INSURANCE GUIDE
Contract Works Insurance UK
What contract works insurance covers during a building project and how it differs from public liability.
TL;DR
- Contract works insurance covers the building under construction against damage - not covered by public liability.
- Public liability covers third-party claims; contract works covers damage to the works themselves.
- Building contracts typically specify whether the employer or contractor arranges contract works insurance.
- The contract works policy runs from start of works to practical completion.
What Contract Works Insurance Covers
Contract works insurance (sometimes called contractors all risks or CAR) covers the physical building works in progress against loss or damage from fire, storm, flood, theft of materials, malicious damage, and accidental damage during construction. If part-completed works are damaged - a fire destroying a half-built structure, a storm demolishing newly erected scaffolding, or a burst pipe flooding foundations - contract works insurance pays for reinstatement. It protects the investment in work completed to date that would otherwise be entirely at the contractor's and client's financial risk.
What Contract Works Does Not Cover
Contract works insurance does not cover: defective workmanship or design (these are warranty and PI issues); existing structures being renovated (which need separate property cover); tools and plant (which need their own equipment cover); or third-party claims by members of the public (which are covered by public liability). The scope is specifically the physical new works and materials incorporated in them.
Who Arranges the Policy
Standard form building contracts specify which party arranges contract works insurance. JCT Clause 6 sets out three options: the contractor insures the works; the employer insures; or joint names cover is arranged. Under design-and-build contracts, the contractor typically arranges all insurance. For more complex projects, the employer may prefer to arrange joint names cover that protects both parties under the same policy, avoiding disputes over which party's insurer responds to a claim.
Period of Cover
Contract works policies run from the commencement of work on site to practical completion. The period should allow for realistic project timelines including any anticipated delays. If the project overruns, the policy must be extended - contract works claims arising after the policy expiry date but before practical completion are not covered by an expired policy. Include a contingency period in the policy duration when arranging cover for longer projects.
Disclaimer
This guide is for general information only and does not constitute financial or insurance advice. Kaeltripton.com is not regulated by the FCA. Always read policy documents in full before purchasing cover.
Frequently Asked Questions
Does the homeowner need contract works insurance for a home extension?
For domestic extensions, the contractor typically arranges contract works insurance as part of their commercial insurance programme. The homeowner's buildings insurance should be notified of the works but does not need to cover the new extension works separately - that is the contractor's responsibility. Confirm with your contractor before works begin that they hold appropriate contract works and public liability cover, and ask for evidence of the policies.
What happens to contract works insurance after practical completion?
At practical completion, the completed works become the employer's or homeowner's property. At this point, the contract works policy ends and the completed building should be insured under a standard property or buildings insurance policy. The transition from contract works cover to buildings insurance should be planned so there is no gap in cover at the point of practical completion.
