Contract works insurance is an important type of insurance for businesses in the construction industry. It provides cover for companies in the event that something goes wrong with a construction project, such as an accident or adverse weather conditions. These can seriously delay or hinder work in progress which could end up costing everybody a lot of time and money.
But who needs contract works insurance? And how can you choose the best policy?
In this article, we will discuss what contract works insurance is, who needs it, why it is important, and what it covers. We will also look at other types of insurance that you may need as a business owner in the construction industry.
What Is Contract Works Insurance?
Contract works insurance provides cover for companies in the construction industry when something out of their hands goes wrong during a construction project. This could be an accident, adverse weather conditions, or any other event that affects work in progress. Construction projects often have strict timeframes and budgets and so a serious delay or hindrance can really affect everyone involved. The customer, the contractor, and any other subcontractors can all be left out of pocket if something goes wrong.
This is where contract works insurance comes in. It can provide cover for the cost of repairs, replacement materials, and any other expenses that are incurred as a result of the accident or event. It can also provide cover for loss of earnings if the project is delayed or has to be put on hold.
Who Needs Contract Works Insurance?
Any business in the construction industry should have contract works insurance. This includes companies that build or renovate property, as well as those that install or maintain building equipment. It is especially important for businesses that work on contracts that are worth £500,000 or more.
Some examples of businesses that need contract works insurance are:
- A construction company that is building a new office block: If something goes wrong during the build, such as an accident or bad weather, contract works insurance can cover the cost of repairs and any delay to the project.
- A window installation company: If a window is broken during installation, contract works insurance can cover the cost of repairs or replacement.
- A company that installs solar panels: If there is an accident while the solar panels are being installed, contract works insurance can also cover the cost of repairs or replacements.
- A scaffolding company: If a scaffold collapses, contract works insurance can help to pay for the cost of repairs.
These are just a few examples but if your company is involved at any stage of a construction project, then you should have contract works insurance.
Why Is Contract Works Insurance Important?
This type of insurance is important for a number of reasons:
- It can help to protect your business from financial losses in the event that something goes wrong. There are many issues regularly faced during construction projects that can seriously delay or hinder work, such as adverse weather conditions, accidents, and faulty equipment so it is important to have some form of protection in place.
- Contract works insurance can provide cover for any legal expenses that may be incurred as a result of an accident or incident. It is not uncommon for construction companies to be taken to court if something goes wrong, so it is important to have this type of insurance in place to protect your business.
- Contract works insurance can help to protect your reputation. In the event that something does go wrong, having this type of insurance in place can help to show your customers that you are a professional and reliable company.
- It is often a legal requirement for companies working on contracts that are worth £500,000 or more. So if your business falls into this category, then you will need to have contract works insurance in order to be compliant with the law.
- It can help to speed up claims processes so you can get back on track as quickly as possible.
What Does It Cover?
Contract works insurance can provide cover for a number of expenses, including:
- The cost of repairs or replacement materials: If something goes wrong and the project needs to be delayed, this type of insurance can help to cover the costs.
- The cost of hiring temporary workers: If an accident happens and you need to hire temporary workers to help with the project, contract works insurance can cover the cost of their wages.
- Loss of earnings if the project is delayed or has to be put on hold: This is important because it can help to protect your business from financial losses.
- The cost of legal expenses: If you are taken to court as a result of an accident or incident, contract works insurance can help to cover the cost of your legal fees.
What Doesn’t It Cover?
As can be seen above, contract works insurance can cover a wide range of eventualities but there are some events that are not typically covered. These include:
- Faulty workmanship: If the quality of your work is not up to standard, then contract works insurance will not cover the cost of repairs.
- Cancellation of the project: If the project is canceled for any reason, contract works insurance will not cover the cost of lost earnings.
- Employee theft: If your employees steal equipment or materials from the site, contract works insurance will not cover the cost of replacing them.
- terrorism: Contract works insurance will not cover the cost of any damage or losses that are caused by terrorism.
It is important to study the small print of any insurance policy you are considering to make sure it covers everything you need. Otherwise, you could find yourself facing a large bill if something goes wrong.
How to Choose a Contract Works Insurance Policy?
There are many things to consider when choosing a contract works insurance policy:
First, you need to consider what it covers and what it doesn’t cover. It is important to make sure that you are covered for all eventualities so that you can be confident that your business is protected.
You also need to consider the cost of the policy. It is important to get a policy that is affordable but also provides adequate cover for your business. It can be tempting to just choose the cheapest policy but this may not provide the level of cover that you need.
Another thing to consider is whether you need a standalone policy or a combined policy. A standalone policy will just cover contract works insurance, whereas a combined policy will cover this as well as other types of insurance, such as employer’s liability, public liability, and commercial premises.
It is also important to consider the excess on the policy. This is the amount that you would need to pay in the event of a claim. The excess is important because it can affect the cost of the policy and the level of cover that you need.
An Example of Contract Works Insurance
To give you an idea of how this type of insurance works, let’s take a look at an example:
- A construction company is building a new office block. The contract is worth £500,000. The company has contract works insurance in place.
- During the construction process, there is a fire and the office block is damaged. The contract works insurance policy will cover the cost of the repairs.
- The company is also south by the owner of the office block for negligence. The contract works insurance policy will cover the legal expenses incurred as a result of the lawsuit.
As you can see, without contract works insurance, the construction company would have been liable for the cost of the repairs and the legal expenses. Instead, the company is able to claim these costs from the insurance policy.
Other Types of Insurance Your Construction Company May Need
As well as contract works insurance, there are other types of insurance that you may need, depending on the type of business you have:
Employer’s Liability Insurance
Employer’s liability insurance is a legal requirement for companies with employees. It covers the costs of any injuries or illnesses that may occur as a result of the employees’ work. For example, if an employee is injured while working on a construction site, the employer’s liability insurance policy would cover the cost of medical treatment.
Public Liability Insurance
Public liability insurance is also a legal requirement for companies. It covers the costs of any injuries or damages that may occur as a result of your business. For example, if a customer slips and falls in your office, the public liability insurance policy would cover the cost of their medical treatment. This type of insurance is particularly important for businesses that have customers visiting their premises.
Commercial Premises Insurance
Commercial premises insurance is important for businesses that own their own premises. It covers the cost of any damage or theft that may occur. For example, if there is a fire in your office block, commercial premises insurance policy would cover the cost of the repairs and/or the replacement of the property.
Fleet insurance is a type of insurance that covers the costs of any damage to your vehicles. This is important in the construction industry because many businesses have multiple vehicles that could potentially experience an issue. For example, if one of your vans is involved in a road accident, the fleet insurance policy would cover the cost of vehicle repairs or replacement. Covering your fleet has many advantages over just covering the individual vehicles. For example, it can be cheaper to insure all of your vehicles under one policy than to insure them individually.
Trade Credit Insurance
Trade Credit insurance is a type of insurance that covers the costs of any debts that may not be repaid. For example, if your company supplies goods to a customer and they go bankrupt, the trade credit insurance policy would cover the cost of the debt. This is very important because it can help to protect your business from the risks of doing business with customers and other companies.
Why Comprehensive Insurance is So Important
When you are running a business, it is crucial that you are prepared for any eventuality. This means having the correct insurance in place to protect your business from any potential losses. Without the right insurance, you could be left liable for a huge amount of money in the event of an accident or disaster.
As you can see, contract works insurance is just one part of the comprehensive insurance package that you need to have in place. It is often advisable to speak to an insurance broker about the different types of insurance that are available. They will be able to advise you on the best policies for your business and help you to get the best deals.
Other Tips for Getting the Best Deals on Insurance
Insurance prices can vary widely, so it is important to shop around and compare different policies before you buy. It is also a good idea to review your insurance needs on a regular basis and to update your policy as your business changes.
Another way to save money on insurance is to take out a combined policy. This means taking out one policy that covers multiple types of insurance. For example, you could take out a combined public liability and employer’s liability policy. This can be cheaper than taking out two separate policies.
Finally, make sure that you are always up to date with your payments. Failing to pay your premiums on time can result in increased premiums or even cancellation of your policy.
Insurance is an important part of any business as it can protect your business from potential losses. Contract works insurance is crucial for every business in the construction industry because there are so many things that can go wrong during a construction project. When choosing insurance, the most important thing is to shop around and compare different policies before you buy so that you can save money while still getting the best coverage.