A building project can lose money long before a client raises a liability claim. Fire can damage an unfinished extension, thieves can take materials awaiting installation, or a storm can ruin work that must be rebuilt. Contractors all risks insurance in the UK is designed to address certain physical losses during construction, helping prevent an unexpected incident from turning a profitable job into an expensive setback.
It is not one standard policy with identical protection everywhere. Cover depends on the insurer, selected sections, limits and construction contract. The wording matters more than the reassuring phrase “all risks”.
What does contractors all risks insurance cover?
At its core is contract works insurance: protection against insured accidental loss of or damage to work in progress before completion or handover, subject to policy terms. It can include permanent building work, temporary works and materials intended for the finished project.
Imagine a contractor building a £90,000 extension. A covered fire damages partly completed walls and roofing. A suitable contract works section could contribute towards rebuilding that insured work, after any excess. It would not automatically cover damage to the homeowner’s existing house.
Contractors all risks cover may be arranged annually across multiple jobs or for a single project. Annual policies commonly specify a maximum contract value; project-specific arrangements can be tailored to a particular job and construction period.
Contract works, materials and plant are different exposures
Work in progress and temporary works
A works section may cover construction, alterations and declared temporary works such as formwork. But refurbishing an occupied building raises different questions from building on an empty plot. Ask specifically about demolition, existing structures and work inside occupied premises.
Materials on site, in storage and in transit
Construction materials insurance is often part of the works section, but location and ownership conditions matter. Timber delivered to site, bespoke windows stored at a supplier’s warehouse and fittings travelling to the project may have different protection.
Record when you become responsible for materials, their maximum value and where they are kept. Off-site storage or transit may need specific cover. Delivery paperwork alone does not establish that a loss would be insured.
Owned and hired-in machinery
Plant insurance addresses equipment rather than the building itself. Owned plant cover may protect excavators and similar machinery against insured physical loss. Hired-in plant cover commonly addresses a contractor’s liability under a hire agreement for damaged or stolen equipment. Continuing hire charges may require a separate extension.
Tools, portable equipment and mobile machinery can have different definitions, theft conditions and limits. Check each category rather than relying on a general statement that equipment is included.
Does it include public liability insurance?
Sometimes, but not automatically. A contractors all risks package may offer public liability as a separate section; another policy might insure works and plant only. Public liability responds to covered third-party injury or property damage claims, not simply the cost of repairing unfinished work.
If construction activity damages a neighbour’s vehicle, the question may concern liability cover. If it damages the contractor’s newly installed wall, the works section may be more relevant. Responsibility, circumstances and exclusions determine the answer.
Employers’ liability is different again. Most UK businesses employing staff must have at least £5 million of cover, subject to legal exemptions. A works policy does not replace it. Related guidance on public liability insurance for contractors and employers’ liability insurance requirements can help clarify these separate responsibilities.
What is usually excluded?
“All risks” is not a promise that every loss is insured. Policies may exclude or restrict wear and tear, gradual deterioration, mechanical breakdown and damage arising from defective design, workmanship or materials. Some wordings distinguish the cost of fixing a faulty component from resulting damage to other insured work.
Existing buildings, property already handed over, contractual penalties and project delays often require separate consideration. Theft protection can depend on site security, especially when premises are unattended. Flood, terrorism and unusual construction methods may attract restrictions or special conditions.
Ordinary works cover should not be assumed to replace lost revenue following delays. That is a separate question explored in business interruption insurance explained. Read the schedule and exclusions, not just a short product summary.
How much cover should a contractor arrange?
Do not calculate protection solely from the amount already spent. Following a major loss, rebuilding insured work can involve replacing labour and materials while fulfilling contractual responsibilities.
Compare the maximum contract value, any single-site limit and the peak value of materials exposed. Disclose unusually large contracts, check turnover declarations and assess owned machinery values alongside obligations in equipment hire agreements.
Review the excess, geographical restrictions, storage and transit terms, and security conditions. Practical completion, partial occupation and defects-liability periods can change protection. Construction contracts may allocate insurance responsibilities between clients, main contractors and subcontractors, so the policy should match those requirements.
A real-world check before the first delivery
Picture a refurbishment contractor replacing a shopfront while the business remains open. New glass, frames in temporary storage, hired lifting machinery and the shop’s existing interior create separate exposures. One certificate headed “contractors all risks” does not prove all four are protected.
Before ordering materials, ask the insurer or broker to confirm the works value and duration, off-site storage, transit, hired plant, existing premises and third-party liability arrangements. Keep written answers with the building contract. This exercise can expose expensive gaps before a claim does.
Frequently asked questions
Is contractors all risks insurance compulsory in the UK?
There is no general legal requirement for every contractor to hold this particular policy. Clients, lenders or building contracts may require it, however. Employers’ liability can be legally compulsory for businesses with employees.
Does the policy cover stolen building materials?
It can, provided the materials and theft circumstances fall within the cover. Check storage locations, site security requirements, transit protection, exclusions and limits.
Are subcontractors covered?
That depends on the insured parties named or defined in the wording and the construction contract. Their own plant, tools and liability are not automatically included just because they work on site.
Can a homeowner arrange contract works insurance?
Yes, project-specific insurance may be available for substantial renovations or new builds. Cover for the existing property and the new works, along with contractual responsibility, needs careful review.
Match the policy to the job
Assess contractors all risks insurance by following a project from purchasing materials through storage, transport, construction and handover. Identify what could be damaged, who must pay and which policy section would respond. Compare those risks with the actual limits and exclusions. That is far more useful than choosing cover simply because its name promises “all risks”.