We reckon at least 90% of Builders & Tradies (new or experienced) have not been explained the details of their Contract Works Insurance by their broker.
This creates a problem because, if you don’t understand something properly, how can you make good decisions.If you also happen to be dealing with an inexperienced broker who may not have deep understanding, the risk of setting a wrong policy gets higher.
At CoverTradie, in these series of articles we try to explain this critical insurance so that you can understand it better and make an informed purchase decision that helps you get the right cover at good prices. Let’s start with the basic question:
What is Contract Works Insurance?
Contract Works Insurance protects you against loss or damage to your construction projects due to certain events.
You might wonder, what are these “Events?”
These events (known as indemnifiable events) are usually defined as “A sudden, unforeseen and unintended physical loss of or damage resulting from any cause that is not excluded by the policy”.
In the past, the coverage of these policies was no more than covering the “acts of god”, storm, fire etc. Now days, the coverage of Contract Works Insurance is more of an “accidental damage” nature. So what does it mean?
Contract Works Insurance : What does it Cover?
Contract Works Insurance has 2 sections:
- Material Damage Section
- Public Liability Section (Optional Cover)
Material Damage Section
This part of the policy is to cover loss of or damage to the project materials. Lets take an example, you a building a house in a leafy green suburb. The frame of the house is up and standing and work progressing at a good pace. Disaster strikes in the form of a big storm that brings a huge gum tree from a neighbouring block to come crashing on your worksite, the frame damage cost is $15,000.
The policy covers you for losses like these to your projects. That means the losses to the materials that get damaged by events that are covered. What are covered events? Events that are not excluded from your policy are covered, as simple as that.
That leads us the the next section: Public Liability Insurance Section.
Public Liability Section compensates you where you have been found legally liable for injury to third parties or damage to their property. Let’s take the example of the house you are building again. As your labourers were moving the trusses to fit the frame, somehow have tipped a truss over the fence damaging the neighbour’s brand new luxury car.
The neighbour demands compensation and the public liability section of your insurance policy will respond to a loss such as that.
With the basic understanding of the sections, we are ready to move on to the next article where we discuss who needs contract works insurance.
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