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?
You'll likely need contract works cover if you're building a brand-new home from the ground up, undertaking major renovations such as removing walls or adding rooms, adding significant extensions or structural upgrades, renovating a home you've just bought before moving in, or 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.
What Does It Cover?
Every policy varies slightly, but in general, contract works insurance covers physical damage to the work in progress including accidental damage to the partially completed building from fire, flood, or storm. Materials stored on site (or sometimes in transit) are covered if they're stolen or damaged before being installed. Temporary structures like scaffolding or site fencing may also be covered. Damage caused by subcontractors may be included, though it pays to check the fine print. Some policies also include limited public liability if someone is injured on site.
What's Not Covered?
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, and damage after the work is complete.
Who Organises It-You or the Builder?
If you're using a group builder or fixed-price contract, they often include contract works insurance. If you're self-managing the build, you'll likely need to organise your own cover.
How Much Does Contract Works Insurance Cost?
The premium depends on total value of the build, location, type of construction, duration of work, and whether you're living on-site. Typical costs range from $500 to $2,500+.
When Does It Start and End?
Contract works insurance generally starts from the moment construction begins and ends when you move in or a Code Compliance Certificate (CCC) is issued. At that point, switch to standard home and contents insurance.
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. Most banks won't release construction funds without proof of contract works insurance.
Work with your mortgage adviser and insurance broker early to confirm what cover you need and how to get it in place before construction begins.
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