When it comes to construction projects, having the right insurance coverage is crucial.

For builders and construction professionals, Contract Works Insurance provides vital protection against risks that can arise during the construction process.

If you’re considering an annual policy, it’s essential to understand the two main types of coverage available: Turnover (otherwise referred to as ‘Transfer’) and Run-Off policies.

Here, we break down what these terms mean and how they impact your cover.

What is a Run-Off Policy?

A Run-Off policy covers projects from when they start until completion, even if the annual policy is not renewed or kept with the same insurer. This type of policy is particularly beneficial for builders who want continuity and certainty in their coverage.

Key features include:

• Automatic Cover: Eligible projects that fit within the parametres of the policy that have started during the policy period are insured until their completion for the full project value.
• Coverage Beyond Renewal: If the policy is not renewed, any ongoing projects that were started within the policy period remain covered until they’re completed (or until the maximum construction period specified in the policy ends).
• Consistent Terms: Builders can rely on consistent pricing and policy coverage throughout the life of the project.

This option is often preferred because it minimises the risk of uncovered projects due to policy lapses or changes in insurance terms.

What is a Turnover (Transfer) Policy?

A Turnover policy, on the other hand, insures projects undertaken during the policy period but only for the amount of work that is undertaken before the policy period ends. To continue coverage for these projects after the policy expires (or you reach renewal), you’ll need to negotiate with a new insurer or renew the policy to cover the remainder of the work.

Key characteristics include: 

• Premium Adjustments: Premiums may need to be calculated based on the work completed prior to the new policy’s inception.
• Potential Gaps in Coverage: If there’s a dispute over the date of loss or which policy period applies, claims handling can become complicated.
• Underwriter Considerations: New underwriters may apply additional premiums to cover completed parts of projects, especially if multiple projects are nearing completion when transferring policies.

Coverage for Projects Already Started: Key Considerations

When applying for a new Contract Works insurance policy, understanding how projects already underway will be covered is critical. This decision depends on whether you have an existing Contract Works policy in place, and if so, whether your existing policy operates on a Turnover (Transfer) or Run-Off basis.

We would recommend speaking with a qualified insurance broker to determine to best way to cover any projects that you have on hand when applying for new insurance to suit your individual circumstances.

Why Run-Off Policies Are Often Preferred

Run-Off policies provide builders with peace of mind, knowing that their projects are covered through to completion regardless of renewal. They reduce the risk of disputes between insurers and ensure that coverage remains consistent throughout a project’s lifecycle.

In simple terms – On a Run-Off policy, if a project is started within the policy period and fits within the parametres of the policy, the project is fully covered within that policy period regardless of whether you renew the policy or move to a new insurer.

However, every construction business is unique, and what works best for one might not suit another. By discussing your specific needs and circumstances with your insurance broker, you can determine the ideal policy type for your business.

Making an Informed Decision

Understanding the differences between Turnover and Run-Off policies is key to making informed decisions about your Contract Works Insurance. Whether you’re planning to expand your operations or simply want comprehensive coverage for your ongoing projects, your broker can guide you toward the most suitable option.

If you have any questions or would like to explore your options further, our team is here to help. With years of experience in construction insurance, we can tailor solutions that protect your business and provide the peace of mind you need to focus on what you do best—building for the future.