In construction, risk never sleeps. Projects are bigger, supply chains longer and financing more complex. As such, contract works insurance designed to protect building projects against loss or damage during construction is more important than ever in 2025.
This blog explains what contract works insurance covers, common pitfalls and why lenders, contractors and developers should pay close attention.
What Is Contract Works Insurance?
Also known as “contractors all risks” cover, it insures building works in progress. Typical cover includes:
- Fire, flood, theft, accidental damage.
- Materials on-site or in transit.
- Partially completed works.
Key Issues for 2025
- Joint insured clauses: Contractor and site owner both insured but claim settlement can get complicated.
- Rising project values: Inflation means sums insured are often too low.
- Basement works & specialist risks: Some insurers exclude high-risk methods unless specifically declared.
- Overlap of policies: Employer vs contractor policies can create disputes.
Real-World Scenarios
- A residential project valued at £5m suffered a major fire. Both contractor and employer had policies. Settlement was delayed for nine months due to disputes between insurers.
- A contractor insured basement works under a general policy, only to find exclusions applied leaving a £2m gap.
Lender & Client Demands
Banks and investors increasingly require contract works cover as a condition of funding. Policies must often include non-negligence cover and extended maintenance periods.
Practical Solutions
- Agree who arranges the cover at contract stage.
- Review values regularly during inflationary periods.
- Disclose all high-risk activities (e.g. underpinning, hot works, demolition).
- Work with a broker to avoid duplication between parties.
In 2025, contract works insurance is more than a tick-box exercise. It’s essential protection against delays, disputes and catastrophic losses.
If you’re planning projects this year, ensure your contract works cover is watertight. Contact Sustain Insurance Brokers for expert advice.
