Construction All Risks and Liability Insurance

About This Policy

This policy insures construction work, from a single contract to an annual programme of contracts. It has four sections. The schedule shows which apply.

Material Damage and Public and Products Liability apply whenever the schedule shows them. Delay in Start-Up and Design and Construct Professional Indemnity apply only if the schedule shows them as included.

Joint names. This policy insures the principal, the head contractor, every subcontractor and the other parties described in the definition of Insured, each for its own rights and interests, under one policy. The Joint Names and Separate Treatment condition explains how that works.

All risks. Material Damage covers physical loss or damage from any cause that is not excluded. It does not list the events that are covered. Where we rely on an exclusion, we must show that it applies.

This policy, together with the schedule, the proposal and any endorsements shown in the schedule, forms your contract of insurance with us. Read them together and tell us if anything is incorrect. Where the schedule and this wording differ, the schedule applies. Words with special meanings are listed in the Definitions section.

Version and Document History

This document is version-controlled. The version and date shown on the cover page and in the footer of each page govern this text. The version stated in the schedule as current at the start of the policy period applies for the whole policy period, and for each project covered under it until its defects liability period ends, unless the schedule or an endorsement states otherwise.

Important Information

Who issues this policy. The insurer, its Australian Financial Services Licence and its contact details are shown in the schedule. Where the insurer subscribes to the General Insurance Code of Practice, the schedule says so.

Who this policy is for. This wording is designed for businesses that carry out or commission construction work, and for distribution to wholesale clients within the meaning of s.761G of the Corporations Act 2001 (Cth). It is not a Product Disclosure Statement, and no Target Market Determination has been prepared for it. An insurer that offers it to retail clients must first prepare the documents the law requires for retail distribution.

[WP REVIEW: confirm whether contract works cover sold to an individual owner-builder for their own home is a home building insurance product, and so a retail product under s.761G(5) of the Corporations Act 2001 (Cth) and a prescribed contract under the Insurance Contracts Regulations 2017, and what this wording needs if it is offered to that market.]

Your duty of disclosure. Before you enter into, renew, extend, vary or reinstate this policy, s.21 of the Insurance Contracts Act 1984 (Cth) requires you to tell us every matter you know, or that a reasonable person in your circumstances could be expected to know, that is relevant to our decision whether to insure you and on what terms. You do not need to tell us anything that reduces the risk, that is common knowledge, that we know or should know as an insurer, or that we waive. If you do not comply, we may reduce or refuse a claim, or cancel the policy, as that Act allows.

Only the named insured owes this duty. Other insureds do not, and a failure by the named insured does not affect their cover except as the Joint Names and Separate Treatment condition allows.

Claims-made cover. Design and Construct Professional Indemnity covers only claims first made against an insured during the policy period and notified to us as the Claims-Made Notice obligation requires. If, during the policy period, an insured becomes aware of facts that might give rise to a claim and tells us in writing before the policy period ends, s.40(3) of the Insurance Contracts Act 1984 (Cth) means we cannot refuse a later claim arising from those facts only because it was made after the policy period ended. Tell us about possible claims as soon as you become aware of them.

Terrorism. This policy may be an eligible insurance contract under the Terrorism Insurance Act 2003 (Cth). Where it is, the Terrorism exclusion has no effect for loss or liability arising from a declared terrorist incident affecting eligible property in Australia, and our liability may be reduced by any reduction percentage declared under that Act.

Financial Claims Scheme. If the schedule shows the insurer is an APRA-authorised general insurer, you may be entitled to a payment under the Financial Claims Scheme if the insurer becomes insolvent. Information is available at www.fcs.gov.au.

Schedule

(Completed separately for each policy. It contains your specific details.)

The schedule shows:

• The named insured and its ABN, and the principal
• The basis of cover: single project, or annual on a contracts commencing or turnover basis
• For a single project: the project, the project site, the contract value and the construction period
• For an annual policy: the business description, the policy period, the maximum project value and the estimated annual contract value
• The defects liability period (default 12 months)
• The sections that apply
• For Material Damage: the contract works sum insured, any sums insured for existing structures, principal's contents and construction plant, the limits of the extensions where they differ from the defaults stated in them, and the defects clause that applies
• For Public and Products Liability: the limit of liability for any one occurrence and the products aggregate limit
• For Delay in Start-Up: the sum insured, the basis (gross profit, revenue or rent), the indemnity period and the time excess
• For Design and Construct Professional Indemnity: the limit of liability, the retroactive date and the excess
• The excesses, including any separate excesses for storm and water damage, earthquake, testing and commissioning, existing structures and vibration
• The geographical scope, if it differs from the default in the definition
• The premium and any deposit premium, the adjustment rates and the minimum premium, with stamp duty, any emergency services or fire services levy, and GST
• Any commission or fee paid to your broker
• Any interested party, such as a financier
• The insurer and its licence, and the state or territory whose law governs this policy (see the Governing Law condition)
• The endorsements that apply, by code, with their variables

Definitions

In this policy, the words below have these meanings wherever they appear, whatever their capitalisation. The singular includes the plural.

Material Damage

This section applies if the schedule shows it. The schedule shows the contract works sum insured, any other sums insured and the excesses.

Damage to the Contract Works

We will pay for damage to the contract works that happens during the construction period within the geographical scope, from any cause that is not excluded.

We pay as set out in the How We Pay for Damage provision. The most we will pay for any one event is the contract works sum insured, adjusted under the Escalation extension, plus any separate sums insured shown in the schedule for existing structures, principal's contents and construction plant, plus the amounts the extensions to this section say are payable in addition.

How We Pay for Damage

Contract works. We pay the cost of repairing, rebuilding or replacing the damaged part of the contract works to a condition substantially the same as, but not better than, its condition immediately before the damage. The cost includes re-performing work, materials, freight and reasonable overheads. We do not deduct for depreciation.

Construction plant. We pay the cost of repairing the plant or, if it cannot be repaired economically, its market value immediately before the damage, unless the schedule shows replacement as new.

Existing structures and principal's contents. We pay the cost of repairing or reinstating them to their condition immediately before the damage. Where the construction contract requires the principal's own property insurance to respond first, we pay only the amount by which the loss exceeds what that insurance pays.

Sum insured reinstated. After a claim, the sum insured is reinstated automatically from the date of the damage. We may charge an additional premium for the reinstatement, calculated at the policy's rates for the remaining construction period.

Escalation

If the contract value increases during the construction period because of variations or cost escalation, the contract works sum insured increases automatically by up to 15% of it, or the percentage shown in the schedule. Tell us the final contract value at practical completion; we will adjust the premium under the Premium Adjustment condition.

Removal of Debris

We pay the reasonable cost of removing debris, demolishing, shoring and propping after damage we cover. The default limit is 20% of the amount of the loss or $500,000, whichever is less, for any one event, unless the schedule shows another amount. This amount is in addition to the contract works sum insured.

Professional Fees

We pay the reasonable fees of architects, engineers, surveyors and other professionals needed to repair or reinstate damage we cover, but not the fees for preparing a claim. The default limit is 10% of the amount of the loss or $250,000, whichever is less, for any one event, unless the schedule shows another amount. This amount is in addition to the contract works sum insured.

Expediting Costs

We pay the reasonable extra cost of overtime, night and holiday work and express freight to speed up repair of damage we cover. The default limit is 20% of the amount of the loss, up to $250,000, for any one event, unless the schedule shows another amount. This amount is in addition to the contract works sum insured.

Complying with Building Law

The cost of repairing damage we cover includes the extra cost of complying with the building laws and codes in force at the time of repair, for the damaged part of the contract works. It does not include the cost of complying with an order or notice served before the damage happened.

Plans, Documents and Digital Models

We pay the reasonable cost of re-creating plans, drawings, specifications and digital building models for the contract works that suffer damage we cover. The default limit is $250,000 for any one event, unless the schedule shows another amount. This amount is in addition to the contract works sum insured.

Offsite Storage and Transit

Materials for the contract works are covered while stored at a place in Australia away from the project site, and while in transit within Australia by road or rail, but not by sea or air. The default limit is $500,000 for any one location or any one conveyance, unless the schedule or the E10 Increased Offsite Storage and Transit endorsement shows another amount. This limit is part of, not in addition to, the contract works sum insured.

Mitigation Costs

We pay the reasonable cost of temporary protection and other measures taken to prevent or reduce damage we would cover, whether or not damage then happens. The default limit is $250,000 for any one event, unless the schedule shows another amount. This amount is in addition to the contract works sum insured.

Fire Brigade Charges

We pay charges levied by a fire brigade or other emergency service for attending a fire or other event at the project site that threatens the contract works. The default limit is $250,000 for any one event, unless the schedule shows another amount. This amount is in addition to the contract works sum insured.

Public Authority Fees

We pay fees charged by a public authority for re-inspection and approval of repairs to damage we cover. The default limit is $100,000 for any one event, unless the schedule shows another amount. This amount is in addition to the contract works sum insured.

Partial Handover

If the principal takes over or uses a completed part of the contract works before practical completion of the whole, cover for that part ends at that time, and its defects liability period starts. Cover for the rest of the contract works continues.

Defects Liability Period

After practical completion of each project, this section continues for its defects liability period to cover:

• damage to the contract works caused during the defects liability period by a cause that happened during the construction period; and
• damage to the contract works caused by an insured while at the project site to carry out its obligations under the construction contract to rectify defects.

We do not pay the cost of rectifying the defect itself. We pay for damage the defect causes, as the Defective Design, Materials or Workmanship exclusion allows.

Testing and Commissioning

This section covers damage during testing and commissioning of plant and systems that form part of the contract works, for up to 4 consecutive weeks of testing, or the period shown in the schedule, if the testing:

• takes place at the project site;
• is part of the construction contract; and
• takes place before the plant or system is accepted for commercial operation.

The testing and commissioning excess shown in the schedule applies to this damage.

Annual Basis

If the schedule shows the annual basis, it also shows one of two footings.

Contracts commencing. Every construction contract that starts during the policy period, within the business described in the schedule, is a project covered by this policy. Cover for each project continues to practical completion and through its defects liability period, even after the policy period ends.

Turnover. Every construction contract under way during the policy period, within the business described in the schedule, is a project covered by this policy. Cover for each project ends when the policy period ends, or at practical completion if earlier, unless we agree in writing to extend it.

Maximum project value. A construction contract whose contract value exceeds the maximum project value shown in the schedule is covered only if you declare it to us before work starts and we accept it in writing.

Declarations and premium adjustment are set out in the Declarations obligation and the Premium Adjustment condition.

Defective Design, Materials or Workmanship

We do not pay for damage consisting of, caused by or arising from defective design, plan, specification, materials or workmanship, except to the extent the defects clause shown in the schedule allows. If the schedule shows none, LEG 2/96 applies.

• LEG 1/96. We do not pay for any damage caused by a defect.
• LEG 2/96. We pay for damage caused by a defect, less the cost that would have been incurred to rectify the defect had it been discovered immediately before the damage happened.
• LEG 3/06. We pay for all damage, including to the defective part, except the cost of improving the original design, materials or workmanship. LEG 3/06 applies only if the schedule shows the E02 LEG 3/06 Defects Cover endorsement.

Example under LEG 2/96: a subcontractor installs waterproofing incorrectly, and water damages the flooring, walls and wiring below. We pay to repair the flooring, walls and wiring. We do not pay to redo the waterproofing.

Property is not regarded as damaged only because of a defect in its design, plan, specification, materials or workmanship.

Wear and Tear

We do not pay for wear and tear, gradual deterioration, rust, corrosion, erosion or inherent vice. We do pay for resulting sudden and unforeseen damage to other parts of the contract works.

Breakdown of Construction Plant

We do not pay for mechanical or electrical breakdown of construction plant. We do pay for resulting damage to the contract works or to other insured property.

Unexplained Shortages

We do not pay for shortages found only at a stocktake or inventory, with no identifiable event that caused them.

Delay, Penalties and Consequential Loss

We do not pay for liquidated damages, penalties for delay or non-performance, or consequential loss of any kind, except as Delay in Start-Up covers if it applies.

Cessation of Work

We do not pay for damage that happens while work on a project has stopped for more than 60 consecutive days, unless we have agreed in writing to continue cover. This exclusion does not apply to damage caused by fire, lightning or explosion.

Property Not Covered

We do not pay for damage to:

• land, including reclaimed land;
• existing roads and pavements that are not part of the contract works;
• dams, canals, tunnels, wharves, jetties and offshore works, unless the E07 Wet Works endorsement applies;
• watercraft and aircraft;
• vehicles registered for road use, unless they form part of the contract works;
• money, securities and documents, other than as the Plans, Documents and Digital Models extension covers; or
• personal property of employees or contractors, unless the schedule shows it.

Pollution of the Contract Works

We do not pay for damage caused by pollution or contamination by a pollutant, unless it is sudden, accidental and unintended and is itself caused by damage this section covers.

Public and Products Liability

This section applies if the schedule shows it. The schedule shows the limit of liability for any one occurrence, the products aggregate limit and the excess.

Liability to Third Parties

We will pay the compensation an insured becomes legally liable to pay because of personal injury or property damage that:

• happens during the construction period within Australia; and
• is caused by an occurrence in connection with the contract works.

The most we will pay for any one occurrence is the limit of liability shown in the schedule (default $20,000,000). We also pay defence costs, as the Defence Costs clause sets out.

Completed Works

After practical completion of each project, we will pay the compensation an insured becomes legally liable to pay because of personal injury or property damage that happens during the policy period, or for a project on the contracts commencing footing during its defects liability period, and is caused by the completed contract works.

The most we will pay for all occurrences under this clause is the products aggregate limit shown in the schedule. This clause does not pay to repair or replace the completed work itself; see the Your Own Work exclusion.

Defence Costs

We have the right to defend any third-party claim against an insured that this section may cover. We will choose the lawyers and manage the defence, and we will consult the insured about strategy. We pay defence costs in addition to the limit of liability, as they are incurred.

Property in Your Care

We cover liability for property damage to property in an insured's care, custody or control that is not otherwise insured under this policy. The default sub-limit is $500,000 for any one occurrence, unless the schedule shows another amount. It is part of the limit of liability.

Vibration and Removal of Support

We cover liability for property damage caused by vibration, or by the removal, weakening or interference with the support of land, buildings or structures, subject to the Vibration and Underground Services condition. The default sub-limit is $2,000,000 for any one occurrence, unless the schedule shows another amount. It is part of the limit of liability. The vibration excess shown in the schedule applies.

Underground Services

We cover liability for property damage to underground pipes, cables, mains and other services, subject to the Vibration and Underground Services condition. The default sub-limit is $2,000,000 for any one occurrence, unless the schedule shows another amount. It is part of the limit of liability.

Sudden and Accidental Pollution

We cover liability for personal injury or property damage caused by the discharge, dispersal, release or escape of a pollutant that results from a sudden, identifiable, unintended and unexpected incident that takes place in its entirety at a specific time and place during the construction period. The default sub-limit is $1,000,000 for any one occurrence and in total for all occurrences, unless the schedule shows another amount. It is part of the limit of liability. The Pollution Liability exclusion does not apply to this cover.

Principal's Vicarious Liability

We cover the principal's liability for the acts or omissions of the contractors and subcontractors carrying out the contract works.

First Aid and Emergency Measures

We pay the cost of first aid and emergency medical measures given at the time of an occurrence. Giving them is not an admission of liability.

Vibration and Underground Services

The Vibration and Removal of Support extension and the Underground Services extension apply only if, before the relevant work started:

• for underground services, current service plans were obtained, for example through Before You Dig Australia or the relevant authority, and the marked services were located by potholing or an equivalent method; and
• for vibration and removal of support, a competent person assessed the work method as suitable, and any dilapidation survey required by the construction contract was carried out.

The Insurance Contracts Act 1984 (Cth) condition applies to this condition.

Injury to Workers

We do not pay for personal injury to a worker of an insured, to the extent the insured is required by a workers compensation law to insure that liability, or would be but for an exemption. This exclusion does not apply to one insured's liability for personal injury to another insured's workers.

Damage to the Contract Works

We do not pay for property damage to the contract works or to materials for them. Material Damage covers that damage where it applies.

Professional Advice and Design

We do not pay for liability arising from professional advice, design or specification given for a fee. That liability, including personal injury or property damage caused by a professional services wrongful act, is covered under Design and Construct Professional Indemnity where it applies, and not under this section. This exclusion does not apply to personal injury or property damage caused by manual work at the project site.

Your Own Work

We do not pay the cost of recalling, repairing, replacing or making good an insured's own defective work or product.

Motor Vehicles

We do not pay for liability arising from a vehicle that is registered, or required to be registered, while being driven on a public road, or for which compulsory third party insurance or a statutory motor accident scheme provides cover. This exclusion does not apply to liability arising from the operation of a vehicle or plant as a tool of trade at the project site.

Aircraft and Watercraft

We do not pay for liability arising from aircraft, hovercraft, or watercraft over 10 metres in length, owned or operated by or for an insured.

Pollution Liability

We do not pay for liability arising from the discharge, dispersal, release, seepage or escape of a pollutant, or the cost of testing, cleaning up or removing it, except as the Sudden and Accidental Pollution extension covers.

Fines and Penalties

We do not pay fines, penalties, penalty notices, civil penalties, liquidated damages, or punitive, exemplary or aggravated damages. We do pay defence costs for a third-party claim that also seeks compensation this section covers.

Contractual Liability

We do not pay for liability an insured assumes under a contract, to the extent it is greater than the liability the insured would have had without the contract. This exclusion does not apply to liability assumed under the construction contract, or under usual terms for site access or for the hire of plant and equipment.

Delay in Start-Up

This section applies only if the schedule shows it as included. It covers the principal only. The schedule shows the sum insured, the basis, the indemnity period and the time excess.

Delay Caused by Insured Damage

If damage covered by Material Damage delays the date on which a project reaches practical completion, we will pay the principal, for the period of insured delay after the time excess and up to the end of the indemnity period:

• the loss of gross profit, revenue or rent, as the schedule shows, as the How We Calculate Delay Loss provision calculates it; and
• the increased cost of working reasonably incurred to reduce the delay, up to the amount of loss it avoids.

The most we will pay is the sum insured for this section.

How We Calculate Delay Loss

Period of insured delay. The period by which practical completion is later than it would have been without the damage. We measure from the date the project would have reached practical completion but for the damage, after allowing for delay from causes this policy does not cover, such as design changes, supply shortages and industrial action. We pay only for the additional delay the insured damage causes.

Loss. For gross profit, the rate of gross profit the principal expected from the completed project, applied to the reduction in revenue during the period of insured delay. For revenue or rent, the revenue or rent the principal would have earned from the completed project during that period. In each case we deduct any charges or expenses that stop or reduce because of the delay.

Time excess. The number of days shown in the schedule at the start of the period of insured delay. We pay for the delay after it has run. It is a waiting period, not a deduction from each day.

Indemnity period. The period shown in the schedule, starting on the date the project would have reached practical completion but for the damage.

Delay Not Covered

We do not pay for:

• delay not caused by damage that Material Damage covers, or that would have happened anyway;
• fines, penalties or liquidated damages for late completion;
• loss after the end of the indemnity period; or
• delay caused by a shortage of funds, or by changes to the scope of the project.

Design and Construct Professional Indemnity

This section applies only if the schedule shows it as included. It is a claims-made section: it covers only claims first made against an insured during the policy period and notified to us as the Claims-Made Notice obligation requires. The schedule shows the limit of liability, the retroactive date and the excess.

Claims for Design Errors

If a claim is first made against an insured during the policy period, or during the extended reporting period in the Extended Reporting Period extension, for a professional services wrongful act committed on or after the retroactive date, and is notified to us as the Claims-Made Notice obligation requires, we will pay:

• the compensation the insured is legally liable to pay; and
• defence costs.

The most we will pay for any one claim, and in total for all claims under this section, is the limit of liability shown for this section. Defence costs are part of that limit.

Injury and damage caused by a design error. Where a professional services wrongful act causes personal injury or property damage, we pay the compensation and defence costs under this section and not under Public and Products Liability, as the Professional Advice and Design exclusion provides. The cost of rectifying the defective design itself is not covered.

Related claims. All claims arising from the same professional services wrongful act, or from related or similar professional services wrongful acts that share a common cause or form one course of conduct, are one claim. It is treated as first made when the earliest of them was first made, and one excess applies.

Extended Reporting Period

If this section is not renewed or replaced, whether because the policy ends, is not renewed, or is cancelled by either party, the insured has 12 months after the end of the policy period to notify claims arising from professional services wrongful acts committed before it ended. This does not extend the period in which professional services wrongful acts are covered, and it ends if the insured buys other insurance that covers the claim.

Design Claims Not Covered

We do not pay for a claim:

• arising from facts or circumstances a member of the insured's control group knew of before the policy period started and that a reasonable person in that member's position would have expected to give rise to a claim;
• for liability assumed under a contract that is greater than liability at law, including an express warranty of fitness for purpose beyond the duty to use reasonable skill and care, unless the E12 Fitness-for-Purpose Design Warranty endorsement applies;
• arising from a deliberate, dishonest or fraudulent act of an insured, established by a final judgment or by the insured's written admission; we pay defence costs until then;
• for the cost of rectifying the defective design itself; or
• for personal injury or property damage caused by manual work at the project site, which Public and Products Liability covers where it applies. We do not pay the same loss twice.

How Limits and Excesses Apply

Limits

The schedule shows the sum insured or limit of liability for each section, and any sub-limits. A sub-limit is part of, not in addition to, the limit it sits under, unless this policy says the amount is in addition. If one event or occurrence is covered under more than one section, each section pays only its own part of the loss, and we do not pay the same loss twice.

Excess

The insured bears the excess shown in the schedule:

• for Material Damage, for each event;
• for Public and Products Liability, for each occurrence, with defence costs in addition;
• for Delay in Start-Up, as the time excess; and
• for Design and Construct Professional Indemnity, for each claim.

The schedule may show separate excesses for storm and water damage, earthquake, testing and commissioning, existing structures and vibration. Where more than one excess applies to the same event under one section, only the highest is deducted.

Who We Pay

We pay the named insured, or as it directs, for the benefit of the insured whose interest is affected. Where the construction contract or the schedule names a party to be paid, such as a principal or a financier, we pay as it requires. A payment we make in this way discharges our liability for that amount.

GST

Where an insured is entitled to an input tax credit for the GST on a cost we pay, we pay net of that credit. Each sum insured and limit includes GST to the extent the insured is not entitled to an input tax credit for it.

Other Insurance

If a loss covered by this policy is also covered by another insurance policy, we will not refuse or reduce our payment because of that other insurance. We may seek contribution from the other insurer as the law allows. This does not apply where the schedule or an endorsement states that this policy is excess of a specified underlying policy, in which case this policy pays only after the limit of that specified policy is exhausted.

General Exclusions

These exclusions apply to every section.

War

We do not pay for any loss, damage, liability or cost arising from war, invasion, act of foreign enemy, hostilities or warlike operations (whether war is declared or not), civil war, rebellion, revolution, insurrection, military or usurped power, or confiscation by a government or public authority.

Nuclear

We do not pay for any loss, damage, liability or cost arising from ionising radiation, contamination by radioactivity from nuclear fuel or waste, or nuclear weapons material.

Terrorism

We do not pay for any loss, damage, liability or cost arising from an act of terrorism, meaning an act, including the use of force or violence or the threat of it, by any person or group, committed for political, religious, ideological or similar purposes, including the intention to influence a government or to put the public in fear. This exclusion has no effect to the extent the Terrorism Insurance Act 2003 (Cth) requires cover to be provided. [WP REVIEW: confirm the treatment of contract works as eligible property under the Terrorism Insurance Act 2003 (Cth) and Terrorism Insurance Regulations, including works not yet handed over.]

Asbestos

We do not pay for any loss, damage, liability or cost arising from asbestos in any form. Under Material Damage we do pay the cost of lawfully removing asbestos that is unexpectedly found and disturbed by damage we cover, up to $100,000 for any one event, unless the schedule or the E04 Demolition and Asbestos Removal endorsement shows another amount.

Cyber Events

We do not pay for loss of, damage to or corruption of electronic data, or for loss arising from use of a computer system by a person not permitted by its owner to use it. We do pay for resulting physical damage to the contract works or construction plant, and for re-creating plans, drawings, specifications and digital building models under the Plans, Documents and Digital Models extension.

Your Obligations

Telling Us About Claims

Tell us as soon as reasonably practicable after damage, an occurrence or a delay that may lead to a claim, and about any third-party claim, demand or proceedings received. Tell the police promptly about any theft or malicious damage. Give us the information and documents we reasonably ask for, and let us inspect damaged property before it is repaired, unless urgent work is needed to make the site safe or to prevent further damage.

Claims-Made Notice

For Design and Construct Professional Indemnity, tell us in writing about each claim as soon as reasonably practicable, and in any case before the end of the policy period or the extended reporting period. If, during the policy period, an insured becomes aware of facts that might give rise to a claim and tells us in writing before the policy period ends, any claim later arising from those facts is treated as made during the policy period, as s.40(3) of the Insurance Contracts Act 1984 (Cth) provides.

Admissions

Do not admit liability for, or agree to settle, a third-party claim against an insured without our written agreement, which we will not unreasonably withhold. First aid, emergency measures and compliance with work health and safety obligations are not admissions.

Reasonable Precautions

Take reasonable precautions to prevent damage and injury, including complying with work health and safety law, building codes, hot work permit systems, and the insurance and security requirements of the construction contract.

Declarations

On the annual basis, the named insured declares the estimated contract value of the projects at the start of the policy period, and the actual contract value within 60 days after it ends. A project above the maximum project value must be declared before work starts, as the Annual Basis clause requires. We will not reduce a claim because a good-faith estimate proves too low; our remedy for under-declaration is the premium adjustment, except where the Insurance Contracts Act 1984 (Cth) gives us a remedy for non-disclosure or misrepresentation.

Telling Us About Changes

Tell us as soon as reasonably practicable if:

• the construction period for a single project will run past the date shown in the schedule; we will extend cover on terms we agree with you;
• the contract value increases by more than the escalation allowance;
• work on a project stops for more than 60 consecutive days; or
• the nature of the contract works changes in a way that increases the risk.

We will tell you whether the change affects your cover or premium.

Recovery from Others

After we pay a claim, we may take over the insured's rights to recover the amount from anyone else and act in its name. The insured must help us, at our cost. We waive our rights of recovery against every insured, and against any party the insured was required by the construction contract or another written contract made before the loss to hold harmless or insure, except where the loss was caused by that party's fraudulent, dishonest or malicious act.

General Conditions

Insurance Contracts Act 1984 (Cth)

Nothing in this policy excludes, restricts or modifies the operation of the Insurance Contracts Act 1984 (Cth). Where this policy is inconsistent with the Act, the Act prevails.

If this policy would otherwise let us refuse to pay a claim, in whole or in part, because of something an insured did or did not do after this policy was entered into, section 54 of the Act applies. We may not refuse to pay the claim only because of that act or omission. Our liability is reduced by the amount that fairly represents the extent to which our interests were prejudiced. Where the act or omission could reasonably be regarded as capable of causing or contributing to the loss, we may refuse to pay only the part of the claim that the act or omission caused or contributed to. We may not refuse any part that the insured proves the act or omission did not cause. This applies to every condition, exclusion, limit and obligation in this policy, not only to the claims conditions.

Corporations Act 2001 (Cth), sections 199A and 199B

Section 199A of the Corporations Act 2001 (Cth) limits the liabilities and legal costs for which a company may indemnify its officers. Section 199B prevents a company from paying a premium for insurance that covers an officer against a liability, other than one for legal costs, arising out of conduct involving a wilful breach of duty in relation to the company, or a contravention of section 182 or 183 of that Act.

To the extent a company that is an insured pays the premium, this policy does not cover its directors or officers for a liability, other than legal costs, that section 199B prevents the company from insuring. This does not reduce cover for any other liability, or for legal costs.

Where we advance defence costs in a civil penalty or criminal proceeding, the insured must repay them if a final judgment or a court's finding establishes conduct that this policy or the law does not allow to be covered.

[WP REVIEW: confirm this statement of ss 199A and 199B, and whether cover for a liability within s 199B can be provided where the insured person pays the relevant part of the premium.]

Joint Names and Separate Treatment

Each insured is treated as if insured separately, but the limits and sums insured shown in the schedule are the most we will pay in total for all insureds together.

One insured may claim against another, and this policy responds to the insured against whom the claim is made, as if each had a separate policy, except that Public and Products Liability does not cover property damage to the contract works.

The conduct, knowledge or breach of one insured is not imputed to any other insured for the purpose of the duty of disclosure, the Design Claims Not Covered exclusion, the Reasonable Precautions obligation or the Fraud condition. Each insured's cover is judged by its own conduct and knowledge, except that the knowledge of a member of an entity's control group is imputed to that entity.

Cancellation

The named insured may cancel this policy at any time by telling us. We refund the premium for the unexpired policy period on a pro-rata basis, less any non-refundable government charges. For a single project, the refund is subject to the minimum premium shown in the schedule, because construction risk is not spread evenly over the construction period. If we have paid a total loss of the contract works, no refund applies to that item.

We may cancel this policy only as the Insurance Contracts Act 1984 (Cth) allows, by giving the named insured written notice as that Act requires. We refund the premium for the unexpired period on a pro-rata basis.

On the contracts commencing footing, cancellation does not end cover for projects that started before it took effect. Cancellation does not affect a claim for damage, an occurrence or a claim that happened or was made before it took effect.

Premium Adjustment

Where the premium is based on declared or estimated values, we adjust it at the rates shown in the schedule once actual values are declared under the Declarations obligation or the Escalation extension, subject to the minimum premium. A late declaration does not end cover, but we may charge interest on premium underpaid.

Inspection

We may inspect the project site, the work methods and the insured's records about the contract works at any reasonable time, on reasonable notice.

Fraud

If a claim is made fraudulently, we may refuse to pay it, as s.56 of the Insurance Contracts Act 1984 (Cth) allows. A fraudulent claim by one insured does not affect the cover of any other insured who was not a party to the fraud.

Sanctions

We do not provide cover, pay any claim or provide any benefit under this policy to the extent that doing so would expose us to any sanction, prohibition or restriction under:

• the Autonomous Sanctions Act 2011 (Cth), the Charter of the United Nations Act 1945 (Cth), or regulations made under either Act; or
• the trade or economic sanctions laws of the United Kingdom, the United States of America or the European Union, to the extent they apply to us.

[WP REVIEW: confirm that naming the UK, US and EU regimes is appropriate for Australian capacity; this is a deliberate library-wide scope choice.]

GST and Premium

The premium includes GST where it applies, under A New Tax System (Goods and Services Tax) Act 1999 (Cth). Claims are paid as the GST provision sets out. The insured must tell us its entitlement to input tax credits when making a claim.

Privacy

We collect, use and disclose personal information about insureds and their workers to assess the proposal, administer this policy and manage claims, in accordance with the Privacy Act 1988 (Cth) and our privacy policy. Our privacy policy explains how a person can access and correct their information and how to complain about a privacy matter.

Complaints and Disputes

If an insured is unhappy with our service or a decision, contact us at the details in the schedule. We will acknowledge the complaint within one business day and give our decision within 30 calendar days.

If the insured is not satisfied with our response, or we have not responded within 30 calendar days, the complaint may be taken to the Australian Financial Complaints Authority (AFCA), a free and independent dispute resolution service, if it is within AFCA's rules: www.afca.org.au, 1800 931 678, info@afca.org.au.

Governing Law

This policy is governed by the law of the Australian state or territory shown in the schedule. If none is shown, it is governed by the law of the state or territory in which the project site is located or, on the annual basis, the state or territory of the named insured's address shown in the schedule at the start of the policy period.

Jurisdiction

Each insured and we submit to the jurisdiction of the courts of the state or territory whose law governs this policy, and of any court that may hear appeals from them.

Headings and References

Headings are for convenience only. A reference to legislation includes any legislation that amends or replaces it. A reference to a clause by its heading is a reference to that clause as it appears in this wording.

How to Make a Claim

1. Make the site safe and take reasonable steps to prevent further damage.
2. Contact your broker, or contact us directly at the details shown in the schedule.
3. Tell the police about any theft or malicious damage.
4. Tell us what happened and when, and give us photographs, quotes, invoices and the relevant construction contract documents.
5. For a claim against an insured, send us the demand or court documents as soon as they are received, and do not admit liability (see the Admissions obligation).
6. We will acknowledge the claim, keep you informed, and tell you our decision as the General Insurance Code of Practice requires where the insurer subscribes to it.

Endorsement Library

An endorsement applies only if its code is shown in the schedule. Each endorsement changes this policy only as it states, and is read together with the variables shown for it in the schedule. Where an endorsement and the rest of this policy conflict, the endorsement applies to the extent of the conflict. If a variable an endorsement needs is not shown in the schedule, the default stated in the endorsement applies; if it has no default, the endorsement does not apply until we show the variable in the schedule. These endorsements are for use with this wording at version 2.1.x.

E01 Existing Structures and Principal's Contents

The existing structures and principal's contents named in the schedule for this endorsement are part of the contract works, for the sums insured shown.

Dilapidation survey. Before work starts, a dilapidation survey of the existing structures is carried out and kept. We do not pay for damage that the survey records as existing before work started.

Vibration and removal of support. We pay for damage to the existing structures caused by vibration or by the removal or weakening of support only if the Vibration and Underground Services condition has been met.

Primary insurance. Where the construction contract requires the principal's own property insurance to respond first, this endorsement pays the amount by which the loss exceeds what that insurance pays.

The existing structures excess shown in the schedule applies.

Schedule variables: existing structures described; existing structures sum insured; principal's contents sum insured; existing structures excess (default $25,000).

E02 LEG 3/06 Defects Cover

LEG 3/06 applies in the Defective Design, Materials or Workmanship exclusion in place of the defects clause otherwise shown in the schedule. We pay for all damage, including damage to the defective part, except the cost of improving the original design, plan, specification, materials or workmanship.

An additional premium applies, as shown in the schedule.

Schedule variables: none.

E03 Delay in Start-Up Extensions

This endorsement applies only while Delay in Start-Up applies. The Delay Caused by Insured Damage clause also covers delay to practical completion caused by:

• damage at the premises of a supplier named in the schedule to materials or equipment being made for the project;
• interruption to the supply of electricity, gas, water or telecommunications to the project site, caused by damage to the supplier's property; and
• prevention of access to the project site by a public authority because of damage to property within the distance shown in the schedule.

The sub-limit for each item is shown in the schedule and is part of the sum insured for Delay in Start-Up.

Schedule variables: named suppliers; sub-limit for each item; access distance (default 1 km).

E04 Demolition and Asbestos Removal

This endorsement applies to projects that include demolition or the planned removal of asbestos. The following conditions apply to those projects:

• demolition is carried out by a contractor licensed for that class of demolition in the state or territory of the project site, under a written safe work method statement;
• asbestos is removed only by a licensed asbestos removalist, under an asbestos removal control plan, with clearance certificates obtained; and
• adjoining property is surveyed before demolition starts.

The Asbestos exclusion does not apply to damage to the contract works caused by an accident during the planned removal, up to the asbestos sub-limit shown in the schedule for this endorsement. We do not pay the planned cost of the removal itself.

Schedule variables: projects or demolition scope; asbestos sub-limit; special excess.

E05 Residential Multi-Storey

This endorsement applies to residential projects of more than one dwelling. The following conditions apply:

• the insured holds the builder's licence and any home building compensation cover required in the state or territory of the project site;
• no combustible external cladding is installed unless it complies with the building code in force and a fire engineer has certified it; and
• fire protection systems for the completed building are installed and commissioned before occupation.

We do not pay for the cost of removing or replacing external cladding because it does not comply with building law, whether or not damage has happened.

Schedule variables: number of storeys covered; special excess, if any.

E06 Piling, Deep Excavation and Dewatering

This endorsement applies to projects with piling, excavation deeper than 3 metres or dewatering. The following conditions apply:

• a geotechnical investigation is completed before work starts, and its recommendations are followed;
• excavations are supported as the design requires, and support is inspected daily while open; and
• dewatering systems have stand-by pumps and power available at all times.

We do not pay for the cost of additional support, grouting or dewatering needed because ground conditions differ from those expected, unless damage happens. The Vibration and Removal of Support extension applies subject to the special excess shown for this endorsement.

Schedule variables: maximum excavation depth; special excess.

E07 Wet Works

The Property Not Covered exclusion does not exclude the works in or next to water named in the schedule for this endorsement. The following conditions apply:

• work is planned around tide and weather forecasts, and stopped when a warning for the site is issued;
• materials and plant are secured above the highest astronomical tide when not in use; and
• the separate excess for wet works shown in the schedule applies.

This endorsement does not cover marine risks to vessels or cargo, which need a marine policy.

Schedule variables: wet works described; special excess.

E08 Projects Already Under Way

The projects named in the schedule for this endorsement, which started before the policy period, are covered from the date shown, but only if an inspection or survey satisfactory to us was carried out before that date.

We do not pay for damage that happened before the date cover starts for the project, whether or not it was known.

Schedule variables: projects named; date cover starts for each; contract value completed at that date.

E09 Principal-Arranged Insurance

Where the principal has arranged its own contract works or liability insurance for the project, this policy covers the insured contractors for the difference between that insurance and this policy:

• for any excess under the principal's policy that the construction contract makes the contractor bear, up to the amount shown in the schedule; and
• for damage or liability the principal's policy does not cover and this policy would.

This policy does not contribute with the principal's policy for loss it covers.

Schedule variables: principal's insurer and policy number; contractor's excess buy-down amount.

E10 Increased Offsite Storage and Transit

The limit in the Offsite Storage and Transit extension is replaced by the amounts shown in the schedule for this endorsement, for any one location and any one conveyance.

Schedule variables: limit for any one location; limit for any one conveyance.

E11 Construction Plant

Construction plant owned by the insured, and construction plant hired in by it for which it is responsible, is covered under Material Damage while at the project site or in transit to or from it within Australia, up to the sums insured shown in the schedule for this endorsement.

The Breakdown of Construction Plant exclusion applies. The Meridian Plant and Equipment wording (2026/PEQ/0001) is available for plant cover away from the project site.

Schedule variables: owned plant sum insured; hired-in plant sum insured; plant excess.

E12 Fitness-for-Purpose Design Warranty

This endorsement applies only while Design and Construct Professional Indemnity applies, and only to the construction contracts named in the schedule for this endorsement.

The Design Claims Not Covered exclusion does not exclude liability under an express warranty in a named construction contract that the design will be fit for its purpose. The most we will pay for that liability is the sub-limit shown in the schedule, which is part of the limit of liability for Design and Construct Professional Indemnity.

Schedule variables: construction contracts named; sub-limit.

Licence and Trademark Notice

This wording's text is licensed under Creative Commons Attribution 4.0 International (CC BY 4.0). The licence applies to the wording text only. It does not extend to, and no licence is granted in, the "Meridian" name, the Cuttleflow Systems name, logo, bearing mark, or any other trademark, trade dress, or brand asset, all of which remain the property of their respective owners and may not be used without separate permission.

An adopting insurer's own schedule, proposal, endorsements and other materials prepared for use with this wording are not required to be released under CC BY 4.0 merely because they are used together with this wording; CC BY 4.0 requires only that you attribute the wording text you use.

This wording is provided for general use and adaptation. Adopting insurers and their advisers are responsible for obtaining their own legal, regulatory, and reinsurance advice before use, including on whether a Product Disclosure Statement and Target Market Determination are required. Use of this wording requires the approval of the relevant capacity provider. Any Wording Partner review and sign-off letter issued in respect of this wording runs to Cuttleflow Pty Ltd t/a Cuttleflow Systems only and does not constitute legal advice to any adopting insurer or insured.

Designed for the Australian market. Assumes application of the Insurance Contracts Act 1984 (Cth). Users are responsible for their own legal review, regulatory compliance, and reinsurance alignment.