Construction

Does Contract Works Insurance Cover Public Liability Insurance?

No — Contract Works Insurance and Public Liability Insurance are two separate types of cover. Contract Works protects the building project itself, while Public Liability Insurance protects you against third-party injury or property damage claims. Although they are different policies with different purposes, you can choose to purchase them either together as part of a combined construction insurance package, or separately if that’s more cost-effective for your business. Even when bundled, they still remain distinct types of cover, one does not replace or include the other.

What Is Contract Works Insurance?

Contract Works Insurance is designed to protect a construction project while it is being built. It provides cover for unexpected events that may damage, delay, or interrupt the works, ensuring the project can be completed without financial loss to the builder, contractor, or property owner. This type of insurance is essential for anyone involved in construction, from small residential builders to large commercial contractors.

Contract Works Insurance typically covers:

Accidental Damage to the Construction Project

Protection for sudden and unforeseen physical loss or damage during the build, whether caused by human error, equipment malfunction, or on-site mishaps.

Fire, Storm, Vandalism & Other Insured Events

Cover for weather-related events, malicious damage, or other external forces that could impact the progress of the project.

Theft of Materials or Building Items On-Site

Construction sites are frequent targets for theft. This cover protects materials, fittings, fixtures, and other items used in the project (excluding tools unless added separately).

On-Site Risks During the Build

This includes risks such as collapse, water damage, or accidental damage caused by subcontractors, employees, or external parties.

Optional Cover for Tools, Machinery, or Equipment

You can extend the policy to include portable tools, plant and equipment, scaffolding, temporary structures, and other essential machinery. This is particularly useful for tradies and contractors who rely on specialised gear.

What Does Public Liability Insurance Cover?

Public Liability Insurance is one of the most important forms of protection for anyone working in the construction industry. It covers you if your work causes accidental injury to another person or damage to their property. Because construction sites involve heavy machinery, multiple trades, subcontractors, and unpredictable environments, the risks are significantly higher, making this cover essential and often mandatory.

Public Liability Insurance typically covers:

Damage to Third-Party Property

If your work accidentally damages someone else’s property, such as a client’s home, neighbouring structures, vehicles, or utilities. Public liability insurance covers the cost of repair or replacement. In construction, even small mistakes can lead to expensive damage, so this protection is crucial.

Injury to Others Caused by Your Work

Construction sites pose hazards to clients, visitors, inspectors, delivery drivers, and other contractors. If someone is injured because of your work or activities on-site, public liability covers medical costs, compensation, and associated expenses.

Legal Fees and Defence Costs

If a claim is made against you, even if you were not at fault, you may need legal representation. Public liability insurance covers the cost of defending the claim in court, settlements, and other legal expenses, preventing the financial strain of paying these costs yourself.

Required for Most Construction Contracts and Licensing

Builders, tradies, subcontractors, and head contractors are often required to hold public liability insurance before stepping onto a site. Many construction contracts, tenders, and licensing bodies (including QBCC and similar state authorities) require proof of cover, usually with minimum limits such as $5 million, $10 million, or $20 million.

Why Contract Works Insurance Does Not Include Public Liability

Although Contract Works Insurance and Public Liability Insurance are often purchased together, they are not the same type of cover, and one does not automatically include the other. Insurers treat these as separate policies because they protect against very different types of risks.

They Cover Completely Different Types of Risk

Contract Works Insurance protects the construction project itself — the materials, structure, and work in progress.
Public Liability, on the other hand, covers you if your work causes injury to another person or damage to third-party property. Because these exposures are so different, insurers classify them as separate policies.

Public Liability Claims Can Be Very Large

Public liability incidents can involve serious injury, long-term medical costs, or major property damage. These claims can reach hundreds of thousands, even millions of dollars.
For this reason, insurers keep Public Liability Insurance separate so they can correctly assess and price the risk on its own.

Construction Licensing and Contracts Usually Require Both

Most builder licences, subcontractor agreements, principal contractor contracts, and government tenders require you to hold both types of cover.
Contract Works is often needed to protect the project, while Public Liability is needed to protect the people and property around it.

You Must Purchase Public Liability Separately or as Part of a Package

Even if you buy Contract Works Insurance, public liability is not automatically included. You must either:

• Purchase Public Liability as a standalone policy, or

• Bundle it together with Contract Works in a combined construction insurance package

Even when offered together, they are still distinct policies, each with its own limits, exclusions, and pricing.

Do You Need Both Contract Works and Public Liability?

Yes, most builders, tradies, and contractors need both types of cover. Each policy protects against very different risks, and together they provide a more complete level of protection for anyone working in the construction industry.

Contract Works Insurance → Protects the Construction Site

Contract Works covers the actual project under construction, including the materials, structure, and work in progress. It responds to events like accidental damage, fire, vandalism, theft of materials, or weather-related losses.
In simple terms: it protects the job itself.

Public Liability Insurance → Protects You From Being Sued

Public Liability covers you if your work causes injury to another person or damage to third-party property. This includes clients, visitors, inspectors, delivery drivers, and other contractors on-site.
In short: it protects your business from costly legal claims.

When Are Both Policies Required?

In construction, it’s extremely common and often mandatory to hold both types of cover at the same time. They are frequently required for:

• Principal Contractor Agreements

Most head contractors require subcontractors to hold both Contract Works and Public Liability before being allowed on-site.

• Residential and Commercial Building Projects

Property owners, developers, and insurers for major projects usually insist on both forms of insurance to minimise risk.

• QBCC Licensing (if applicable)

Certain licences and project types require Public Liability and/or Contract Works coverage to meet regulatory and financial requirements.

• Council Work

Local councils generally require contractors and subcontractors to show proof of Public Liability and, depending on the project, Contract Works Insurance.

• Government Tenders

Government contracts almost always require both types of insurance, often with minimum limits such as $20M.

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Who Needs Public Liability & Contract Works Insurance?

Public Liability and Contract Works Insurance are essential for a wide range of professionals in the construction industry. Because construction sites involve multiple trades, expensive materials, heavy machinery and constant safety risks, most people working on a project will need one or both forms of cover.

Builders

Residential and commercial builders need Contract Works to protect the project itself and Public Liability to cover injury or property damage caused during construction.

Tradies

Electricians, plumbers, carpenters, tilers, painters, and other trades rely on Public Liability every day. Those who take on their own jobs or small projects may also need Contract Works cover.

Subcontractors

Most principal contractors require subcontractors to hold both Public Liability and, depending on the job, Contract Works Insurance before stepping onto a site.

Owner Builders

Owner builders managing their own construction or renovation projects often need Contract Works Insurance to protect the building works, and Public Liability to cover third-party risks.

Civil Contractors

Civil contractors working on infrastructure, earthworks, subdivisions, and major projects face high-risk environments and typically require both policies.

Construction Companies

Medium and large building companies often package both types of insurance together, along with plant, machinery, vehicles, and professional indemnity.

Project Managers

Construction project managers may require Public Liability for business activities and may also arrange Contract Works cover on behalf of clients or builders.

How to Buy Contract Works and Public Liability Insurance Together

Many construction businesses prefer to purchase both Contract Works and Public Liability as part of a combined construction insurance package. This is often the most convenient and cost-effective option.

Combined Construction Insurance Packages

Insurers can bundle both policies into a single package, making it easier to manage your cover, renewals, and claims. While they remain separate types of insurance, they sit under one combined policy structure.

Often Cheaper When Purchased Together

Bundling your construction insurance is often more affordable than buying each policy individually. Insurers may apply package discounts when multiple covers are combined.

Can Include Additional Covers

A combined construction insurance package can also include other essential policies such as:

• Tools and equipment insurance
• Plant and machinery cover
• Commercial vehicle or ute insurance
• Professional indemnity insurance
• Business pack cover
• Workers compensation (where required by law)

This allows builders, tradies, and construction companies to protect all aspects of their operations under one streamlined policy.

What We Do for Construction Businesses

At Morgan Insurance Brokers, we are construction insurance specialists. We help builders, subcontractors, owner-builders and tradies by:

• Advising on what cover you need (e.g., contract works, public liability, tools & equipment)

• Structuring combined packages that suit your project scale and risk exposure

• Ensuring you meet contract requirements, licensing needs or tender prerequisites

• Reviewing your cover year-on-year to keep it up to date as your business grows

Whether you’re a builder, tradie,  or subcontractor, we can tailor a package that fits your project.

Get your construction insurance quote now.

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by lauren