The policy is available in two forms, Single Project or on an Annual basis. The Single Project policy will provide cover for a specific project, with the annual policy covering all projects during the 12 month period.
The Annual policy can be written on a ‘Turnover’ or ‘Run-Off’ basis and care needs to be taken with your annual declaration to ensure no gaps in coverage. Turnover, also known as ‘Transfer’, will only cover the work undertaken during the policy period, while Run-Off will cover any contract commencing during the policy period through to completion of the project (or expiry of cover as per the wording).
Cover can be arranged by either the Principal or the Builder (or an Owner Builder), Developer, Contractor or joint venture or Private Public Program, and can extend to any party who has an interest in the project(s).
In general, a Contract Works policy will insure the value of the contract for physical loss or damage, for all risks not otherwise excluded, and will provide a number of additional benefits to assist in getting the project back on track following a loss.
The Liability section covers your legal liability to pay compensation to a third party for bodily injury or property damage arising from your negligence in undertaking your insured activities.
Additionally, various coverage extensions are negotiable, such as:
If any of the following are relevant then you should speak to your broker about a Contract Works Insurance policy:
A Contract Works Insurance policy can include Public Liability Insurance and is quite often broader to include:
|DE1||Outright Defect Exclusion a) Excludes everything|
|DE2||Extended Defect Exclusion a) Excludes Property Insured in a defective condition due to DWM b) Excludes Property which relies on the support of defective property in a) c) Excludes Property Insured damaged to enable repair of a) & b) (i.e. access costs) d) Covers other Property Insured free of defect but damaged as a consequence|
|DE3||Limited Defective Condition a) Excludes Property Insured in a defective condition due to DWM b) Excludes Property Insured damaged to enable repair (i.e. access costs) c) Covers other Property Insured free of defect but damaged as a consequence|
|DE4||Defective Part a) Excludes “Component Part” of Property Insured in a defective condition due to DWM b) Excludes Property Insured damaged to enable repair (i.e. access costs) c) Covers other Property Insured free of defect but damaged as a consequence|
|DE5||Design Improvement a) Excludes costs of improvements b) Covers other Property Insured free of defect but damaged as a consequence|
|LEG1||Outright Exclusion a) Excludes everything|
|LEG2||Consequences Cover a) Excludes costs rendered necessary by defects in DWM b) Excludes costs to rectify the ‘defect’ if put in hand immediately prior to ‘damage’ (i.e. portion of faulty insured property itself and the access costs to get to it) c) Covers Damage less the above costs|
|LEG3||Improvement Exclusion a) Excludes costs incurred to improve the original DWM b) Covers all direct and indirect damage caused by defect from DWM (i.e. the faulty insured property itself and access costs)|
DWM – Design/Plan/Specification Workmanship Material
A number of steel framed industrial units are being erected on an estate. The design engineers have miscalculated the load on the bolts that secure the roof beams together. Mid-way through the project the bolts fail as the final roofing panels are being fitted to one unit, which collapses damaging the neighbouring completed unit.
Costs are incurred for replacing the bolts that failed, replacing the roof structure that was damaged when it collapsed, making good the damage to the supporting wall, repair of damage to the neighbouring unit, redesign costs for the defective bolts and replacement of the bolts already fitted in the other units.
How the policy responds to this loss is dependent on the Defects Exclusion applied in the wording.