What Is Contract Works Insurance?
If you’re about to build a new home or undertake major renovations in New Zealand, your standard house insurance won’t cover you during the construction phase. That’s where contract works insurance steps in.
Also called builder’s risk insurance, contract works insurance is a specialist policy that protects your property while it’s under construction or renovation. It covers accidental loss or damage to the building itself and materials on-site—from the first dig of the foundations to the final lick of paint.
When Do You Need Contract Works Insurance?
If you're doing any of the following, you’ll likely need contract works cover:
Building a brand-new home from the ground up
Undertaking major renovations (e.g. removing walls, adding rooms)
Adding significant extensions or structural upgrades
Renovating a home you’ve just bought before moving in
Self-managing a build or working with a builder who doesn’t provide cover
Contract works insurance is usually a requirement of your lender if you're financing the build with a mortgage. The bank wants to ensure that if something goes wrong during construction, your investment (and theirs) is protected.
What Does It Cover?
Every policy varies slightly, but in general, contract works insurance covers:
Physical Damage to the Work in Progress
This includes accidental damage to the partially completed building, such as a fire, flood, or storm damage.
On-site Materials
Materials stored on site (or sometimes in transit) are covered if they’re stolen or damaged before being installed.
Temporary Structures
Things like scaffolding or site fencing may also be covered.
Subcontractor Work
Damage caused by subcontractors may be included—though it pays to check the fine print or require proof of their own insurance.
Public Liability (Sometimes)
Some policies also include limited public liability if someone is injured on site. However, this is more commonly held by the builder or construction firm, not the homeowner.
What’s Not Covered?
While it’s broad, contract works insurance doesn’t cover everything. Exclusions may include:
Wear and tear or poor workmanship
Design flaws or faulty plans
Earthquake or subsidence (unless specified)
Tools or equipment owned by tradies (they need their own cover)
Damage after the work is complete (this falls under standard home insurance)
It’s essential to read the policy carefully or get professional advice to ensure the cover matches your project.
Who Organises It—You or the Builder?
That depends on the type of build:
If you’re using a group builder or fixed-price contract (like a turn-key home), they often include contract works insurance in their service. You’ll want to check the terms and ask to see proof of insurance.
If you’re self-managing the build or using individual contractors, you’ll likely need to organise your own cover.
In any case, if the lender is involved, they’ll want confirmation that the correct cover is in place before they release funds.
How Much Does Contract Works Insurance Cost?
The premium depends on:
Total value of the build
Location (and any natural hazard risks like floods or earthquakes)
Type of construction (e.g. timber frame vs concrete)
Duration of the work
Whether you’re living on-site during construction
Typical costs range from $500 to $2,500+, depending on the scale and risk level. For large or complex builds, expect more.
When Does It Start and End?
Contract works insurance generally starts from the moment construction begins and ends when:
You move into the property, or
A Code Compliance Certificate (CCC) is issued
At that point, it’s essential to switch to standard home and contents insurance, as contract works cover no longer applies.
If your project runs over time, you must extend the policy—otherwise, you may be left uninsured mid-build.
Don’t Build Without It
Even if your build is “just a small reno,” the risks are very real. Fires, flooding, theft of materials, or accidents can happen on any site—and when they do, the financial losses can be significant. That’s why most banks won’t release construction funds without proof of contract works insurance.
And just as importantly, even if the builder has insurance, you need to know who is covered and for what. Don’t assume their policy protects you.
Talk to the Experts
Contract works policies can vary widely, and getting it wrong could cost you. Work with your mortgage adviser and insurance broker early in the process to confirm what cover you need and how to get it in place before construction begins.
Whether you're building your dream home or renovating to grow your equity, make sure you’re covered every step of the way.
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