What Is Contract Works Insurance?
Contract works insurance, sometimes called construction all-risk or CAR insurance, covers the works under construction — and typically the materials and plant on site, and in some policies the existing structure being renovated — against accidental physical loss or damage such as fire, storm or theft while the project is underway. It protects whoever bears the risk of that damage under the building contract, and the premium is usually built into the project cost as a preliminaries item rather than absorbed as a surprise expense.
Key takeaways
- Contract works insurance covers the works under construction, and often materials and plant on site, against accidental damage while a project is in progress.
- The building contract usually specifies who is responsible for taking the policy out — commonly the builder or head contractor, sometimes the principal.
- The premium is a real project cost, typically allowed for in preliminaries rather than left out of the estimate.
- It is a different cover to public liability insurance and to home warranty insurance, which protect different parties against different risks.
What contract works insurance covers
Contract works insurance protects the physical works being built — and usually the materials and temporary works on site — against accidental loss or damage from events such as fire, storm, flood, impact or theft while the project is under construction.
Depending on the policy, it can also extend to plant and equipment used on site, and on renovation or extension projects, to the existing structure being worked on, since a fire or storm during construction can just as easily damage the part of the building that was already standing.
Not the same as public liability
Contract works insurance covers damage to the project itself. Public liability insurance covers injury or damage caused to third parties or their property. Most construction contracts require both, held separately.
Who takes out contract works insurance
The building contract sets out who is responsible for arranging the policy, and the answer varies by contract type. On many residential and commercial building contracts, the builder or head contractor takes out the cover and the cost sits inside their price.
On some larger or principal-managed projects, the principal instead arranges a project-wide policy covering the head contractor and subcontractors, particularly where multiple trades work under separate contracts on the same site. Either way, the contract should say clearly who is required to hold cover and to what value, and it is worth checking rather than assuming.
Why it is a cost line in an estimate
Contract works insurance is a real, recurring cost of running a project, and a premium missing from an estimate is margin quietly given away before the job even starts.
Estimators typically carry it as a preliminaries item, either as a fixed allowance or as a percentage of the contract value, and larger or higher-risk projects — those with difficult access, extensive existing structure, or a longer program — generally attract a higher premium that should be reflected in the price.
- Contract works insurance vs public liability — contract works covers damage to the project itself; public liability covers injury or damage to third parties.
- Contract works insurance vs home warranty insurance — contract works protects the project during construction; home warranty insurance protects a homeowner after completion if the builder cannot finish or fix defective work.
- Contract works insurance and a dilapidation report — a dilapidation report records the condition of neighbouring or existing structures before work starts, which can support a claim if contract works insurance is later needed for damage during construction.
How My Trade Hub helps with contract works insurance
My Trade Hub is not an insurer and this page is general information, not insurance advice — always confirm cover and requirements with a licensed broker or insurer against your specific contract.
What My Trade Hub does help with is making sure a premium allowance is not missed: preliminaries items such as insurance sit in your editable rates library alongside labour, material and plant rates, so they are carried into every tender rather than added as an afterthought. It is free to create an account; tender preparation and estimating sit on the paid plans.
Frequently asked questions
What is contract works insurance?
Contract works insurance covers the works under construction, and usually materials and plant on site, against accidental physical loss or damage such as fire, storm or theft while a project is in progress.
Who is responsible for taking out contract works insurance?
The building contract specifies this, and it varies. Commonly the builder or head contractor arranges cover and carries the cost in their price, though on some projects the principal arranges a project-wide policy instead. Check the specific contract rather than assuming.
Is contract works insurance the same as home warranty insurance?
No. Contract works insurance covers the project itself while it is being built. Home warranty insurance is a separate, statutory cover that protects a homeowner after completion if the builder dies, disappears, becomes insolvent or cannot rectify defective work.
Does contract works insurance cover an existing structure?
Some policies extend to an existing structure being renovated or extended, since it can be damaged by the same events, such as fire or storm, that threaten the new works. This depends on the specific policy, so it is worth checking rather than assuming cover applies.
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