Construction Insurance
Insurance options for builders, developers and construction businesses managing projects from design through to handover.
Industry overview
Construction projects bring together many parties, large sums of money and long timeframes. Damage to the works, injury on site or a design problem can affect the whole project.
Builders and developers are often asked to hold specific cover under their contracts, and some states have their own requirements for residential building work. A broker can help you understand how the different policies relate to each project.
Common business risks
Damage to the works
Storms, fire, theft and vandalism can damage a project before handover. Rebuilding can affect both cost and timelines.
Third party injury and property damage
Excavation, crane work and site traffic can affect neighbours and the public. Claims from adjoining owners are a known risk on tight urban sites.
Design and specification errors
Where a business provides design or project management services, an error can lead to costly rectification and disputes.
Plant and equipment loss
Excavators, scaffolding and other equipment can be damaged or stolen from site. Replacement may take time to source.
Contractual liability
Head contracts often include indemnities and insurance clauses. These can shift risk to your business in ways that a standard policy may not respond to.
Delays and cash flow pressure
Weather, supply shortages and disputes can stretch a project out. Delays may affect cash flow across your other jobs as well.
Insurance commonly considered
Businesses in this sector often look at the following types of cover. What suits you depends on your operations, contracts and assets.
- Public & Product Liability InsuranceBuilders and subcontractors are commonly asked for public liability before they can work on a project.
- Plant & Machinery InsuranceConstruction businesses that own or hire in plant may look at cover for accidental damage, theft and breakdown.
- Professional Indemnity InsuranceFirms offering design, drafting or project management services may consider cover for claims arising from professional advice.
- Commercial Motor InsuranceSite utes, tippers and light trucks used in the business generally need commercial motor cover.
- Management Liability InsuranceDirectors of building companies may consider this cover for claims connected to how the business is managed.
- Business InsuranceA business package may help protect office premises, equipment and stock held away from site, depending on the policy.
Risk management considerations
- 1Have contracts reviewed before signing, especially indemnity and insurance clauses.
- 2Collect and check certificates of currency from all subcontractors before they start on site.
- 3Secure sites after hours with fencing, lighting and locked storage for plant and materials.
- 4Keep detailed site diaries, photos and variation records throughout each project.
- 5Meet work health and safety duties through site inductions, safe work method statements and regular checks.
- 6Talk to your broker before taking on a project that is larger or different from your usual work.
Why broker support helps
Construction insurance can involve several policies that need to work together across a project. A broker can help you see where cover may overlap and where there could be gaps based on your contracts.
If something goes wrong on site, early notification and good records matter. A broker can guide you through the claims process and help you respond to insurer questions.
Frequently asked questions
What is contract works insurance?
Contract works insurance is designed to cover physical loss or damage to a construction project while it is being built, subject to policy terms and exclusions. It may be arranged by the builder, the owner or the head contractor depending on the contract.
Is home warranty insurance the same as builder's liability cover?
No. Domestic building or home warranty insurance is a state-specific arrangement that may protect homeowners if a builder cannot complete work or fix defects. Requirements differ between states and territories, so it is worth checking with the relevant state authority.
Do subcontractors need their own insurance?
Many head contractors require subcontractors to hold their own public liability and other cover. The contract usually sets out what is needed and the minimum limits.
Will my policy cover defects in my own work?
Liability policies generally do not cover the cost of fixing your own faulty work, though they may respond to resulting damage to other property. The wording varies between insurers, so it is worth asking a broker to explain it.
Talk to us about insurance for your business.
Tell us how your business operates and we'll discuss the types of cover that may be relevant.