UK homeowners planning building work often ask whether their home insurance covers the project or whether they need a builders risk policy. The two cover different things: homeowners insurance covers a finished, occupied home, while builders risk, known in the UK as contract works, covers the building work itself. This guide explains the difference rather than picking a winner, using Association of British Insurers and Money Helper sources. Kael Tripton does not provide quotes, does not route enquiries to brokers, and does not earn commission from any provider mentioned.
Key Facts
- Homeowners insurance covers the building and the owner's contents for an occupied home (ABI, accessed June 2026).
- Builders risk, called contract works or contractors all risks in the UK, covers the works, materials, and often plant during construction, usually on an all-risks basis (ABI, accessed June 2026).
- For alterations and extensions, both the existing structure and the works should be insured (ABI, accessed June 2026).
- You must tell your home insurer about major building work, as it can affect cover, especially if the home is unoccupied during the project (ABI, accessed June 2026).
- Both covers are sold by FCA-authorised insurers, with disputes referable to the Financial Ombudsman Service (FCA; FOS, accessed June 2026).
At a glance: builders risk vs homeowners insurance
| Attribute | Builders risk (contract works) | Homeowners insurance |
|---|---|---|
| What it covers | Building works and materials in progress | Finished building and owner's contents |
| When it applies | During construction or renovation | While the home is occupied |
| Who usually arranges | Contractor, sometimes homeowner | Homeowner |
| Existing structure | Should be insured on alterations | Covered, subject to disclosure |
| Cover basis | Usually all-risks | Defined perils and options |
| Term | Length of the project | Annual policy |
| Liability | Often paired with contractor liability | Personal occupier liability |
What a builders risk policy is
A builders risk policy, known in the UK as contract works or contractors all risks, covers a building project while it is being built or renovated. The ABI describes contract works cover as protecting the works themselves and unfixed goods and materials on site for incorporation, generally on an all-risks basis. On larger jobs it can also cover plant and temporary works, and it runs for the length of the project rather than annually.
For a homeowner, the key point is that this cover is usually arranged by the building contractor as part of their insurance, alongside public liability and employers' liability. On alterations and extensions, the ABI notes that both the existing structure and the new works should be insured, which is where home insurance and contract works overlap and must be coordinated.
What homeowners insurance is
Homeowners insurance, or standard home insurance, covers a finished, occupied home. The ABI describes buildings insurance as covering the structure and permanent fixtures, and contents insurance as covering the owner's possessions, usually with personal liability cover for the owner as occupier. It is an annual policy priced on the assumption that the home is lived in and not a building site.
Major building work changes that assumption. Extensive renovations, periods when the home is unoccupied, and the presence of contractors and materials can all affect cover. This is why home insurers expect to be told about significant works.
How the cover differs
The dividing line is the state of the property. Homeowners insurance covers the home as a completed dwelling; builders risk covers it as a project under construction. During major works, the risks shift toward those a builders risk policy handles, such as damage to partially completed work, theft of materials, and weather damage to an exposed structure, which a standard home policy may not cover.
Responsibility also differs. The contractor typically arranges contract works cover for the project, while the homeowner keeps their home insurance for the existing structure and contents. The two must be coordinated so that the existing building is insured during the works and there is no gap between the contractor's cover and the home policy. Smaller jobs may be handled by notifying the home insurer, while larger projects need dedicated contract works cover.
How the cost differs
Builders risk cost depends on the project value, type and length of works, and risk controls, while home insurance cost depends on the property, rebuild value, and cover chosen. They are not directly comparable, because one is project-based and the other annual. For renovation work, a homeowner may pay for both at once: continued home insurance plus the contractor's contract works cover reflected in the build price. Check policy schedules and FCA-authorised brokers for live terms rather than relying on a single figure.
Who a builders risk policy suits
Anyone undertaking construction or significant renovation: developers, contractors, and homeowners managing a major project, especially new builds, extensions, and structural alterations where the works carry real value and exposure.
Who homeowners insurance suits
Owner-occupiers of a finished home for everyday living. It remains the right cover for the existing dwelling, but it should be supplemented during major works and kept informed of significant projects.
When you need both
During a renovation or extension, you typically need both at once: home insurance for the existing structure and contents, and builders risk or contract works cover for the project. The two are not duplicative, because they cover different things at different stages. The essential step is to tell your home insurer about the work and confirm who insures the existing structure during the build, so there is no gap.
Frequently asked questions
Does home insurance cover building work?
Standard home insurance covers a finished, occupied home, not the building works themselves. You must tell your home insurer about major work, and the works usually need separate contract works cover, often arranged by the contractor.
What is the UK equivalent of builders risk insurance?
In the UK, builders risk cover is generally called contract works or contractors all risks. It covers the works and materials during construction, usually on an all-risks basis.
Who arranges insurance for a home renovation?
The contractor usually arranges contract works and liability cover for the project, while the homeowner keeps home insurance for the existing structure and contents. Coordinate the two so the existing building is insured throughout.
Do I need to tell my insurer about an extension?
Yes. You should tell your home insurer about major works such as an extension, because they affect the risk and the cover, particularly if the home is unoccupied during the project.
Is the existing house covered during the works?
It should be, but this needs confirming. The ABI notes that on alterations both the existing structure and the works should be insured, so check whether your home policy or the contractor's cover protects the existing building during construction.
How do I check an insurer is authorised?
Search the firm's name or reference number on the FCA Register at register.fca.org.uk. Both covers are sold by FCA-authorised insurers, and eligible disputes can be referred to the Financial Ombudsman Service.
