Contract works insurance UK, sometimes called contractor’s all risks insurance policy, is a vital type of insurance for people who are operating in the construction sector. It covers a range of different types of property on the construction site against damage or losses due to theft or vandalism.
The property covered by a contract works insurance policy includes:
- The work in progress
- The building materials being used in the project
- Your plant, machinery, tools and equipment
- Any temporary buildings
- Any hired-in property
Often contract works insurance will be part of a tradesman’s insurance package, although it can sometimes be bought as a standalone insurance product. It’s usually bought on an annual basis to cover all of the projects that a contractor will be working on throughout the year. However, it can also be bought on a project-specific basis to cover a single project.
As well as needing contract works insurance to protect yourself against unexpected losses, sometimes you’ll be required to have contract works insurance because it will be a condition in the project’s contract that you have this type of insurance.
Work in progress
Contract works insurance covers the work in progress up to the handover point when you cease to be responsible. It should be noted that if you’re working on an existing structure, the existing structure is not covered by the contract works insurance policy and should be insured by the owner of that structure.
As well as covering the work in progress, contract works insurance also covers any materials on site that are being used in the project.
It’s important to check your policy to make sure you comply with any security requirements, particularly if you have large amounts of valuable materials, such as non-ferrous metals or electrical cables, on-site which represent an increased theft risk as they’re attractive to thieves.
Plant, machinery, tools & equipment
A contract works insurance policy will cover any construction plant, tools and equipment on site that you’re using to undertake the project.
Again, it’s worth checking your policy to make sure you comply with any security requirements, although you should make sure that you keep any plant, machinery, tools and equipment on site as secure as possible anyway. It’s estimated that the theft of such items accounts for around £800 million of losses each year in the UK.
As well as covering your own plant, machinery, tools and equipment, contract works insurance also covers any hired-in items. As with your own items, it’s important that you comply with any security requirements in the insurance policy.
Continuing hire charges that you’re liable to pay following any loss or damage are also covered.
If you have any temporary buildings on site, such as site huts or portable toilets, your contract works insurance will cover these. Any fixtures and fittings in these temporary buildings will also be covered.
Unlike a conventional property insurance policy, a contract works policy does not have sums insured because the value of the property on each construction site varies. Instead of calculating the premium based on the value of the property to be insured, the insurers base the premium on your annual turnover and the type of work that you are doing.
However, although there aren’t sums insured, there are policy limits. These define the maximum amount that the insurer will pay in the event of a claim.
Although the standard limits are usually adequate for most businesses, it’s important to check the limits to make sure that they are not too restrictive. The limits can usually be increased for an additional premium if they need to be.