No one grows up thinking one day they are going to need Contract Works Insurance so I better learn about it. When you need it though, it’s hard to figure out all that you need to be able to make an informed decision.
Who needs Contract Works Insurance? is one of the most frequently asked questions. Many Tradies, Builders and everyday people have asked the same question over the years. CoverTradie makes it simple, read on.
There are three types of situations/policies that should cover most people’s queries, see below:
- Owner Builders – Single Project Policies
- Owners contracting construction to builders – Single Project Policies
- Builders or Tradies – Annual Policies
Owner Builders – Single Project Policies
Very exciting times , an opportunity of a lifetime to build a home to your own specs and the quality that you want. Who doesn’t want to do that. You’ve decided to spend a bit of cash either from your own savings or borrowed money from a bank. You now have “skin in the game” that needs to be protected.
In doing so though, there’s often risks involved with things not going to plan like project delays etc. And whilst most people are worried about a project running over time, with a bit of planning, skill and the right team behind you, that risk can be managed.
The project delays are likely to be more annoying than catastrophic.
There are however some other risks involved with building a new home. Risks that are quite big and have the potential to bring a lot of financial harm. Those risks are the one’s that need managed by a professionally done Contract Works Insurance policy.
Think about a situation where your home is near completion and 90% of the work is done but some random arsonist sets it on fire burning the almost finished house down.
There’s no way to recover from a loss like that unless you own a diamond mine. Even if you owned a diamond mine, its still important to manage your risks and to cover your self against a financial loss such as that, you need to have contract works insurance.
You’ll find that if you are borrowing money, your bank will ask you to provide a certificate of currency for Contract Works Insurance.
You are only going to need a single project policy because that’s the one project that you will be working on unlike commercial builders who build many houses, factories, commercial buildings etc. who need insurance to protect them all.
Owners contracting construction to builders – Single Project Policies
There are often situations where an owner needs to take out insurance for a project that has been contracted out to a builder who doesn’t have contract works insurance or don’t have the right type of policy to cover their project.
Again it is a situation where a single project policy works.
Builders or Tradies – Annual Policies
If you are a builder just starting out and you’d be constructing several homes, offices, factories etc. you might be interested in an annual policy. A single project policy for each of the project could also do the job but that would be so inefficient and annoying way to cover yourself.
The annual policy is like many single policies, it provides automatic cover for projects of a certain type and size. You need to tell the insurer what type of projects you would be undertaking, your total expected turnover for the year, the maximum value of any single project and the maximum duration of your projects. With this information, an annual policy can be issued that covers all the projects you are working on. Even simultaneously.
If you build multiple houses, commercial buildings or schools for that matter, each project needs insurance cover. Annual policy is the way to go for you.
Hopefully this was straightforward and easy to understand. If you’d like to learn more, continue reading the next article where we discuss what does the policy cover in detail and what it doesn’t also know as Exclusions.
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