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Construction Insurance

Construction insurance can protect you from risks with the right policy.

What you need to know

  • Construction insurance (also known as construction all risk insurance, builders insurance or construction works insurance) provides cover for various construction-related risks under a single policy.
  • A policy can be tailored to suit specific projects and to protect all parties involved including the project owner, contractors and suppliers.
  • It can also be tailored to single projects or annual contracts.
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What is construction insurance?
Construction insurance is a type of financial protection that can protect you from the various risks of the industry, including protection for building works against loss or damage, legal liability help if someone tries to sue you and more.

How much is construction insurance?

Premiums can be affected by a wide range of factors including:

  • The sum insured. The higher the level of cover you have in place, the more you will have to pay in premiums.
  • Any additional options you select. Adding additional cover to your policy, for example to cover architect's fees when repairing insured damage, will increase the cost of premiums.
  • The number of people covered. The number of contractors and subcontractors included in the construction project will influence the cost of cover.
  • The work you do. If insurance is taken out on a per-project basis, the size and scope of the construction works will be taken into account. If you take out an annual policy, the insurer will consider the size and scope of the projects you take on and how many you would be expected to complete in a calendar year.

What does construction insurance cover?

Covered

  • Legal liability
  • Loss or damage due to theft, storms, water damage and more
  • Items the owner supplies to be included in the construction project
  • Tools, equipment, plant and machinery against on-site and off-site losses
  • Professional fees when repairing insured damage
  • Debris removal costs
  • Damage mitigation expenses
  • Loss of profits
  • Loss of rental
  • Delay in start-up

What does construction insurance not cover?

As with any other form of insurance, a range of exclusions will apply to your construction insurance policy. These exclusions can differ from one insurance provider to the next but will commonly include:

Not Covered

  • The total or partial destruction, erasure or corruption of electronic data.
  • The use of the Internet or email that results in a claim.
  • Acts of war or terrorism, invasion, or any claims relating to nuclear weapons material.
  • Any insolvency or bankruptcy of the company must be reported to the insurer. The insurer reserves the right to cancel the policy or alter the terms.
  • Any liability arising out of or in anyway connected with personal injury, property damage or other losses connected to asbestos of any form.
  • The demolition of buildings or structures.
  • Claims related to welding or heating where the insured has failed to comply with laws or safety standards.
  • Claims relating to strikes, civil unrest or wilful damage.
  • Excavation work or the removal or weakening of supports.
  • Any liability arising out of ownership, use, maintenance, possession or operation on any watercraft or aircraft.
  • The loss of or damage to items such as bills, computer software or cash.
  • Claims relating to actions or incidents occurring outside Australia.
  • Claims arising from dishonest, fraudulent or criminal conduct.
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Make sure you read the PDS
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What types of construction insurance are there?

Construction insurance encompasses a broad range of different liabilities and finding the right level of cover for your business can be a confusing task. To make sure you're not paying for benefits that you don't need, an insurance broker may be the best way to help tailor a policy to your needs, so take the time to seek expert advice.

To give you an idea of what you can get, the following types of cover are often available with a construction insurance policy:

Cafe

Public liability

This can cover you for public liability claims made against you including legal costs and expenses for claims made by third parties, claims for physical damage to or destruction of goods in your control as well as claims for injuries to employees or third parties on the construction site.

construction

Property damage

This provides cover for the construction site and pre-existing structures against unforeseen physical loss or damage, including by fire, wind, theft and more.

tool

Equipment insurance

This provides cover for loss or damage to construction equipment found on building sites, which can include everything from handheld power tools to massive earthmoving equipment and even cranes. Other items covered include forklifts, pavers, concrete equipment, lifting equipment, harvesting machines and farm machinery.

employee

Employment practices liability insurance

This provides cover for alleged discrimination, unfair dismissal, sexual or workplace harassment, wrongful dismissal or termination of employment. It can also cover you for costs you may be required to pay including damages, legal fees and any back pay.

decennial

Decennial liability insurance

This is designed to provide protection against any liability for major damage to a building that can occur or become apparent in the decade following its completion. It can cover the cost of damages and compensation that may need to be paid to the building owner.

property damage

Erection all risks insurance

This is designed to protect you against the risk of any loss suffered in relation to the erection and installation of machinery, plant and steel structures, including physical damage and liability cover.

delay

Delay in start-up insurance

Similar to business interruption, this can cover the loss of the anticipated income in the event that a construction project is delayed because of extreme weather and other events that are out of your control.

How can I compare construction insurance?

There are a number of steps you can take and factors you can consider when comparing builders risk insurance policies. These include:

  • Determine how long your construction process will take. As builders risk insurance policies will cover you for the duration of building from start to finish, estimate how long the building process will take and factor this in when calculating how much each policy will cost.
  • Make sure all the important people are covered. Take the time to sit down and work out which individuals and professionals will be working on the project. Will there be architects, engineers, tradesman, contractors and subcontractors? Construction insurance covers the property owner, the general contractor and some subcontractors, so compare the available policies to make sure you find cover for all the necessary people.
  • Work out a budget. Calculate how much your project is going to cost, including everything from materials to labour. This will then help you determine exactly how much cover you actually need.
  • Specified peril vs all risk policies. Specified peril policies only provide coverage for specific incidents that occur to structures listed on your insurance policy. All risk policies provide coverage for a broader range of events and incidences. Which one is right for you?
  • What additional coverage do you need? Examine the range of insurance options available to determine whether or not you might need to increase your cover. Would a professional indemnity policy be a good idea?
  • Consider your options for the future. When comparing builders insurance policies, consider whether each provider will make it easy for you to convert your coverage to a permanent property insurance policy once the job is finished. This can help you save money in the long run.
  • Compare exclusions. As is always the case when buying insurance, it makes good sense to read the policy documents closely and examine what is excluded from your policy. This can prevent any nasty surprises down the line and ensures you cover that you understand.
  • Seek expert advice. Shopping for construction risk insurance can be a daunting and sometimes confusing task. In order to ensure you get the right level of cover put in place, speak to an insurance broker to get professional advice tailored to your specific needs.

Talk to a broker about a construction insurance package

Frequently asked questions

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To make sure you get accurate and helpful information, this guide has been edited by Gary Ross Hunter as part of our fact-checking process.
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Written by

Insurance Expert

Tim Bennett is a Finder insurance & utilities expert. For over 10 years he's reported on news, politics, finance and other topics as a journalist and radio presenter. Tim's roles have included radio news reader and breakfast at the ABC, news producer for SBS and producer for Fairfax Media. Tim regularly appears as a health insurance expert on programs like Sunrise and SBS news, as well as in the Australian, The Daily Telegraph, The Courier Mail and more. See full bio

Tim's expertise
Tim has written 116 Finder guides across topics including:
  • Personal finance
  • Financial comparison
  • Heath insurance
  • General insurance
  • Life insurance

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3 Responses

    Default Gravatar
    JohnSeptember 27, 2018

    We are owner building our farm house at Dalveen Queensland with a construction cost (materials & Labour) of around $250,000 It has timber floors & Windows with cladding exterior & colorbond roof. Single level. We want to cover the building and materials during the construction process against accidental damage including fire, hail, storm etc. would like a quote please.

      AvatarFinder
      JoshuaSeptember 30, 2018Finder

      Hi John,

      Thanks for getting in touch with finder. I hope all is well with you. :)

      To get a quote, you may want to fill out the form found above under the “Receive a Quote for Business Insurance” subheading. Please review the criteria, details of the insurance policy, and its conditions, then contact the insurer directly to discuss your options.

      I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.

      Have a wonderful day!

      Cheers,
      Joshua

    AvatarFinder
    JonathanFebruary 21, 2018Finder

    Hi Phil,

    Thanks for your inquiry.

    If you submit your details via the form on the construction insurance page, a business insurance broker will be in touch to discuss the different options available and provide you with a quote on your multilevel apartment complex insurance. This service is provided free of charge and there is absolutely no obligation to sign up for a policy.

    As a gentle reminder, please ensure that you read through the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you.

    Best,

    Jonathan

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