What is Contract Works Insurance?

By Olivia Johnson - Trusted UK Business Expert

Last Updated 14th of March 2025

5 minute read

If you’re working in construction or similar industries, you may have heard about Contract Works Insurance. This type of insurance is vital to protect your worksite and assets, but many people don’t fully understand its benefits. We’re here to help you understand how it works and why it’s important.

Contract Works Insurance is a specialised policy that covers construction projects against risks like damage, theft, or accidents. It protects the contractor, subcontractors, and other parties involved in the project. This ensures the financial stability of the project in case of unforeseen events.

Understanding Contract Works Insurance is essential to safeguarding your project’s success. Keep reading to find out why this coverage is so important and what it protects.

What is Contract Works Insurance?

Contract Works Insurance is an essential type of coverage for contractors and builders involved in construction projects. It provides financial protection in case of damage, loss, or accidents during the course of a project. This insurance is designed to cover materials, equipment, and structures that are under construction.

In simpler terms, Contract Works Insurance is like a safety net for any unexpected events that could damage or delay a project. It can cover a wide range of incidents, from fire and vandalism to accidents during construction. Having this insurance in place ensures that the financial costs of repairing or replacing damaged materials, equipment, or structures won’t fall on the contractor or the business owner.

Understanding Contract Works Insurance

Contract Works Insurance is specifically designed to cover the risks that arise during the construction process. The key component of this insurance is that it protects the physical worksite, covering both materials and work in progress. This policy also extends to protect contractors, subcontractors, and the project owner against financial losses caused by incidents that may arise during the construction phase.

In construction, projects are often at risk of being damaged or destroyed by external factors such as fire, flooding, vandalism, or even theft. Without the proper insurance, a business could face severe financial hardship if something goes wrong. Contract Works Insurance offers protection by covering these costs, ensuring that the project can continue as planned or be rebuilt if necessary.

This type of insurance may also cover liabilities that arise from accidents that occur on-site, like a worker being injured or property being damaged by construction activities. In addition to offering peace of mind for contractors, this coverage helps to foster a more secure working environment, as it takes into account a variety of potential risks during the construction process.

What Does Contract Works Insurance Cover?

Contract Works Insurance covers a broad range of incidents, including but not limited to:

• Damage to Property – If the construction project gets damaged due to fire, flood, or any accidental cause, this insurance can cover repair costs.
• Loss of Materials or Equipment – If construction materials or equipment are lost or stolen, the policy helps replace them.
• Damage During Construction – Any damage that occurs while the building or structure is being worked on is covered.
• Liability Protection – Injuries that happen on-site or damage caused by construction activities may be included under liability coverage.
• Natural Disasters – If a natural disaster, such as a storm or earthquake, damages the site or work, insurance will cover the costs.

Contract Works Insurance provides essential protection, ensuring that all potential risks are taken into consideration, from natural disasters to human errors.

Who Needs Contract Works Insurance?

Contract Works Insurance is generally required by contractors and builders working on significant construction projects. However, it can also be beneficial for a wide range of industries, including architects, engineers, and project managers. Essentially, anyone involved in the construction or alteration of buildings or other structures should consider having this insurance in place.

Even if you’re a small contractor, it’s essential to ensure that your business is protected against unexpected events that could disrupt the completion of the project. In many cases, clients or project owners may even require that contractors have this type of insurance before work can begin.

Why Do You Need Contract Works Insurance?

Contract Works Insurance offers several benefits that can help businesses in the construction industry thrive and mitigate risks. Here’s why this coverage is so important:

• Protection Against Uncertainty – The construction industry is filled with risks, and having the right insurance ensures that your business is protected against the unforeseen.
• Financial Security – If something goes wrong, such as an accident or natural disaster, Contract Works Insurance can help pay for repairs or replacement, reducing the financial burden on the contractor.
• Peace of Mind – Contractors can work without the constant worry of potential financial losses. This allows you to focus on completing the project rather than worrying about “what if” scenarios.
• Requirement for Clients – In some cases, clients or stakeholders may insist on seeing proof of Contract Works Insurance before hiring a contractor. Having the policy in place could be essential for winning contracts.

What Does Contract Works Insurance Not Cover?

While Contract Works Insurance offers a broad range of protections, there are also exclusions that you should be aware of. Some risks are typically not covered under this policy, such as:

• Pre-existing Damage – If the property or materials were damaged before the insurance was in place, it would not be covered.
• Defective Workmanship – If the damage results from poor workmanship or design flaws, it may not be covered by the policy.
• General Wear and Tear – Normal wear and tear over time is not usually covered under Contract Works Insurance.
• Acts of Terrorism – Some policies may exclude damage caused by terrorism or political violence. However, additional coverage may be available for these risks.

It’s important to review the policy details to fully understand what is and isn’t covered.

How Much Does Contract Works Insurance Cost?

The cost of Contract Works Insurance can vary based on a number of factors, including:

• The size and scale of the project – Larger projects with higher risks often cost more to insure.
• The type of construction work – Certain types of construction, such as high-rise buildings or complex industrial projects, may require more expensive coverage.
• The value of materials and equipment – The more expensive the materials and equipment, the higher the cost of insurance.
• The level of coverage – The more extensive the coverage, the higher the premium.

To get an accurate quote, it’s important to speak with an insurance provider who can assess the specifics of your project.

Are you ready to safeguard your construction project? Click the link below to find out more about how Contract Works Insurance can protect you and your worksite today.

FAQ

Is Contract Works Insurance mandatory?

No, Contract Works Insurance is not always mandatory. However, it is highly recommended, and some clients may require contractors to have it before work begins.

Does Contract Works Insurance cover the full value of my project?

It typically covers the value of materials and structures under construction. However, you should discuss the details with your insurer to ensure it meets your needs.

Can subcontractors be covered under my Contract Works Insurance?

Yes, subcontractors can be covered as part of the overall policy. It’s essential to verify this with your insurer to ensure full protection.

How do I know if my Contract Works Insurance policy is right for my project?

Consult with an insurance professional to ensure that your policy matches the specific risks and needs of your construction project.

Can I change my Contract Works Insurance during the project?

Yes, you can typically adjust your policy if the scope of work or project size changes. Always inform your insurer about any significant changes.