Whether you’re building new or doing an alteration, extension or renovation, both your contract and the homeowner’s lender will require that contract works insurance (also known as builder risk insurance) is arranged to cover the work. The policy provides cover for sudden and accidental loss or damage to the works specified in the contract.
DEFINITION
Contract works insurance is defined as indemnifying the policyholder(s) for sudden, unforeseen and unintended physical damage or loss to the contract works during the period of insurance. This typically excludes faulty workmanship but can be extended to include damage caused by natural hazards, such as earthquakes.
EXAMPLES
FIRE DAMAGE
A new timber weatherboard home is nearing completion when a power surge sparks a fire that causes substantial damage.
THEFT OF MATERIALS & APPLIANCES
$15,000 of custom made windows were delivered to site at 4pm, ready to be fitted the following morning. When the builder arrived on site they were all missing.
STORM & FLOOD DAMAGE
Heavy rain causes flooding that results in damage to the works.
VANDALISM
Vandals break into the property, smashing walls, breaking windows and causing thousands of dollars of damage.
HOW MUCH DOES IT COST?
The cost of cover varies greatly, as it depends on the contract value, your location and the coverage extensions that you require. The premium may also include levies that we’re required to collect on behalf of the government, such as the Fire & Emergency Levy.
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POLICY KEY FACTS
This is meant as a summary of the most important items of the policy. For a complete understanding of what it does and doesn’t cover you should always read the full policy wording.
WHAT'S COVERED
Sudden, unforeseen and unintentional physical loss or damage. This could include:
- Fire
- Theft & burglary
- Accidental damage
- Storm and flood
- Subsidence
- Natural hazards such as earthquake or tsunami (as an optional extension)
WHAT'S NOT COVERED
- Damage caused by faulty workmanship or defective design and materials
- Any existing structure (unless added separately)
- Consequential loss
- Contractor’s tools & equipment
- Gradual damage
OTHER THINGS YOU SHOULD KNOW
- An excess is payable for each claim
- The cover ends on the earlier of the expiry date on the policy, practical completion or when the owners start to occupy the works
Download our Easy to Read Guide to Contract Works Insurance for Builders
POLICY TERMS & CONDITIONS
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