Construction Insurance NZ
Project and site insurance for construction companies, project managers, and head contractors. Protect your works, plant, and people from site to completion.
Quick Quote
Prices shown are indicative only. Your actual premium will depend on your specific circumstances and project details.
What Is Construction Insurance?
Construction insurance is a collection of policies that protect building projects, the people working on them, and the businesses involved. Unlike standard business insurance, construction cover is often project-specific — arranged for the duration and value of a particular build.
This page covers insurance for construction companies and project managers. If you are an individual builder or tradesperson, see our builder insurance guide.
Construction vs Builder Insurance
This page is for construction companies, project managers, and head contractors managing multi-trade projects. For individual Licensed Building Practitioners (LBPs), residential builders, and sole trader tradespeople, see insurance for builders.
Contract Works Insurance
Contract works insurance is the core construction policy. It covers physical loss or damage to the construction works themselves — from ground-breaking to handover. This is sometimes called "builders risk" or "course of construction" insurance.
What's Typically Covered
- Construction works and materials on site
- Materials in transit to site
- Temporary works (scaffolding, formwork, shoring)
- Fire, storm, flood, and earthquake damage
- Theft and vandalism on site
- Accidental damage during construction
- Existing structures (if extension purchased)
- Professional fees for redesign after insured damage
What's Typically Not Covered
- Defective design, materials, or workmanship (the defect itself)
- Normal wear and tear, gradual deterioration
- Consequential loss (delay penalties, lost revenue)
- Mechanical or electrical breakdown of plant
- Pre-existing damage to existing structures
- Penalties for late completion
- Damage from faulty soil conditions (unless specifically covered)
- War, terrorism, nuclear events
Illustrative Example: Contract Works Claim
A head contractor is building a $2.5 million commercial warehouse. During a severe storm, wind lifts partially-installed roofing panels, causing water damage to structural steelwork and interior fitout below. The cost to repair the damage and replace materials is $180,000.
Contract works insurance covers the cost of repairing the storm damage and replacing ruined materials — subject to the policy excess. The head contractor does not need to fund repairs out of project margins.
Illustrative example only. Actual coverage depends on policy terms and conditions.
Construction All-Risk (CAR) Insurance
CAR insurance is a broad-form policy that wraps contract works, third-party liability, and sometimes plant cover into a single policy. It is the standard construction insurance product for medium to large projects in New Zealand.
Project-Specific CAR
Arranged for a single project, covering all works from start to completion. The sum insured matches the total contract value (including materials, labour, and principal-supplied items).
Best for: one-off projects, large builds, projects with specific risk profiles. Provides tailored cover for the project's unique characteristics.
Annual CAR Policy
Covers all construction projects undertaken during the policy year, up to a maximum individual project value. No need to arrange separate cover for each project.
Best for: construction companies running multiple projects throughout the year. Simpler administration, but may have lower per-project limits.
Principal-Controlled Insurance
On large construction projects, the project owner (principal) may arrange a single insurance programme that covers all parties — the principal, head contractor, subcontractors, and consultants. This avoids gaps and overlaps between multiple individual policies.
How It Works
The principal arranges a project-wide insurance programme — usually contract works, public liability, and professional indemnity — covering all parties involved in the project.
The cost is typically built into the project budget or deducted from contractor payments. Individual contractors may still need to maintain their own insurance for work outside the project.
Cross-liability waivers prevent insured parties from suing each other under the project insurance — reducing disputes and keeping the project moving.
NZS 3910 Note: The NZS 3910:2013 standard conditions of contract for building and civil engineering construction set out insurance obligations for both principal and contractor. Under NZS 3910, the principal typically arranges contract works insurance while the contractor arranges public liability. Always check the specific contract for variations.
Plant & Equipment Insurance
Construction plant and equipment — cranes, excavators, scaffolding, generators, and specialised machinery — represents a significant capital investment. Plant insurance covers loss, damage, and breakdown of this equipment.
Own Plant
Covers your owned equipment — excavators, concrete pumps, generators, power tools. Replacement or repair cost if damaged, stolen, or destroyed on site or in transit.
Hired Plant
If you hire equipment, the rental agreement usually makes you liable for damage. Hired plant insurance covers your liability for damage to rented equipment while in your care.
Breakdown
Mechanical and electrical breakdown cover for construction plant. Covers repair or replacement when equipment fails due to internal causes — not just external damage.
Construction Liability Insurance
Construction sites are high-risk environments. Public liability insurance for construction covers bodily injury to third parties and damage to third-party property caused by your construction activities.
Public Liability
Covers injury to site visitors, neighbours, pedestrians, and damage to adjacent properties. Construction PL limits are typically $5-20 million due to the high potential for serious injury or property damage.
- Injury to members of the public near the site
- Damage to neighbouring properties (vibration, crane strikes)
- Damage to underground services (pipes, cables)
- Legal defence costs
Cross-Liability for Subcontractors
On multi-contractor sites, cross-liability provisions allow each insured party to claim against another under the same policy as if they had separate policies. This prevents subcontractors from being left uninsured when a co-contractor causes damage.
Head contractors should ensure their liability policy includes subcontractor coverage or require subcontractors to hold their own insurance with adequate limits.
NZ Building Act & Legal Requirements
While construction insurance is not strictly mandated by law in New Zealand, several legislative requirements make it a practical necessity for any construction business.
Building Act 2004 — 10-Year Liability
Section 393 of the Building Act 2004 establishes a 10-year long-stop limitation period for civil proceedings related to building work. This means construction companies and contractors can face claims for defective work up to 10 years after the relevant act or omission. Run-off cover (maintaining insurance after project completion) is important for managing this long-tail risk.
Health and Safety at Work Act 2015
Construction is classified as high-risk work under the Health and Safety at Work Act. PCBUs (Persons Conducting a Business or Undertaking) have a primary duty of care to ensure, so far as is reasonably practicable, the health and safety of workers and others affected by the work. Fines for breaches can reach $3 million for a body corporate. Statutory liability insurance covers fines and defence costs for unintentional breaches.
Building Consent & Code Compliance
Construction projects require building consents from the local council. The building consent authority may require evidence of insurance as part of the consent process — particularly for larger or higher-risk projects. Code compliance certificates (CCCs) are issued on completion, and any defects identified during inspection can trigger rectification costs that insurance may cover.
Licensed Building Practitioner (LBP) Scheme
Restricted building work must be carried out or supervised by Licensed Building Practitioners. While the LBP scheme does not require insurance, the Building Practitioners Board can discipline LBPs for negligent or incompetent work. Professional indemnity insurance helps cover the costs of defending disciplinary proceedings and any resulting claims.
Indicative Pricing by Project Size
Construction insurance costs are primarily driven by the total project value and the type of construction. Below are indicative costs for contract works insurance in New Zealand.
| Project Value | Project Type | Indicative Premium |
|---|---|---|
| $100K-$300K | Residential renovation | $500-$1,500 |
| $300K-$800K | New residential build | $1,200-$4,000 |
| $800K-$2M | Multi-unit residential / small commercial | $3,000-$10,000 |
| $2M-$5M | Commercial / industrial | $8,000-$25,000 |
| $5M-$10M | Large commercial | $20,000-$50,000 |
| $10M+ | Major projects / infrastructure | Broker-quoted |
Prices shown are indicative only for contract works insurance. Actual premiums depend on project type, location, duration, builder experience, and claims history. Public liability and other covers are additional.
Related Insurance for Construction Businesses
Construction insurance covers the project itself. But construction businesses also need general business insurance to cover their operations, staff, and vehicles outside of specific project cover.
Builder Insurance
Insurance for individual builders, LBPs, and small building firms. Public liability, tools, and professional indemnity.
Tool Insurance
Cover for tools and equipment — in your vehicle, on site, or in your workshop. Theft, damage, and breakdown.
Contractor Insurance
Liability and indemnity cover for subcontractors working on construction sites. Contract requirements and COC guidance.
Business Vehicle Insurance
Cover for utes, trucks, and commercial vehicles used in construction. Fleet options for larger operations.
Employer Liability
Cover for employment-related claims from staff. Top-up cover beyond ACC for workplace injuries and disputes.
Business Interruption
Lost income cover if your construction business is disrupted by an insured event — fire, natural disaster, or key supplier failure.
Frequently Asked Questions
Common questions about construction insurance in New Zealand.
What is contract works insurance in New Zealand?
Contract works insurance covers physical loss or damage to construction works during the course of a building project. This includes materials, labour costs, and works in progress — from site preparation through to project completion. It typically covers events like fire, storm, flood, theft, vandalism, and accidental damage. Most NZ construction contracts require the principal or head contractor to arrange contract works insurance for the full value of the project.
Who is responsible for arranging construction insurance — the builder or the client?
It depends on the contract. Under NZS 3910 (the standard NZ construction contract), the principal (project owner) is typically responsible for arranging contract works insurance, while the contractor arranges public liability insurance. However, many contracts modify this arrangement. In residential builds, the builder often arranges all insurance. Always check the specific contract terms — and get it in writing before work begins.
What does construction all-risk (CAR) insurance cover?
Construction all-risk insurance is a broad-form policy that covers physical loss or damage to the construction works, materials, temporary works, and often existing structures. It typically includes cover for fire, storm, flood, earthquake, theft, vandalism, accidental damage, and collapse. It usually excludes defective design, normal wear, consequential losses, and penalties for late completion. CAR can be arranged on a project-specific or annual basis.
Do I need insurance for a renovation or extension project?
Yes. Renovation and extension projects carry significant insurance risks because you are working on or near existing structures. Damage to the existing building — such as cracking foundations, water ingress, or fire — may not be covered by the homeowner's standard house insurance during construction. Contract works insurance for renovations should include cover for existing structures, which is typically an optional extension to the policy.
How much does construction insurance cost in NZ?
Construction insurance costs are typically calculated as a percentage of the project value. Contract works insurance generally costs between 0.2% and 0.8% of the total contract value, depending on the project type, location, and risk profile. A $500,000 residential build might cost $1,500-$3,000 for contract works cover. Larger or higher-risk commercial projects attract higher rates. These are indicative figures — actual premiums depend on the specific project details.
What is the 10-year liability period under the NZ Building Act?
Under section 393 of the Building Act 2004, civil proceedings relating to building work must be brought within 10 years of the act or omission that gave rise to the claim. This means builders, contractors, and construction companies can face claims up to 10 years after project completion. This long tail of liability makes it important to maintain insurance coverage — or arrange run-off cover — even after a project is finished or your business winds down.
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Advice provided by Evolve Group Limited (FSP711891). See our disclosure statement for details.