needs Contract Works Insurance?

Anyone involved in the building and construction industry, including:

• Builders and Contractors:
• Property Developers:
• Owner-Builders:
• Subcontractors:

Choosing the Right Policy

Consider the specific needs of your work or the project, including:

• Scope of Coverage: Ensure it covers all key risks.
• Policy Limits: Check that sums insured and sub-limits are sufficient
• Exclusions: Understand any exclusions or limitations. Is damage caused by a sub-contractor or injury to labour hire or contractors covered?

Contract works insurance is a specialist cover for managing risk in the building and construction industry. The right policy will manage key risks and provide financial security and peace of mind, allowing you to concentrate on managing and growing your business.