These projects can be efficient and cost effective – but they also introduce exposures that appear earlier, escalate faster, and fall outside what many teams expect.

Working around an existing building means working around its history, its unknowns, and its vulnerabilities.

In this article, construction insurance specialist Adam Bortone explains the exposures that come with existing structures, why they catch contractors off‑guard, and how to protect your project from day one.

Early works: Where problems often begin

Issues typically arise as soon as a contractor takes possession of site.

This early construction phase – often treated as routine – is where unexpected exposures tend to emerge.

Early works can include:

• Mobilisation of plant and equipment
• Initial demolition works
• Site preparation activities
• Early works packages on major projects

If damage occurs at this stage, the key question becomes: who holds responsibility?

Without clear contractual allocation, responsibility is often uncertain – and this is where exposure increases.

Why clear contractual responsibilities matter

Two key realities shape this exposure:

• Contract works cover is generally for new works only and does not automatically include existing structures cover.
• Property or ISR policies often exclude buildings under construction or alteration

This creates a dangerous gap where:

• Contractors may assume the principal’s property or ISR policy will respond
• Principals may assume the contractor’s contract works policy covers everything

When responsibilities aren’t clearly defined, reliance may fall solely on the public liability policy – which can create additional exposures.

Existing Structures vs Liability: The real exposure

Working on or around existing buildings introduces additional considerations that simply don’t exist on a new‑build site, including:

• Structural damage to the existing structure during demolition or alterations
• Water ingress, fire, or collapse affecting the existing structure
• Hidden building defects or unknown conditions worsened by the new works performed by the contractor

There is a common assumption that public liability insurance will respond to the additional exposures, which is not always the case.

• Liability policies are designed to cover third‑party property damage arising from negligent acts or omissions
• Certain weather-related events may sit outside cover where contractor negligence is not established (for example, extreme rainfall)
• Theft and/or malicious damage following forced entry may sit outside liability cover where no contractor fault is established

This is where uninsured exposure can quietly build.

Managing the risk: What contractors should do early

The best protection starts before work begins. Engaging a broker early helps create clarity around:

• Clearly defining who insures what in the contract
• Reviewing policy exclusions before work begins

• Completing condition or dilapidation reports on existing structures

• Confirming policy limits and sub-limits are adequate

These steps reduce uncertainty and help prevent disputes, delays and uninsured losses.

Final thoughts

Existing structures introduce complexity, but not uncertainty – if contractors take the time to understand the exposures and allocate responsibilities clearly. Strong contractual clarity, a solid grasp of policy intent, and early risk management can help prevent costly disputes and coverage gaps.

Getting this right at the start of a project isn’t just good practice. It’s essential.

To find out more about this, reach out to Adam Bortone at abortone@pno.com.au or call (03) 9536 7369.

About the expert – Adam Bortone