In the event of theft, fire, the collapse of a construction, natural disaster, defective materials, and more, contract works insurance is vital when it comes to making sure all eventualities are covered when carrying out contract works.
Here's an example: If you’re a builder who is building an extension for your customer, legally, until the extension is completed, it’s your extension not the customer's.
Therefore if the work (ie the extension) is damaged or destroyed during the building process you will be legally obliged to build it again using your own money.
Contract works insurance is a fail-safe against such an eventuality.