CONTRACT WORKS /CONSTRUCTION INSURANCE

Since 2006, our team has been developing a specialty in the area of Builders
Contract Works Insurance. We've negotiated keener premiums and looking at ways
to offer additional discounts to your construction insurance policy.

WHAT IS CONTRACT WORKS INSURANCE?

Cover for theft, malicious damage, weather damage and more
Construction Insurance or Contract Works Insurance will cover any building works for
loss or damage during construction. It generally covers loss or damage caused by
theft, malicious damage, wind, storms, floods, cyclones, landslides or subsidence,
fire and earthquake.
Cover for while you build
If it is built, you need Building Insurance, if it is being built, you need Contract Works
Insurance.
Our policy has additional benefits
Our Builders Contract Works Insurance policy
also features many automatic additional benefits
that can include cover for spec and display
homes. During the period of insurance, your
Builders Contract Works cover can include
alterations and additions to your builds during
the course of their erection.
Call for a free quote
If youd like to know more about Builders Contract Works Insurance, call us for a
free no obligation quote where you can ask questions and seek a clearer
understanding of how Tradesures Construction Insurance may better suit you and
your work.

Call us today at Tradesure on 1800 024 799.

SAVE SOME OF THE COST OF CONTRACT WORK

INSURANCE?
Bundle and save 20%
The Tradesure team can now offer
Subbies and Tradies a 20% standard
discount (subject to claims history) on
their Builders Contract Works
Insurance. To be eligible for further
discounts, combine your Material
Damage and Public Liability sections.
Pay by the month helps your cashflow
We understand the cost of a one-off annual premium can make a substantial impact
on your cashflow and may even require additional financing to cover that fee. The
Solution is our Pay by the Month option which is offered to you at no extra cost
(applicable to annual policies only).
It is a little complex, but we can help, that's why we're here.
Contract Works is a complex area of insurance. Put simply, a builder taking out
Construction Insurance needs to provide an annual estimate of their turnover (during
the time frame of the policy) including the details of the maximum contract amount.
At the end of the term of the contract works insurance policy, should the builders
estimated expenditure be less than expected, a refund is issued. Alternatively, if the
estimated expenditure has been exceeded, the builder will be invoiced for the
additional costs.
Contact us to get a quote
Because of the complexities we are unable to give a price indication here without
knowing some detai ls. But we can get
you a price fast just by speaking to us or
submitting a quote request on the trade
insurance quote form, we can get a pretty
firm price to you within an hour.

CONSTRUCTION INSURANCE BROCHURE

Tradesure Builders Contract Works Insurance (101 KB)

WHAT OTHER INSURANCE DO YOU NEED TO CONSIDER?

Want piece of mind? Get the right insurance
Whether you own a medium to large building company or you operate as a sole
trader or youre involved in a partnership, its important to have the correct builders
insurance. The right builders insurance will provide you certainty for the future and
peace of mind. To find out more about builders insurance contact your Tradesure
representative or obtain a trade insurance quote on line.
Business insurance and specifically Tradies business insurance - can be as broad
or as defined as you need. It can be bundled or packaged to include business
insurance products such as general
property, public liability, tax audit,
income protection, transit and statutory
liability. You can also add Tradie
specific insurance including tools
insurance and work vehicle insurance.

Do you have a business premises? Even a shed or workshop

You should also consider Business Property Insurance, which is essentially
insurance cover against loss or damage to buildings, contents and stock which might
be the result of fire, storm and water. This is particularly important if you work from a
shed or you have a workshop. Tradies insurance can also cover theft from your
premises and breakage to glass. Ensure your Business Insurance pack that covers
all of the above, so ask your Tradesure representative for a trade insurance quote. It
is important to talk to us as there are exclusions that need to be considered and we
recommend that you discuss these exclusions as well as the inclusions with your
Business Insurance consultant.
To have your questions answered, talk to us
To find out more about tradesman business insurance and to organise a trade
insurance quote contact us.

CONTRACT WORKS INSURANCE FOR BUILDERS

Contract Works Insurance for builders and owner builders includes cover for loss or
damage of building works ( as per the product Disclosure Statements) whether they

be new buildings, renovations or extensions.

Public Liability can also be added to this policy and if the contractor has no separate
Public Liability policy this inclusion is highly recommended. This insurance gives the
builder and the principal (the person or entity that woks is being completed for) cover
under the Material Damage section for such occurrences as Fire, Storm, Cyclone,
Malicious Damage, Theft of building materials, storm, lightning, flood, water damage,
accidental damage & collapse. It is the builders and the principals protection for
losses that may occur during the course of the construction.

There are basically two alternatives for this for builders and one choice for
owner builders

1/ SINGLE CONTRACT INSURANCE BUILDERS AND

OWNER BUILDERS
This insures one contract that is specified by the builder at one location for a
particular entity ( can be the builder for spec home) for a particular time. The normal
term for these is 6 months but we recommend insuring the construction for 12
months as the premium is usually the same and it will cover the works if the contract
goes over the 6 months standard period.
For owner builders they may need to
extend for a greater period than a year so it
is important that the initial term selected fit
with their expectations around how long the
construction will take and /or before they
occupy the premises. If the builder has no
separate public liability then it is important
that this be included. This inclusion should
be mandatory for Owner/Builders.

2/ ANNUAL CONTRACT
WORKS INSURANCE
This is the policy we recommend at it has some distinct advantages. The premium is
calculated on your estimated turnover for the coming twelve months. A declaration is
sent out prior to the next renewal where the builder needs to disclose all the
contracts completed and commenced in that 12 months period. The premium is then
adjusted up or down a refund of premium if turnover overestimated and an
additional premium if under estimated. At that time the insurer will require an

estimated turnover for the next 12 months and of course the contractors does not
need to include the contracts already commenced in the previous 12 months
providing they are included on the annual declaration where they should be included.
Advantages of the Annual Contract Works Insurance is that contracts are
automatically insured that have commenced during the term without having to
notify the insurer. Premiums for Annual Contractors can be paid at Tradesure
monthly at no additional cost (at the time of writing this Tradesure were the only
facility we are aware of who offer this). This
also assists with cash flow for the builder as
the builder avoids a one off upfront
payment. The Annual Contractors insurance
includes cover under the Public Liability
section for Products Liability as well and we
know that this is not always the case with all
One Off Contract Works Insurance
policies.
Product Liability cover is briefly described
as cover for you for claims made against
you for personal injury to thir d parties and
property damage to third parties property caused by the nature, condition or quality
of the builders products If the Material Damage section and Public/Products Liability
sections are both included we have found a significant saving of premium in
comparison with doing One Off Contract Works policies. This can vary, depending on
circumstances and insurer underwriting, but up to a 20% saving can be achieved by
combining these two sections so it can be substantial particularly when you take into
consideration the monthly premiums at no additional charge option.
Please also note that the cover ceases;
1/ when the home is officially handed over or 2/ When the building becomes
occupied ( even if not completed or officially handed over). This is when the owner
needs to arrange insurance for the home and of course also needs to disclosure to
their insurer that the builder has not handed the home over officially.
It is also crucial that when completing insurance for One Off contracts that the
insurance is arranged prior to the commencement of the work. Insurers are reluctant
to insure dwellings and commercial buildings under a Contract Works Insurance
policy if the building has already commenced as it appears that they have some
concerns around some builders where a claim has already occurred and then
arranged the insurance for the partly completed building in an endeavor to have their
claim met. Also and importantly as there is a misconception among some contractors
that they may save premium if only insuring the contract for a short period. There is

no saving in premium for this as the premium is based on the contract value and not
the length of time the cover is required. So it is very important to insure the contract
prior to the commencement of work and insure the contract for 12 months as the
premium is most likely the same as any period, which is less.

WHAT IF YOU UNDERINSURE THE CONTRACT VALUE?

It is also important to insure for the total contract value as underinsurance penalties
apply in the event of claim under the Material Damage section if you select a sum
insured less than the contracted amount. As you have no doubt experienced, many
contracts exceed the original contract price so it is also important that the increase
be advised to the insurer of this as soon as you become aware of the increase. Most
policies have an Escalation Allowance available and if this has been selected there
will be an automatic increase which is usually shown by a percentage which is
usually around 15% of the contract value when included but you would need to
check this with your insurer. A few builders, and particularly owner builders, insure for
a lesser amount and then increase the sum insured as the building value increases.
There is absolutely no point in doing this and it will cost the same as the insurer will
calculate the premium on the highest sum insured during the period of the insurance
anyway and charge extra for the increase.

DO I NEED TO INSURE THE EXISTING DWELLING IF I AM

DOING AN ADDITION OR RENOVATION?
If you are working on an existing dwelling it is also important that the dwelling owner
notify their insurer of the work being undertaken and the amount of the work
involved. This can not only effect the property damage section of their policy but also
the Public Liability cover for the home owner.
The Contractor will still need to insure the value
of the works as this will not be covered by the
home policy of the owner. If the owners
insurance declines to keep the home insured
because of the work being undertaken then the
contr actor can and needs to include the home
on his Contract Works insurance. We strongly
recommend when this needs to be done that
the sum insured of the home be selected and
advised by the homeowner. Although it is not an
issue for the Builder the homeowner may also need to check if their contents
insurance is still covered under these circumstances as their current insurer may
cancel the policy in full once this is known.

There are many additional benefits included on Contract Works insurance under the
Material Damage section and among these are;
Existing Dwelling as explained where the work relates to renovations and/or
additional there may be a need to include the existing home under the Contract
Works insurance
Contract Value Increase this additional cover allows automatically for a specified
increase in the contract value under completion
Expediting Expenses where products need to be sourced quickly this covers
additional costs un freight and wages
Removal of Debris This is for clean-up costs after a claim. Once again many
Contract Works policies have an allowance for this and we recommend a percentage
value of at least 10% of the Contract Price
Professional Fees when a claim does occur often architects, draughtsman,
surveyors and other consultants need to be consulted to assist with the claim
Materials In Storage off site materials on site are included in the standard cover
automatically but if loss or damage occurs to building materials that were to be used
for a particular contract at another site then this should also be included. Some
insurers will allow a percentage awhile others may have a specified amount
Materials In Transit this covers building
products and materials in transit to your
building site. Once again this can be shown
as a percentage or a specific amount
depending on the insurer.
Mitigation Expenses this is the additional
cost incurred by the builder in an effort to
reduce further loss to the building involved
Fire Extinguishment Costs This is to
cover the cost of extinguishing a fire at the contract site
Contractors Plant, Equipment and Tools Cover can be included for these but
they are restricted o the building site or sites (if annual). Many builders have a
separate cover for their tools and equipment as the cover covers them automatically

Australia Wide and not just to the Building site.

Cranes, Hoists, mobile construction machinery these items are not included
generally in the Contractors plant above so need to be specified separately to be
insured. Depending on the item once again it may be better to arrange an annual
cover for these items if they are owned by the builder.
As with any of these additional benefits it is important to see they are included on
your insurance and also to check that all the limits are adequate for the contracts you
are involved with and remember these can be changed if where required.
Other considerations;
Licensed tradesman must be used at all times.
Faulty Workmanship not insured.
Penalties, fines, liquated damages are not covered.
Contact Tradesure for your 'Contract Works Insurance cover.

WHAT DOES OWNER BUILDER CONTRACT WORKS

INSURANCE COVER?
What does Owner Builder Contract Works Insurance cover?
1/ Material Damage
This is damage to the building whilst under construction. The most common claims
come from cyclone, storm, fire, flood and theft of building materials.
2/ Public Liability
This is to protect the owner builder from claims
made against them by third parties for damage
to property and injury they suffer.
As with all insurances you should consult the
relevant Product Disclosure Statement to
ascertain the extent of the cover and more
importantly what is not covered.
When should Insurance be arranged?

BEFORE YOU COMMENCE BUILDING!!! The biggest Common Mistake Owner

Builders mak e in relation to this insurance is to wait until they have partly completed
or commenced construction before arranging this insurance. Owner builders often
feel that they will save insurance premium by only insuring the dwelling for a shorter
period of time than it takes to build the dwelling. This can be incorrect particularly
where the term of the cover is less than 12 months. Additionally some insurers will
not cover Contract Works policies once the building has commenced due to strict
underwriting guidelines. If cover is difficult to arrange or cannot be arranged because
you have already commenced building, this can also have ramifications where
finance is involved. Financiers and banks usually as part of their normal lending
practice, request a copy of the contract works insurance policy before advancing
funds so if this is not in place, the availability of funds could be jeopardised.
How long should I have the policy go for?
As this is done on a Single One Off contract works insurance policy and no
renewal is issued by the insurer, it is best to make the policy run initially for as long
as you think it will take to build your home as some insurers are reluctant to extend
the policy if the cover is required for a greater time than originally applied for. For
instance if your estimate of the build time is
18 months, then make the policy run for 18
months as normally insurers do not offer
renewal for one-off Contract Works cover.
The only exception we would recommend for
this is that if it will take you less than 12
months to build the home then make the
initial period of insurance run for 12 months
as there will be no additional premium to pay.

WHAT IF I OCCUPY THE DWELLING BEFORE THE HOME IS

FINISHED AND THE CONTRACT WORKS INSURANCE HAS
TIME TO RUN?
It is most important to understand that once you occupy the dwelling (even if it is not
completed) the Contract Works Insurance and the Public Liability associated with the
policy will not cover you and you will need to arrange Home Insurance to insure your
home. This is another big mistake Owner Builders make they assume that because
they have Contract Works insurance in place it will still cover until the expiry date
when in fact this is not the case.
Calculating the sum insured

This is a common question asked by Owner Builders as the value of the construction
varies over the build and is obviously is much less at the beginning than at the end.
Our advice for this is to have the sum insured represent the replacement value of the
finished home and the sum insured should reflect what it would cost a builder to
rebuild and/or rectify the damage. This will make sure you are not penalised by
underinsurance clauses that exist in Contract Works policies i.e.as an example of
this is if you insure a home under construction for $150k and the replacement value
is $300k then you will only receive 50% of any claim as you are insured for only half
the replacement value. We have also found that when a loss and particularly a major
loss occurs, owner builders are happy for a registered builder who is appointed by
the insurance company to finish the build and repair the damage. This does not
preclude the owner builder completing the work themselves , however, as the insurer
is paying for the repa irs they have the discretion on who they will appoint to do the
work. If there is a saving in having the owner builder do the work for the insurer then
they may well appoint the owner builder but like a registered builder they would have
to quote for the work that is required. Also consider it should take the registered
builder less time to complete the work.
What excesses apply in the event of a
claim?
This can vary from insurer to insurer but
generally we have found the standard
excesses are $1,000 per claim for Material
Damage and Public Liability. The exceptions to
this are Named Cyclone (Tradesure is $2,500)
and Workers to Worker claims under the
Public Liability section which is also $2500 at
Tradesure.
Is there anything I need to know if I engage
Subcontractors?
The most important and often overlooked aspect of this is that all subcontractors
should have their own Public Liability insurance and show evidence to the owner
builder of this by way of a certificate of currency before they commence work. This is
a principal adopted by registered builders and it applies no less to owner builders.
We strongly recommend you obtain this in writing and not just receive the information
verbally. If they have employees of their own they should also have Workers
Compensation in place.
All subcontractors should be suitably qualified, licensed and operating as required by

law.

WHAT ADDITIONAL ITEMS ARE INSURED?

It can depend on what you select ( and they must be selected as not all are
automatically included) and some of these additional items do not add to the cost so
we recommend they be included;
Contract Value Increase can cover up to 15% of the value
Removal of Debris usually up to 10% of the sum insured
Professional Fees usually up 15% of the sum insured for draughtsman, architects,
surveyors
Fire Extinguishment Costs usually $10,000
Materials in Transit usually $10,000

ARE MY TOOLS OR ANY OF MY EQUIPMENT INSURED

UNDER THE CONTRACT WORKS POLICY?
Any tools you use or plant and equipment you own can be insured. Sometimes these
are best covered under the Contract
Works Insurance , however, this is not
always the case as it can depend on
the tools and equipment and where
you require them insured. We
recommend speaking to an insurance
professional to ascertain your
insurance needs in relation to these
items. Subcontractors tools and
equipment are the responsibility of the
subcontractor and they should have
their own insurance for these items.
What if I employ someone to
assist?

If you employ someone to assist you then you should arrange Workers
Compensation (Work Cover) insurance for the employee. Even if the worker has
their own ABN they could still be deemed to be an employee under current
legislation and you would need to check with the Workers Compensation in your
state to clarify this.
What are some of the occurrences excluded by Contract Works insurance owner
builders should be aware of?
Once again it can vary from insurer to insurer but here are a few examples;
No cover once the building is occupied.
No cover for any defect or design error including incorrect plans or specifications.
Damage that occurs over time such as corrosion, or deterioration due to climate
conditions.
Damage caused by vermin, termites or insects.
Contact Tradesure for your 'Contract Works Insurance cover.