This clause requires insurance on work being done under the contract—typically used in construction, renovation, or manufacturing. For example, if you're building a house and a fire destroys materials on site, contract works insurance reimburses the cost of replacing those materials and the work already done. This matters legally because once work begins, the materials and partly-finished work have value, and someone must bear the risk if they're damaged or destroyed before completion. Under English law, the risk of loss typically passes to the buyer once work starts, so the buyer usually pays for this insurance. The clause specifies who buys the insurance, what it covers, and what happens if there's a claim.
If you're the contractor (doing the work), try to make the other party buy this insurance, since they benefit from the finished product and can claim on their own insurance. If you must buy it, get a quote first and add that cost to your contract price—don't absorb it as a hidden expense. Ensure the policy covers not just materials but also labor costs and any temporary structures you've built. ---
Frequently Asked Questions
What does this clause mean in simple terms?
This clause requires insurance on work being done under the contract—typically used in construction, renovation, or manufacturing.
Why should I care about this clause?
For example, if you're building a house and a fire destroys materials on site, contract works insurance reimburses the cost of replacing those materials and the work already done.
What are my options?
This matters legally because once work begins, the materials and partly-finished work have value, and someone must bear the risk if they're damaged or destroyed before completion.
How does this affect small businesses?
Under English law, the risk of loss typically passes to the buyer once work starts, so the buyer usually pays for this insurance.