​The end of 2022 saw Perth builder Clough going into voluntary administration. Its fall has left the fate of several projects hanging. 

If a contractor becomes insolvent mid-project, their insurers are highly likely to cancel the policy from the time that the contractor is declared insolvent. This would leave local governments with an incomplete and uninsured worksite, which may result in uncompleted work liability and potential re-tendering costs.

Keeping this scenario in mind, members involved in construction of development projects are advised to insure their contract works in case anything goes haywire.

Local governments often embark on new projects, like the construction of a new building or an upgrade or extension of an existing asset to provide more opportunities to the community to thrive.

Traditionally, local government passes the responsibility for implementing insurance of the works and third party (public) liability insurance to the head contractor. The contractor must include all parties, including subcontractors, on the cover.

However, increasingly, local governments are looking to have more involvement in the arrangement and handling of these covers.

For peace of mind in managing construction, local governments could consider a principal arranged program. Generally speaking this type of cover is considered far less administrative. Procuring your own construction insurances means you don't have to request and scrutinise all tendering contractors' insurances, as well as keep records of their insurances on file.

For more information talk to your LGIS account manager about solutions to mitigate your contracting risks.