Single Project Contract Works Insurance is ideal when you need dedicated, project-specific insurance coverage that aligns with the unique requirements and risks of a particular construction project like:
- Start-up Builders or Property Owners: for a one-off project.
- Specific Project Coverage: example, construction in a cyclone prone location.
- High Value Projects: that require specific coverage and better risk management.
- Contractual Requirements: when the construction contract specifically requires a Single Project Policy to ensure that the project is adequately insured.
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What does Contract Works Insurance Cover?
A Contract Works Insurance policy has two sections:
- Material Damage
- Covers loss or damage caused by insured events to insured property at the contract site, like a Fire, Storm Damage, Theft etc. and also:
- Additional Benefits
- Removal of Debris
- Professional Fees
- Transit
- Off-site Storage
- Expediting Expenses
- Mitigation Expenses
- What’s not covered under the Material Damage (Section 1)?
- Builder warranty insurance, faulty workmanship, materials and design, gradual deterioration, and normal upkeep etc.
- Additional Benefits
- Covers loss or damage caused by insured events to insured property at the contract site, like a Fire, Storm Damage, Theft etc. and also:
- Public Liability
- Indemnifies the insured for legal liability to compensate third parties for Personal Injury and Property Damage.
- Covers legal costs and extends to contractual liability.
- What’s not covered under the Public Liability (Section 2) ?
- Defective design,
- employer’s liability or workers’s compensation
- insured property under Section 1,
- fines and penalties,
- product defects,
- product liability,
- professional duty or professional indemnity etc.
- What’s not covered under the Public Liability (Section 2) ?
See fine-print screenshots taken from a policy document which you must be aware of
When does the cover start?
Coverage starts from legal possession of the site and ends at practical completion or as specified in the Policy Schedule.
How is the premium calculated for Single Project Contract Works Insurance?
The premium is calculated based on a number of factors like:
- Location of the project
- Value of the project
- Domestic or Commerical build
- Limit of Public Liability etc.
Contract Works Insurance Calculator
Insurers do not share the Contract Works Insurance Calculator with the customers or the brokers as the rating formulas are their intellectual property.
However, its important to understand that for a contract works insurance policy, the insurer will usually collect what the call is the deposit premium.
Deposit premium is a dollar value that they have arrived at on the basis of estimated project value.
About a month before the policy due date, the insurers request the clients complete a declaration on the status and the cost of the project which serves 2 purposes:
Firstly, to ascertain how close the project is near its completion date and if an extension of cover is required which can usually be obtained by paying an extra premium.
Secondly, if there is an adjustment to deposit premium applicable. If you had estimated the project will cost $500,000 to complete but in actual it cost $600,000 then you’d have to pay the premium to cover the difference in the project outlay.
On the other hand if the project cost less than estimated, you are also eligible to a refund but usually no more than 20-25% of the deposit premium.
Talk to us to discuss further and we’d be happy to walk you through the policy wordings and get you the appropriate cover.
References:
https://www.mecon.com.au/wp-content/uploads/2023/12/Single-Project-Policy-Wording-1123-Final.pdf