Contract works insurance is an insurance for builders and other tradesmen, designed to cover work that’s underway on a site. It can pay to repair or redo the work that’s in progress if it’s damaged by an insured event like fire, flood, storm, vandalism or theft.
Though a lot of UK-based companies offer contractor insurance, the best deal is likely to be found in providers in Ireland; the UK’s equivalent of US-based companies like Travelers Insurance (TRA) or St Paul’s (STP).
Contract insurance has some specific features
Most people buy flat insurance or home insurance when they buy buildings insurance, but this type of insurance is unlike either of those. It’s easier to get and cheaper, but there’s no free insurance cover and you’ll have to pay a deposit or premium as well as fees and further charges.
It’s made available through brokers, which will help you choose the best deal, but the broker who offers the cover must be directly authorised by the insurer and within the insurance provider’s geographical region.
This is similar to how life insurance works, but it’s not the same.
Issues to consider
Until recently, if you wanted to start work on a project, you would have to apply for the insurance yourself and get yourself accredited. But rules have recently changed and you no longer need to do this, as long as your local authority approves the works.
Underwriters are obliged to write cover – if it’s damaged – as long as the relevant payment is made and if the cost of the work carried out is above the agreed loss threshold.
There’s no maximum repair limit, although the upper limit in terms of liability is £10m.
It doesn’t cover owner builders, self-builders, DIY or property repairs, and there’s no duty to reduce your premium or make a claim.
If it’s a flat insurance policy, you can insure its entire value and divide it up between a number of different companies, but in contractor insurance, you must choose one that you’re going to have with you for as long as the project’s going on.
Contractors don’t need business insurance or public liability insurance as well as contractor insurance, but subcontractors may need their own protection.
Builders’ contractors, such as those who put in kitchen work in houses, are generally seen to be lower risk than contractors or general builders who are building a new house or larger extension or developing a property.
Instead of getting building contract contents insurance, you may be better off getting builders’ insurance instead, as it has better cover and protection for your property.
If you live in a flood-risk area, you can leave this off, but if you do, you’ll have to pay a higher premium. After an insured event occurs, you will have to pay the first £100 of claim costs, before submitting a full claim (for either repair costs or replacement).
You will need to put down a £250 deductible and you will have to wait for your insurer to issue a cheque for that amount, before you can use it to pay for the second part of the claim.
You’ll have to pay your contractor directly for damage that exceeds the repair threshold for domestic buildings.
It’s a good idea to get advice from an expert insurance broker, if you’re thinking about taking out a builder’s insurance policy.
Your broker should be able to recommend the best level of cover and identify any exclusions and limits that you may not be aware of.
That way, you’ll get the best protection for your property and the people who could be affected by it.