Builders Insurance
Most builders buy insurance because a contract told them to, then never look at it again until a claim exposes the gap. The two that catch people out are the same every year: a policy bought for a small domestic extension that no longer reflects a firm now running three sites and eight men, and a contract works section left at the sum insured somebody guessed at four years ago.
A builder's exposure is unusual because you are liable for work you did not carry out. Bring in a labour only bricklayer and, for insurance purposes, they are normally treated as your employee. Bring in a bona fide subcontractor with their own limited company and their own cover, and you can still be pulled into a claim as the firm that engaged them. Whether that leaves you covered or arguing depends on wording you have probably never read.
We arrange cover for builders working on domestic extensions and renovations through to small commercial new build, and the useful part of the conversation is usually not the price. It is establishing what you actually do now, who does it with you, and what the contracts you are signing oblige you to carry.
What actually goes wrong
The exposures that produce claims in this trade, rather than a generic list.
Damage to the building you are working on
The single largest claim most builders will ever have. Public liability covers damage to third party property, but the structure you are contracted to work on is normally excluded from it, because it is in your care. Escape of water from a first fix that was not capped, a fire from a subcontractor's angle grinder, or a partial collapse during a structural opening are all contract works or existing structures claims, not public liability ones.
Subcontractors who are not what they said they were
A subcontractor who cannot produce a current certificate is treated by most insurers as your employee for the duration of that job, which is fine if you have employers liability and a nasty surprise if your labour figures never included them. If their public liability limit is lower than the one your contract requires, the shortfall lands on you.
Injury to somebody who should not have been there
Domestic sites are the worst for this. Clients walk onto site to see progress, children get through unsecured hoarding at weekends, and neighbours cut across to reach their own garden. A public liability claim from an unauthorised visitor is still a claim, and the defence usually turns on whether you can evidence that the site was secured.
Work that turns out to be design
Specifying a steel without a structural engineer's calculations, choosing a damp proofing method, or telling a client which underpinning approach to use are all design decisions. Public liability responds to injury and damage, not to the cost of putting right advice that was wrong. That is professional indemnity, and most builders doing design and build do not carry it.
The cover we arrange
Policies are put together around how you work. Employers liability is included as standard wherever you employ anyone.
Public liability
Covers injury to other people and damage to property that is not yours, arising from your work. Nearly every contract you sign will specify a limit, and £5m has become the practical minimum for anything commercial. £1m still appears on older domestic work but increasingly fails contract checks.
- Third party injury and property damage
- Legal defence costs
- Limits typically £1m, £2m, £5m or £10m
- Covers your subcontractors while working for you
Employers liability
A legal requirement if you employ anyone, and included as standard. The statutory minimum is £5m and the market standard is £10m. It matters more than most builders assume, because labour only subcontractors and casual weekend help usually count as employees even though nobody is on PAYE.
- Legally required if you employ anyone
- £10m limit as standard
- Covers labour only subcontractors
- Includes occupational illness claims
Contract works
Covers the work in progress itself: materials on site, work already completed but not yet handed over, and temporary works. Set the sum insured at the full contract value including materials, not the profit on it, and check whether the policy covers existing structures separately if you are working on an occupied building.
- Work in progress and completed sections
- Materials and supplies on site
- Temporary works and site huts
- Existing structures where the contract requires it
Plant, tools and equipment
Covers owned and hired in plant against theft, fire and accidental damage. Hired in plant is the one people forget: the hire agreement normally makes you liable for the full replacement value and for continuing hire charges while a replacement is sourced, and both need to be insured.
- Owned plant and hand tools
- Hired in plant liability
- Continuing hire charges
- Theft from site and from vehicles
Professional indemnity
Needed if any part of what you do involves design, specification or advice. On a design and build contract this is not optional, and JCT design and build wordings usually name a required limit and a period for which it must be maintained after practical completion.
- Design and specification liability
- Required by most design and build contracts
- Claims made basis, so continuity matters
- Run off cover after you stop trading
What an underwriter will ask
Having these to hand shortens the process considerably, and usually improves the terms.
- Your annual turnover, split between domestic and commercial work
- Wageroll, and separately what you pay labour only and bona fide subcontractors
- The highest contract value you have taken in the last three years, and the largest you would take on
- Whether you work at height, and to what height
- Whether you carry out any demolition, underpinning, piling or structural alteration
- Depth of any excavation work
- Whether you undertake any design, or work under design and build contracts
- Claims history, usually five years, including incidents that never became claims
What moves the premium
Where the price actually comes from, and which parts of it you can change.
Turnover and wageroll
The two figures that drive most of the premium. Both are usually declared as estimates at inception and adjusted at renewal against actuals, so under declaring to save premium now simply creates an adjustment bill later.
The mix of domestic and commercial work
Commercial work usually attracts higher limits and stricter contract conditions, but is not automatically dearer to insure. Domestic work carries its own difficulties, particularly around site security and client access.
Height, depth and structural work
Working at height, excavating, underpinning and structural alterations all move the rate. Being precise about how much of your turnover each accounts for is usually worth more than shopping the whole risk around.
Subcontractor arrangements
A firm that verifies certificates and insists subcontractors match its own limits presents better than one that cannot say who worked for it last year. It is one of the few things that reliably improves terms and costs nothing to fix.
Claims history
Frequency hurts more than severity. Three small tool thefts read worse than one large fire, because insurers price for the pattern rather than the total.
Conditions and exclusions that catch this trade out
Terms vary between insurers, so treat these as the questions to ask rather than a description of any one policy.
Heat work conditions
If anyone on your sites uses a blowtorch, grinder, welder or hot air gun, expect a hot works condition. It typically requires a written permit, extinguishers to hand, combustibles cleared or protected, and a fire watch continuing for sixty minutes after the work stops. A fire claim where the fire watch was not kept is commonly declined outright.
Height and depth limits
Standard builders wordings often restrict work above a stated height, commonly ten or fifteen metres, and excavation below a stated depth, commonly three metres. Neither is a hard no, but both need declaring so the policy is extended rather than quietly breached.
Asbestos
Almost universally excluded unless specifically bought back. On refurbishment and renovation this matters, because pre 2000 buildings may contain it and disturbing it inadvertently can trigger both a liability claim and a clean up cost that the policy will not meet.
Faulty workmanship itself
Insurance covers the damage that faulty work causes, not the cost of redoing the faulty work. If a badly fitted pipe floods a finished kitchen, the kitchen is a claim and the pipe is your cost. Understanding that line saves a lot of disappointment.
Tools left in vehicles overnight
Tool cover usually carries a vehicle warranty: the vehicle must be locked, often alarmed, and in many wordings tools must not be left in it between stated hours, typically nine at night and six in the morning. Overnight van thefts are the most common claim in this class and the most commonly declined.
Common questions
How much public liability insurance do builders need in the UK?
There is no legal minimum for public liability, but the contract usually sets one. £1m is still seen on small domestic work, £2m is common, and £5m has become the practical floor for commercial contracts and most main contractor requirements. £10m is normal on larger commercial and public sector work. Check the contract before you buy, because increasing a limit mid term is straightforward while defending a shortfall is not.
Do I need employers liability if I only use subcontractors?
Almost certainly yes. Labour only subcontractors, who work under your direction and use your materials or plant, are treated as employees by most insurers and by the Employers' Liability (Compulsory Insurance) Act. Only a genuine bona fide subcontractor, running their own business with their own insurance and their own control over how the work is done, sits outside it. Getting this wrong risks a fine of up to £2,500 for each day you were uninsured.
What is contract works insurance and do builders need it?
Contract works covers the job itself while it is in progress: materials on site, sections already built, and temporary works. Public liability will not pay for it, because the works are in your care rather than being third party property. If a fire, flood or storm destroys three weeks of work, contract works is what rebuilds it. Most JCT and standard building contracts require it, and the sum insured should be the full contract value.
Does builders insurance cover damage to the client's existing house?
Not automatically. The existing structure you are working on is usually excluded from public liability and needs to be covered specifically, either under an existing structures extension or by the property owner under the relevant contract clause. On a JCT contract this is a defined obligation, and which party insures the existing structure depends on which insurance option the contract uses. It is worth settling before work starts rather than after a claim.
Am I covered if a subcontractor causes the damage?
Your public liability normally covers subcontractors while they are working for you, so you are protected against a claim brought against your business. That does not remove their own responsibility, and insurers will usually pursue the subcontractor's insurer afterwards. The risk sits with unverified subcontractors: if theirs has lapsed or their limit is lower than the contract demands, the difference is effectively yours.
Do builders need professional indemnity insurance?
You need it if you do anything that counts as design, specification or advice, which includes far more builders than carry it. Choosing a beam size, specifying a damp proofing method or advising a client on a structural approach are all design. Public liability responds to injury and damage; it will not pay to put right advice that was wrong. Design and build contracts usually require professional indemnity by name and specify the limit.
Talk to somebody who knows the trade
Tell us what you actually do and we will come back to you with cover options built around it.