Why is a Contract Works Policy Necessary?
When it comes to planning a new construction project, insurance doesn’t always get the priority it requires, with contractors often wondering whether it is really necessary to take out a contract works policy at all. Very often the contract works policy is arranged at the last minute, or even after the project has already started.
All construction work, no matter what size, contains an element of risk. This risk varies from project to project but risks common to most construction projects include:
• Natural Disaster – earthquake, flooding, storm
• Construction collapse
• Defective design, workmanship or materials
• Malicious damage to property
• Third party liability
Damage as a result of these risks can result in steep repair and replacement costs that were not budgeted for.
To comprehensively safeguard against these risks during the construction period, a Contract Works policy and a General Liability policy is needed. Should you apply for a Contract Works policy after you begin construction, it’s known as a take-on and must be declared.
THE LEGAL STUFF
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