How much does construction insurance cost in Australia?

There isn't one useful average that tells every Australian builder what construction insurance should cost.

The price depends on the business, the work being carried out and the insurance you need.

A builder completing several projects each year will usually be assessed differently from an owner-builder doing one renovation.

What do we mean by construction insurance?

Construction insurance isn't necessarily one policy.

Depending on what you do, you might need to look at:

• contract works insurance
• public liability
• plant, tools and equipment
• professional indemnity
• commercial motor
• other specialist construction cover

Depending on your business and location, you may also have separate workers compensation obligations. Workers compensation is not the same as a standard private construction insurance policy.

Residential builders can also have separate state or territory requirements around home warranty or building compensation schemes.

These aren't all the same thing and shouldn't be treated as interchangeable.

What affects the cost of contract works insurance?

Project value

For a single project, the total value of the work can be one of the biggest factors.

A larger project means there's potentially more to rebuild or replace after a major insured loss.

Annual turnover

Builders with annual contract works policies may be asked about their expected turnover rather than only one project.

Tell the insurer if your business grows materially rather than simply letting an old estimate continue.

Type of construction

The work itself matters.

Insurers may treat:

• new residential builds
• renovations
• extensions
• commercial construction
• fit-outs
• civil works
• demolition
• excavation

differently.

The materials and construction methods can matter too.

Where you work

Location can affect the risk.

Insurers can consider things such as:

• flood
• cyclone
• storm
• bushfire
• theft
• surrounding properties
• access to the site

A project in one location may therefore be quoted differently from a similar project somewhere else.

Your largest project

On an annual policy, an insurer may want to know the maximum value of any one project you're likely to take on.

Don't assume an annual policy automatically covers a project of any size.

Your claims history

Previous construction or liability claims can affect both price and which insurers are prepared to offer cover.

Give accurate claims information when getting quotes.

The type of work you subcontract

Insurers may ask how much work is done by employees and how much is subcontracted.

They can also be interested in the trades and higher-risk activities involved.

Your excess

The excess is the amount you may need to pay when you claim.

A higher excess can sometimes change the premium, but make sure it's an amount the business could comfortably handle.

What affects public liability insurance cost?

Public liability pricing works differently from contract works.

An insurer might consider:

• your trade
• annual turnover
• number of workers
• subcontractors
• where you work
• the type of projects
• your claims history
• the liability limit you choose

A lower-risk trade doing small jobs isn't necessarily priced the same as a builder managing larger sites.

Single-project or annual contract works cover?

Contract works can sometimes be arranged for one specific project.

This can make sense for:

• owner-builders
• one-off developments
• businesses completing occasional projects
• a project that doesn't fit an existing annual policy

Builders completing multiple eligible projects may instead use an annual policy.

An annual policy can reduce the need to arrange insurance from scratch for every job, but limits and eligibility still apply.

Compare the structure as well as the premium.

What information will you need for a construction quote?

It helps to have:

• the type of work you do
• annual turnover
• project values
• your largest project
• locations
• construction methods
• business experience
• employee and subcontractor details
• claims history
• demolition or excavation details
• any existing structures involved
• the cover limits you need

The more unusual the job, the more information an insurer may want.

Don't compare construction insurance on price alone

Construction policies can look similar until you read what they actually cover.

Check:

• maximum project value
• types of work accepted
• existing structures
• materials
• plant and tools
• public liability
• excesses
• exclusions
• geographic limits
• when cover starts and ends

A cheaper policy that doesn't properly cover your work can be a very expensive saving.