In response to heightened risks and contractual obligations, employers are increasingly requiring groundwork and civil engineering companies to secure contract works insurance
In recent years there has been an increasing trend for employers to require groundwork and civil engineering companies to provide insurance cover for contract works.
Contract works insurance is arranged across the construction sector to cover works as they progress until practical completion.
Groundwork and many civil engineering companies have not historically been required to take out a full contract works policy as the likelihood of any damage to their work has been deemed to be insignificant.
A comprehensive “all risks” cover
Contract works insurance provides a comprehensive “all risks” cover for the construction of all types of building and civil engineering works including new builds and the alteration, repair, or refurbishment of existing property.
Cover can be arranged on a one-off, single-period project or on an annual basis.
Many risks covered by contract works insurance may not typically be risks that groundworks companies foresee.
However, groundworks companies with broader ‘contract works/ all-risks’ cover can benefit, particularly in helping to win new contracts where the contract terms make such cover obligatory.
Example claim
A client was contracted to lay groundworks for a new construction project and had laid fresh concrete foundations and oversight.
However, the concrete was not fully set when intruders broke into the site, stole a dumper, and drove it across the works.
This resulted in significant damage, requiring the contractor to break into and replace both footings and oversight. With contract works insurance in place, the contractor was able to claim for the labour and materials required to reinstate the works.
What does contract works insurance cover?
Contract works insurance is essentially a property insurance providing cover for accidental loss of or damage to the contract works which will usually include temporary works, unfixed materials and free issue materials on site.
These most common claims relate to damage, or loss caused by:
- Fire
- Lightning
- Theft
- Malicious Damage
- Storm and flood and other water damage
- Explosion
- Earthquakes.
Where required, contract works policies may also be extended to include other risks such as:
- Temporary Buildings
- Constructional Plant Tools & Equipment owned or hired in.
- Employee Tools & Effects
- Advanced Loss of Profit (specific projects only)
- Existing Buildings (specific projects only)
- Terrorism.
If extended, the policy is then generally referred to as a contractors all risks insurance.
This cover should not be confused with public liability insurance, as such policies specifically exclude damage to the contract works.
What isn’t covered?
Contract works insurance cover varies between insurance providers, therefore it’s important to review the exclusions, policy excesses and limits set out in the policy wording.
Loss or damage caused by uninsured risks not outlined in your policy will not be covered, therefore it’s important to consider all possible risks before work is undertaken.
Examples of typical exclusions include:
- The policy excess
- Wear and tear
- Loss or damage due to faulty design
- Inventory losses
- Terrorism (unless purchased separately).
Policies will not cover injuries or accidents to third parties or to employees (including subcontractors); these risks will still need to be covered by Public Liability Insurance and Employee Liability Insurance, respectively.
Who needs contract works insurance?
Builders are more likely to take out this cover, but there are also circumstances, where other contractors may consider arranging contract, works insurance, especially where the building contract stipulates that such cover needs to be in place.
Parties who may take out a contract work insurance policy include:
- Builders who complete residential or commercial contract work.
- Other contractors and trades participating in wider projects.
- Owner builders who are taking on the management of their entire building project –
- Employers controlling their own projects.
Speak to an expert
Tysers Insurance Brokers can provide expert insurance and risk management advice to the Construction sector.
If you require the guidance of an experienced broker, you can get in touch by visiting our website.
