Contract works insurance

Cover for construction work while the project is underway, including the work itself and materials on site.

Updated 4 October 2026

The short answer

What is contract works insurance?

Contract works insurance covers loss or damage to construction work while it is underway, including the structure, materials on site and often temporary works. Depending on the policy wording, it can cover events like fire, storm, theft, vandalism and accidental damage before handover. It is separate from public liability, which covers damage to other people's property.

What does contract works insurance usually cover?

Every policy is different, so the wording always decides. These are the typical inclusions and exclusions.

Usually covered

Damage to the works under construction from fire, storm, flood (if included), theft, vandalism and accidents
Materials on site waiting to be installed, and often materials in transit or stored off site
Temporary works such as formwork and hoardings, when included
Costs to remove debris and professional fees to rebuild, up to set limits

Usually not covered

Faulty design, workmanship or materials themselves (resulting damage may be covered)
Your own tools and plant, which usually need separate cover
Delays, liquidated damages and lost profit, unless specifically added
Damage after practical completion or handover, apart from any maintenance period cover

Who uses contract works insurance?

Builders, head contractors and trade contractors who carry the risk of the works until handover. Under many construction contracts one party, often the builder or the principal, must insure the works. It is common for residential builders, commercial fit-out contractors and anyone running a project with significant materials on site.

What do clients and sites ask for?

Construction contracts usually say who must insure the works, for how much, and whose interests must be noted on the policy. Some principals arrange project-wide cover themselves, in which case trade contractors need to know what that policy does and doesn't cover them for.

When it gets harder

When does contract works insurance get more complicated?

Annual versus single-project cover

Businesses with several projects a year often use an annual policy with a maximum contract value per project. A project bigger than that limit, such as a larger commercial job, may need its own policy.

The contract decides who insures

Some contracts require the contractor to insure the works, others have the principal do it. Reading the insurance clause early avoids paying for cover twice or, worse, having none.

Existing structures

Renovations and extensions involve an existing building. Damage to that existing structure is often treated differently from the new works, and may need to be specifically included.

Cost

What affects the cost of contract works insurance?

Factors that affect the price of contract works insurance
Factor	Why it matters
Contract value	The total value of the works being insured is the main driver.
Type of construction	Timber-frame residential, steel commercial, civil and fit-out work are all priced differently.
Project duration	Longer projects mean more time exposed to loss.
Location and natural hazards	Bushfire, flood and cyclone exposure can affect price and acceptance.
Security of the site	Fencing, lighting and how materials are stored affect theft risk.

Common questions

Questions about contract works insurance

Is contract works the same as builder's risk insurance?

They are similar ideas. In Australia the cover is usually called contract works, construction works or contractors all risks insurance. Builder's risk is the more common term in the United States.

Do subcontractors need contract works insurance?

It depends on the contract. Often the builder or principal insures the whole works, but some subcontracts require trades to insure their own part of the works or materials.

Does contract works cover home warranty requirements?

No. Home warranty type insurance for residential building is a separate scheme that works differently in each state. Contract works covers damage to the works during construction.

Can I get contract works cover for one job?

Yes, single-project policies are common for larger or one-off jobs. Businesses running several jobs a year often find an annual policy simpler.

Contract works by trade

How contract works insurance applies to specific kinds of work.

Other types of insurance

This page is general information only. It does not take into account your objectives, financial situation or needs, and it is not a recommendation to buy any insurance product. Always read the policy wording and, where applicable, the Product Disclosure Statement.

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