Contract Works & Public & Products Liability Insurance

Principal/Head Contractors Contract Works Insurance

Contract Works Insurance is designed to cover loss or damage to materials on a construction site, including materials in transit/storage. Also referred to as Material Damage or when bought together with Public & Products Liability, the package can also be known as Contractors' All Risks (CAR) Insurance.

Most head contract conditions state, “The Works” are the head contractors responsibility and need to be insured for damage. Although less common, Principal Controlled Insurance can be purchased by owners and developers allowing developers to control the insurance program and protect the project in the event contractor insolvency or contract termination.

Claims examples include natural disasters, such as bushfires, fire, earthquakes, flood and water damage, subsidence and landslip, storm, tsunami or wind. As well as damage to property caused by defects, theft and malicious damage or vandalism.

Trades & Civil Contractors Contract Works Insurance

Contract Works requirements can be passed on via sub-contracts in what’s termed "back to back" contracts. This usually happens on larger contracts or when working for higher tier principal contractors.

Checking whether you are responsible for damage to your own works is recommended as evidence of sub-contractor contract works insurance is not always checked, potentially leaving you on the hook contractually without cover.

Civil contractors may find they are responsible for damage on site during early works. Pipes, dewatering, landslide and road surface repairs or replacement can be costly. We recommend reviewing the insurance clauses in your contract to check who is responsible for damage.

Claims examples include natural disasters, such as bushfires, fire, earthquakes, flood and water damage, subsidence and landslip, storm, tsunami or wind. As well as damage to property caused by defects, theft and malicious damage or vandalism.

Principal/Head Contractors Public & Products Liability

Designed to cover you against claims for injury and/or damage to third parties this is most businesses, most important policy due to the potential legal costs and damages awarded in one of the most litigious countries in the world. Head contractors generally take on more financial, contractual, operational and environmental risks then their appointed contractors and it’s important to make sure your public & products liability insurance aligns as closely as possible with your contractual, operational and environmental risks.

One of the largest risks you and your insurers face is called “Worker to Worker” liability. Most construction sites have large numbers of contractors and sub-contractors on site at any one time, which creates a high-risk environment for third party damage and injury claims. As the head/principal contractor is responsible for the health and safety of workers on site it’s important to have good risk management processes and procedures in place such as; site inductions, work safe methods and accident reports, statements & photographs in the event of injury or damage.

Other significant risks you and your insurers are exposed to include; fire risks from hot work/welding, plant, unauthorised site access and vicarious liability from sub-contractors workmanship and/or defective products or specifications.

Trades & Civil Contractors Public & Products Liability

Similarly to Principal/Head Contractors this policy is designed to cover you against claims for injury and/or damage to third parties.

Whilst there can be similar financial, contractual, operational and environmental risks taken by trades & civil contractors, one of the most significant differences is the activity or activities being undertaken. The head/principal contractor is generally referred to as "The Builder" whereas trades and civil contractors need to specify their business activities and with some contractors carrying out multiple activities, it’s important all are specified in your schedule.

For example, a contractor may work as a Carpenter, Gyprocker, Tiler and Painting Contractor and so should not have a policy that notes “Painter” only, unless all activities have been disclosed to the insurer.

Similarly, civil construction has various disciplines that should be specified. Is the business solely involved in excavation and site preparation or does the business build bridges, work gas & water escape, injury caused by tools & on road and motorway construction, build sea walls and/or flood defence, involved in wet risks, railway, airport or other high-rise hazardous locations or sectors.

If works are sub-contracted there are similar "Worker to Worker" exposures for trades & civil contractors as well as fire risk from hot work/welding, gas & water escape, injury caused by tools & plant.