Understand the cover builders commonly use, what clients and sites ask for, and when it gets more complicated.
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The short answer
Builders in Australia usually carry public liability insurance, contract works insurance for projects under construction, and tools and vehicle cover. Residential builders also need home warranty type insurance in most states above a contract value threshold. Employing staff means workers compensation, and using subcontractors adds questions about whose insurance responds.
Common cover
Most builders build their insurance from a few separate policies. These are the ones that come up most, and why they matter for this kind of work.
Covers injury to people and damage to neighbouring or client property arising from your projects, including work done by your team.
Covers the building and materials while the project is underway, against fire, storm, theft and accidental damage. Often required by the contract.
Power tools, levels, scaffolding components and site equipment.
Utes, vans and trucks used to move people, materials and waste.
Owned or hired plant such as skid steers, mini excavators and site generators.
When it gets harder
A carpenter doing small renovations is easy to insure. A builder running a $2 million commercial fit-out with subcontractors, hired plant, expensive materials and a deadline has several exposures at once, and each one needs to line up with the contract.
Head contracts usually spell out who insures the works, the liability limit, whose interests must be noted, and sometimes specific wording. A cheap online policy can technically be insurance but still not meet the contract.
If subcontractors don't hold their own public liability, or a worker's injury claim lands on you because of how they were engaged, your policies can end up paying. Insurers ask about subcontractor spend and whether they are insured.
Damage to the existing building during a renovation or extension can be treated differently from damage to the new works. It is worth checking how the contract works policy handles it.
Annual contract works policies have a maximum project value. A job above that limit may need a separate single-project policy.
Residential building above certain contract values needs state-based home warranty or domestic building insurance, and each state runs it differently. Eligibility can depend on your finances and history.
Illustrative examples
These are illustrative examples, not real clients, showing how the work changes the insurance.
A builder who mainly does residential extensions wins a $2 million office fit-out. The contract asks for $20 million liability, contract works for the full value, and the principal noted on both policies. Their annual contract works policy has a $1 million project limit, so this job needs its own cover.
A severe storm hits a frame-stage house, damaging the frame and soaking stacked materials. Contract works is the policy designed for this kind of loss during construction.
A subcontractor's work causes damage to a neighbouring property, and it turns out they let their public liability lapse. The neighbour pursues the builder, and the builder's policy and contract terms decide what happens next.
Cost
Builders' premiums depend heavily on the type and size of projects. These are the main factors.
| Factor | Impact | Why it matters |
|---|---|---|
| Turnover and project values | Major | Larger annual turnover and bigger projects mean more exposure. |
| Residential versus commercial work | Major | The type of construction and the client affect risk and requirements. |
| Subcontractor spend | Major | How much work is subcontracted and whether subbies are insured. |
| Liability limit | Moderate | $20 million costs more than $10 million. |
| Location and natural hazards | Moderate | Bushfire, flood and cyclone exposure affects contract works pricing. |
| Claims history | Moderate | Previous liability and works claims affect pricing and insurer choice. |
Common questions
Most builders carry public liability and contract works insurance, plus tools and vehicle cover. Employers need workers compensation, and residential builders usually need home warranty type insurance above state contract value thresholds. The contracts you sign often set the details.
In most states, residential builders need home warranty or domestic building insurance for jobs above a contract value threshold. Each state runs its own scheme with its own rules, so check with your state building authority.
It depends on the contract. Many building contracts require the builder to insure the works, but some principals arrange their own project cover. The insurance clause in the contract will say.
Sometimes, depending on the policy. Many insurers expect subcontractors to hold their own public liability, and may charge more or limit cover if they don't. Collecting subcontractors' certificates of currency before they start is common practice.
Public liability covers injury to people and damage to other people's property. Contract works covers damage to the project itself while it is being built.
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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