Home Contract Works policies covers the risk of damage to the building and the work in progress, whether caused by the builder or another cause. Separately the contractor will carry liability insurance should they injure a third party or damage property other than the house and works.
You should always seek advice if you are having major work carried out.Unless this is done, you may well find both the house and the works completely uninsured!
Most people expect their home insurers to automatically cover any building works. This may be true for fairly minor improvements, but rarely true when the work is more substantial, such as an extension or a new roof.
Where the significant building costs are say over £50,000, you are likely to need a stand-alone “works” insurance policy to cover both the building (which is then temporarily removed from the home policy), and the works, often in joint names with the contractor.