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Contract Works Insurance

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Frequently asked questions about contract works insurance

Contract works insurance is one of the most common policies taken out by builders, developers, contractors and property owners in New Zealand. We answer some of the most frequently asked questions.

Contract Works Insurance Requirements and Coverages

What is Contract Works Insurance?

Contract works insurance provides coverage for loss or damage to a construction project. It includes buildings under construction and materials on-site, as well as those in transit or storage off-site. It also covers costs arising from accidental damages or unforeseen circumstances such as theft, fire, vandalism, storm damage, or other natural disasters.

Who needs Contract Works Insurance?

Contract works insurance is primarily for businesses involved in construction and engineering projects. This includes contractors, subcontractors, property developers, and builders. It is especially crucial for those undertaking large scale or high-risk projects, where potential losses can be substantial.

Why is Contract Works Insurance necessary?

It provides financial protection in case an unexpected incident occurs that can disrupt the project and cause significant losses. Without it, the business would have to bear the burden of any costs related to the repair, reconstruction, or replacement of damaged works. This insurance also fulfils contractual obligations that require such coverage.

What does Contract Works Insurance not cover?

While policies may vary, typical exclusions include wear and tear, faulty design, consequential loss, or losses due to negligence. Always read the policy wording or consult with an expert like us at Gerrards for specific details.

What is the period of cover in Contract Works Insurance?

The policy covers the duration of the project, starting from the commencement of work until completion. It may also include any maintenance period if specified in the contract. The completion of the contract works policy is automatically triggered early in certain scenarios such as practical completion. Make sure you are aware of these or else you may find there will be periods without cover. 

How to Buy Contract Works Insurance with Gerrards

The Process

With Gerrards, the process of buying contract works insurance is simple and fast. We can get multiple quotes from top insurers in 24 hours or less. Based on your business and project requirements, we can also advise you about coverage limits and the best fit for your business. Once everything is finalised, we can send a certificate confirming your coverage.

Contract Works Insurance Certificate

The certificate provides proof of your coverage. It details your policy number, the period of cover, the coverage limits, and other relevant information.

Industries We Cover

Gerrards can offer coverage for any industry involved in construction, from residential builders to heavy civil engineering.

How much contract works insurance do I need?

Determining the amount of insurance you need depends on several factors, including the value of your contract, the risks associated with your project, and your risk tolerance. Talk to us at Gerrards, and we can guide you in assessing your insurance needs.

Contract Works Examples & Claims

How do I make a contract works insurance claim?

If you need to make a claim, you can contact us at Gerrards, and we will deal with the insurance company on your behalf. We will support you throughout the claim process and advocate for your interests.

What are some common contract works claims?

An incident occurred in Christchurch, where a company was constructing a multi-story commercial building. They had completed the structure up to the third floor when an unexpected earthquake struck the city. The tremor caused substantial damage to the structure, which needed partial demolition and reconstruction. Thankfully, their contract works insurance policy covered the loss, allowing them to rebuild and complete the project with minimal delay.

A residential development project was underway in Auckland. One morning, the site manager arrived to find a significant amount of construction materials missing, including expensive pipes and electrical wiring. After reporting the theft to the police and their insurer, they were able to recover the cost of the stolen materials through their contract works insurance policy.

A construction company was working on a major infrastructure project in Wellington. During routine work, a crane malfunctioned and dropped a hefty load of steel girders. The incident caused significant damage to the partially completed structure and delayed the project timeline. Fortunately, the company’s contract works insurance policy covered the cost of repairing the damage and replacing the damaged materials, minimizing the financial impact on the project.

A large, partially constructed commercial building in Hamilton caught fire due to a faulty electrical connection. The blaze engulfed the structure, causing severe damage and bringing the construction work to a halt. The builder filed a claim under their contract works insurance policy. The insurance not only covered the loss from the fire but also the additional expenses to remove the debris and reconstruct the damaged parts of the building.

A contractor was renovating a historic building in Dunedin when a sudden storm hit the city. The storm caused severe flooding in the area, and the building’s basement, where significant renovation work was in progress, was filled with water. The flood resulted in significant damage to construction materials and equipment. The contractor’s contract works insurance covered the costs associated with the water damage, enabling them to recover from the setback and continue with the project.

In the hilly regions of Queenstown, a property developer was working on a luxury housing project. A sudden landslip, triggered by heavy rain, caused the partially completed structures to collapse. The disaster led to massive financial loss. However, their contract works insurance came to their rescue, covering the financial loss, allowing them to rebuild the structures and get the project back on track.

Is Contract Works Insurance Worth It?

Deciding whether or not to get contract works insurance can seem tricky. Here are the pros and cons in simpler terms:

The Good Parts

Protection from Unexpected Problems: Building stuff can be risky. You never know when bad weather, theft, or accidents can cause damage. Insurance helps cover these costs so you won’t have to pay them yourself.

Follows the Rules: Sometimes, you need this insurance to follow the law or a contract. It’s a way to show you’re responsible and can cover any problems that pop up during construction.

Keeps Money Safe: If something goes wrong and you don’t have insurance, fixing the problem can be expensive. With insurance, you don’t have to worry about these big unexpected costs.

Peace of Mind: Insurance helps you worry less about what could go wrong. You can focus more on doing a good job.

The Not-So-Good Parts

Costs Money: Insurance isn’t free. You have to pay for it. Sometimes, it can be pretty pricey, especially for big projects with lots of risks.

Not Always Needed: If you’re working on a small project with low risks, you might not need this insurance. It could cost more than it’s worth.

Doesn’t Cover Everything: There are some things this insurance won’t cover, like poor workmanship or if you were careless. You might need extra insurance for these situations.

In a nutshell, whether contract works insurance is worth it depends on your project and how much risk you’re comfortable with.

Contract Works Insurance Policy Changes

What happens if need to change my insurance later?

If you need to make changes to your contract works insurance policy, contact us at Gerrards, and we can assist you in amending your policy. It’s important to review and update if anything about your project changes. 

What happens if I cancel my contract works policy?

Cancellation leaves your project exposed to potential risks. Without the safety net of insurance, any loss or damage to your project would be a direct financial burden on your business.

Compare Contract Works with Other Policies

Contract Works Insurance covers the risks associated with the construction or alteration of a building, such as damages from natural disasters, theft, and accidents during the construction process.

On the other hand, Commercial Building Insurance is designed to cover damage or loss to an already completed building. This insurance typically covers events like fire, storm damage, burst pipes, and vandalism but doesn’t cover damage that happens during construction.

Essentially, while contract works insurance provides cover during the building process, commercial building insurance protects your property once construction is complete.

While contract works insurance covers the physical work of a construction project, Public Liability Insurance covers the legal costs and compensation payments if a third party – like a member of the public or a neighbouring property – is injured or their property is damaged because of your business activities.

For example, if a passerby is injured by a falling tool from your construction site, your public liability insurance would cover the legal and compensation costs. But if your building materials were damaged in a storm, that’s where your contract works insurance would kick in.

Contract Works Insurance and Material Damage Insurance can seem similar, but they cover different aspects. Contract Works Insurance is specifically for construction projects, covering the building work and materials onsite against damage or loss.

Material Damage Insurance, however, generally covers all physical assets of a business, such as buildings, contents, stock, and machinery, not just those associated with a specific construction project. It’s a broader cover that protects your assets from risks like theft, fire, and accidental damage.

Do you have further questions about contract works insurance nz?

We hope this guide has shed light on the intricacies of contract works insurance in New Zealand. However, we understand that every business is unique, and you might still have questions specific to your situation. At Gerrards Insurance Brokers, we’re here to help. If you have any further queries about contract works insurance, or any other insurance need, please don’t hesitate to contact us. Our team of experienced professionals is always ready to provide personalised advice and solutions tailored to your business. 

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