Yeah it's CYA: the ass in question is yours. The guy who burns your house down without insurance will just file bankruptcy. You're the one left with the ashes.
I have my doubts that such a thing exists outside of extreme circumstances or internet commenters' imaginations.
Insurance for damage due to building works is separate and required to be carried by the principal contractor for work over $20,000.
Which is to say, if I don't check they actually hold a policy, the residential insurance is not going to pay out.
I am extremely skeptical you have interpreted those policies accurately. For example, the one above doesn't require anything of anyone renovating stuff: but it also just won't pay for any associated damages.