Contract Works Insurance

Contract works insurance protects your project from unintentional or accidental loss or damage during the construction phase at the contract site, including accidental damage, theft, and natural disasters like earthquakes and storms.

Construction Work: All works in progress including the structure being built or project under renovation. Damage from storms, fire, or vandalism to work in progress is covered, including the cost of repair or redoing the work. It's essential to ensure the contract price is accurate to avoid underinsurance.

Construction Materials: Costly materials stored on-site are covered if stolen, damaged, or destroyed due to unforeseen events, including replacement costs. This means your project won't suffer unnecessary delays or bear unexpected additional costs. If the principal is supplying their own building materials, ensure they are noted separately under the principals supplied materials limit.

Loss During Maintenance Period: Coverage extends to loss or damage during the specified maintenance period following project completion when the contractor is obligated to rectify defects. If any defects or damages are identified in this period, the cost to repair or rectify these issues can be claimed through your policy.

Professional Fees: Covers fees for architects, surveyors, consulting engineers, clerks of works, and fees for obtaining building and resource consents. Does not cover fines, penalties, or fees related to preparing an insurance claim or estimating costs.

Contract works insurance premiums are calculated based on several key factors that reflect the risk profile of your construction project:

• Type of work - Commercial builds, residential construction, renovations, and civil works each carry different risk levels and premium costs
• Contract value - The total project cost directly influences your premium, as higher-value projects represent greater potential exposure
• Location - Construction sites in disaster-prone areas, high-crime locations, or remote regions may attract higher premiums
• Project duration - Longer construction periods increase exposure to potential risks and may result in higher costs
• Claims history - A clean claims record can result in more favourable premiums, while previous claims may increase costs
• Type of coverage - Single project policies differ in cost from annual policies covering multiple projects throughout the year

Contract works insurance in New Zealand typically costs between $1,000 to $2,000 a basic residential dwelling, though this can vary significantly based on the factors above and the specific nature of your project. Typically budget 0.1 - 0.4% of the total contract value. So for a $10,000,000 build, this would be between $10,000 to $40,000.

What Is Contract Works Insurance?

Contract works insurance — also known as construction all risks insurance — is a specialist policy that protects construction projects against accidental loss or damage during the building phase. Whether you're a builder, developer, homeowner, or project manager, contract works insurance covers the work in progress, materials on site, professional fees, and even the maintenance period after practical completion.

In New Zealand, construction projects face a unique set of risks: seismic activity, severe weather events, theft from unsecured sites, and the inherent complexity of managing multiple trades and subcontractors. A single incident — a storm tearing through partially completed framing, a fire in a renovation, or materials stolen overnight — can result in significant uninsured losses if you don't have the right cover in place.

Gerrards Insurance Brokers works with more than 20 New Zealand and international insurers to find contract works policies tailored to your project, whether it's a residential build, commercial development, renovation, or civil works project.

Who Needs Contract Works Insurance?

Contract works insurance is relevant to a wide range of parties involved in construction. You may need it if you are:

• A building contractor or subcontractor undertaking residential or commercial construction projects
• A property developer overseeing new builds or large-scale renovations
• A homeowner commissioning a new home build or major extension
• A project manager coordinating multiple trades across a construction site
• A commercial business carrying out fit-outs, extensions, or structural works on existing premises

Many clients, lenders, and local councils require proof of contract works insurance before work commences on site. For contractors tendering for large commercial projects, having robust cover in place can be a key differentiator when competing for contracts.

What Does Contract Works Insurance Cover?

A comprehensive contract works policy typically provides coverage across several key areas:

• Work in progress: Physical loss or damage to the structure being built, renovated, or extended, including damage caused by fire, storm, flood, vandalism, and accidental damage. If work needs to be redone due to a covered event, your policy picks up the cost.
• Construction materials on site: Materials stored at the construction site are covered against theft, accidental damage, and destruction. This includes building materials supplied by the principal that should be noted separately under the principals supplied materials limit.
• Maintenance period: Coverage extends beyond practical completion into the maintenance period — typically 12 months — during which the contractor is responsible for rectifying defects. Any loss or damage arising during this period can be claimed under the policy.
• Professional fees: Costs for architects, surveyors, consulting engineers, and clerks of works are covered, along with fees for building consents and resource consents required to restore the project following a loss.
• Removal of debris: The cost of removing debris following a covered loss is often included, which can be a significant expense on larger construction sites.
• Natural disasters: New Zealand's exposure to earthquakes, volcanic activity, and severe weather makes natural disaster cover a critical component of any construction policy.

What Is Not Covered?

Like all insurance policies, contract works insurance has exclusions you should be aware of. Common exclusions include:

• Faulty design, materials, or workmanship (though consequential damage may still be covered)
• Normal wear and tear or gradual deterioration
• Mechanical or electrical breakdown of plant and equipment
• Fines, penalties, or liquidated damages
• Professional fees related to preparing an insurance claim or estimating the cost of reinstatement
• Intentional damage or damage caused by fraud
• Loss or damage occurring after the project has been handed over and the maintenance period has ended

Understanding your exclusions is critical. Gerrards will walk you through exactly what your policy does and doesn't cover so there are no surprises at claim time.

Single Project vs Annual Contract Works Policies

Contract works insurance is available in two main formats, and choosing the right structure depends on your business model and construction activity:

• Single project policy: Designed for one-off or infrequent construction projects. This policy covers a specific project from commencement to the end of the maintenance period. It's well-suited to homeowners, developers, or contractors working on a single major project.
• Annual (open-cover) policy: Designed for builders and contractors who work on multiple projects throughout the year. An annual policy provides rolling coverage for all projects commenced during the policy period, eliminating the need to arrange separate cover for each job. This is typically more cost-effective and administratively simpler for active contractors.

Gerrards can help you assess which structure is most appropriate based on your project pipeline, contract values, and risk profile.

Contract Works Insurance and the Maintenance Period

One aspect of contract works insurance that is often misunderstood is the maintenance period. In New Zealand construction contracts — particularly those based on NZS 3910 — the contractor is obligated to return to site and rectify defects identified during the maintenance period following practical completion.

Contract works insurance can extend to cover loss or damage that occurs during this period, provided the damage is not the result of faulty design or workmanship (which would be a warranty issue rather than an insured event). This is important protection for contractors who may be called back to site months after handover to address issues arising from unforeseen events such as storm damage or accidental impact.

Ensure your policy clearly specifies the length of the maintenance period covered — typically 12 months — and that it aligns with your contractual obligations.

How Much Does Contract Works Insurance Cost in New Zealand?

Contract works insurance premiums in New Zealand are calculated based on the specific risk profile of your project. Key pricing factors include:

• Contract value: The total insured value of the project is the primary driver of premium. As a general guide, budgeting 0.1% to 0.4% of the total contract value is a reasonable starting point. For a $1,000,000 residential build, this translates to roughly $1,000 to $4,000 in premium.
• Type of construction: Residential, commercial, civil, and industrial projects carry different risk profiles and attract different rates.
• Location: Sites in high-risk areas — such as flood plains, earthquake zones, or high-crime suburbs — may attract higher premiums.
• Project duration: Longer project timelines increase exposure and may result in higher premiums.
• Claims history: A clean claims record is rewarded with more competitive pricing.
• Security measures: Fenced and secured sites with lighting and monitoring may attract more favourable terms.

Because premiums vary significantly based on these factors, the best way to understand the cost for your specific project is to speak with a Gerrards broker who can obtain competitive quotes from multiple insurers.

Why Use Gerrards for Contract Works Insurance?

Gerrards Insurance Brokers is an independent New Zealand brokerage that works for you — not the insurer. That independence means we can access more than 20 insurers to find the most competitive and comprehensive contract works cover for your project.

Our brokers understand the New Zealand construction industry, the risks specific to our seismic and weather environment, and the contractual requirements that builders and developers face. We don't offer a one-size-fits-all solution — we take the time to understand your project, your obligations, and your risk appetite before recommending a policy.

Key reasons to work with Gerrards:

• Access to 20+ insurers: We compare the market to find you the best combination of cover and price.
• Same-day proof of insurance: When you need to start on site quickly, we can move fast.
• Expert advice: Our team understands construction contracts, NZS 3910 obligations, and the nuances of contract works policies.
• Claims support: If something goes wrong, we advocate on your behalf to ensure your claim is handled fairly and efficiently.
• Ongoing policy management: As your project evolves, we can adjust your cover to reflect changes in contract value, scope, or timeline.

Frequently Asked Questions

Is contract works insurance compulsory in New Zealand?

Contract works insurance is not legally compulsory in New Zealand, but it is widely required by clients, lenders, and project managers as a condition of commencing work on site. Under many standard construction contracts — including those based on NZS 3910 — the contractor is required to hold contract works insurance for the duration of the project.

Does contract works insurance cover subcontractors?

Most contract works policies extend to cover all contractors and subcontractors working on the project site. However, it's important to confirm this with your broker, as some policies may require subcontractors to be specifically noted or may exclude certain types of subcontracted work.

What is the difference between contract works insurance and public liability insurance?

Contract works insurance covers physical loss or damage to the construction project itself — the structure, materials, and associated costs. Public liability insurance, on the other hand, covers third-party bodily injury or property damage arising from your construction activities. Both are important, and many contractors hold both policies simultaneously. Gerrards can arrange combined programs covering both exposures.

Can I get contract works insurance for a renovation project?

Yes. Contract works insurance can be arranged for renovations, extensions, and fit-outs, as well as new builds. For renovation projects, it's important to also consider cover for the existing structure, which may need to be noted separately in the policy to ensure it is adequately protected during the construction phase.

How do I arrange contract works insurance quickly?

Contact Gerrards by phone at 0800 374 691 or submit an enquiry online. With basic project details — contract value, type of work, location, and project duration — our brokers can typically provide quotes and arrange cover within the same business day.