There are some common misunderstandings that we see when arranging contract works insurance. Getting your head around these could avoid potential headaches and cost.
Renovations, alterations, labour only
When doing alteration and renovation work, or if your contract is labour only, it is usually your client’s responsibility to arrange contract works insurance. Even though your contract may require them to do so don’t just assume they will. A number of domestic house insurers don’t actually do it, or they may quote what seem like high premiums, and this can put off homeowners from getting it. Their inaction could leave you exposed if something happens, so make sure you ask them for a copy of the contract works insurance certificate before you start work. If the project is a new build, unless it’s labour only, it is usually the builder’s responsibility to arrange the contract works insurance.
Include principal supplied materials
Whoever arranges it the policy covers both the builder and the principal (both should be named on the policy), so it’s important that any materials (and sub-contract labour) the owner supplies are included too.
When it expires
The wording of contract works polices all vary, however in general they will define when the policy ends as the EARLIER of:
Ground work and foundations need insuring too!
If there’s a natural event like an earthquake, landslip or flood your groundwork and foundations could be destroyed or require substantial rework. Plus there’s the cost of demolition and removal of debris to add to the bill. Contract works insurance will cover this, but only if you’ve arranged it before the work starts.
Banks will require it
If you’re building your own place and haven’t arranged contract works insurance from the outset, it could be very difficult to get it during the build. What usually happens is the builder needs some bank finance halfway through the job and the bank will only lend with evidence of insurance. So save yourself the hassle (and the potential risk) by getting the cover in place from day one.