For more on this part of the insurance industry:
1. visit our construction insurance page for a look at all products in this sector
2. or focus in on all of the constructions projects insurance products available on IB Markets!
Construction projects insurance is a specialised policy tailored to protect against the risks associated with construction activities. It provides important financial safeguards for:
This insurance makes sure that losses due to theft, vandalism, fire, and natural disasters do not derail the progress or financial stability of a project.
Typical coverages include material damage, public liability, and loss of profits from delays. Optional coverages may also include professional indemnity, workers’ compensation, or equipment protection.
The Australian construction industry was expected to reach an estimated valuation of $193 billion in 2024. This highlights the critical role that construction projects insurance has in shielding the industry’s complex and dynamic operations.
Rising material and labour costs due to inflation and supply chain disruptions are driving higher project expenses and insurance premiums. Contractor and subcontractor insolvencies pose major risks to project completion and claim volumes, showing the need for construction projects insurance.
Along with these concerns, new trends are starting to appear, such as:
mass timber adoption: fire risks and structural considerations for insurance policies emerge with mass timber’s rise in construction
sustainable building demand: net-zero goals drive eco-friendly materials and modular construction, creating new insurance needs
engineered wood safety: mid-rise projects influence insurance coverage options, with engineered wood offering safe, sustainable solutions
Global geopolitical issues and local policy changes are disrupting supply chains, causing delays and rising costs in construction. Brokers should advise clients on mitigating risks associated with construction projects insurance.
What is construction works insurance?
Construction works insurance, also known as contract works insurance, protects against risks during building projects. As a form of construction projects insurance, it covers losses from various unforeseen events.
This insurance is vital for builders, contractors, and property owners. It manages unexpected risks and is often required by lenders to secure project funding.
Project insurance protects large-scale projects, such as construction and engineering, from financial losses caused by sudden events that may disrupt progress. It is closely linked to construction projects insurance, providing coverage against threats that could lead to delays or major expenses.
Since project managers oversee critical aspects of a project, they face many hazards related to their responsibilities.
Professional indemnity (PI) insurance covers negligence or errors, while public liability (PL) insurance protects against third-party injuries or property damage.
In Australia, builders may need PI insurance depending on local laws. For instance, Victoria’s Building Act (1993) mandates PI insurance for certain building practitioners.
This insurance protects against claims of negligence or errors in professional services, ensuring financial security and compliance.
Yes, tradies in Australia should have insurance to protect against a variety of risks. Policies include:
public liability insurance: covers legal costs and compensation for injury or property damage caused by their work
workers’ compensation insurance: mandatory if employing staff, covering work-related injuries or illnesses
tool and equipment insurance: protects against loss or damage to essential tools and equipment
Appropriate insurance helps tradies run their businesses securely and meet legal requirements.
A project plan is a comprehensive document outlining how a construction project will be executed and controlled. It generally includes:
By including these, the project plan serves as a roadmap and guides the project team through each phase. It supports the effectiveness of construction projects insurance.
Builders in Australia are not legally required to have public liability insurance. The coverage amount depends on the project size and requirements, but most builders choose between $5 million and $20 million to allow for sufficient protection.
Without PL insurance, builders risk paying out of pocket for property damage or injuries caused by their work. Many clients and contracts also require proof of construction projects insurance before starting a project, which limits opportunities for uninsured builders.