Having a robust Contract Works Insurance policy is essential to protect builders and construction professionals against unforeseen risks during the construction process.

Whether you’re considering a new policy or already have one in place, understanding the importance of policy parameters and how these policies operate is vital to ensuring adequate coverage for your projects.

The Purpose of an Annual Contract Works Insurance Policy

The main benefit of an Annual Contract Works Insurance policy is to provide coverage for all projects you undertake throughout the year. This type of policy offers a comprehensive solution that reduces the administrative burden of having to arrange individual Single Project policies for each new project.

However, while this coverage is broad, it’s crucial to understand that only projects that fall within the defined policy parameters will be insured.

Overlooking or misunderstanding these parameters can leave your projects uninsured, putting your business at financial risk.

Why Regular Reviews Are Essential

To avoid gaps in coverage, it’s important to regularly review your Contract Works Insurance policy. These reviews ensure that your policy parameters align with the scope and scale of your current and upcoming projects.

Failing to do so could mean that projects exceeding or falling outside of these defined parameters are left without coverage, which can lead to significant challenges in the event of a claim.

Key Policy Parameters to Monitor

Below are the most critical parameters to be aware of when managing your Contract Works Insurance policy.

1. Maximum Project Value
   • This figure needs to represents the highest value project that you estimate starting within the insurance period.
   • Why it matters: If this value is underestimated, you could be underinsured (or completely uninsured), leaving you financially vulnerable in the event of a claim.
   • Solution: Ensure this figure is realistic at the start of the policy and adjust it as necessary if higher-value projects arise throughout the year.
2. Maximum Project Duration
   • This needs to be the longest period that any project is expected to take during the insurance period.
   • Why it matters: The policy will only cover projects up to the specified maximum duration. Projects exceeding this time frame will not be insured unless adjustments are made.
   • Solution: Regularly assess your project timelines and new construction contracts, and update the policy if longer project durations are anticipated.
3. Type of Projects Insured
   • This parameter outlines the types of projects your insurer has agreed to cover. Examples of noted projects may include:
     • New Residential Builds
     • Residential Extensions and/or Renovations
     • New Commercial Builds
     • Non Structural Fit-Outs
   • Why it matters: Undertaking a project outside of the specified types could leave you without coverage for that project.
   • Solution: Clearly define your project types with your broker and notify them if you are expecting to undertake any projects that differ from what is noted on your policy.
4. Territorial Limit
   • This specifies the geographical area within which your projects are insured. For example, your policy might cover only projects undertaken within South Australia.
   • Why it matters: Projects outside the defined territory will not be covered.
   • Solution: Ensure the territorial limits reflect your operational areas and amend them if your work expands to new regions.

Amending Your Policy Parameters

One of the benefits of an Annual Contract Works Insurance policy is its flexibility and you can generally amend your policy coverage at any time during the policy period.

If you identify that an upcoming project falls outside of your current policy parameters, notify your insurance broker promptly. They will assist in making the necessary changes to ensure your projects are insured correctly throughout the year.

Understanding the Parameters Ensures Protection

Contract Works Insurance is an invaluable tool for managing risk in the construction industry, but its effectiveness depends on how well the policy parameters align with your operations. By understanding these parameters and conducting regular reviews, you can ensure your business is always adequately protected.

If you have any questions or need assistance reviewing your policy, our team is here to help. With our expertise, we can guide you in tailoring your coverage to suit your business needs, giving you peace of mind to focus on your projects.