What insurance covers do builders need to protect their business?

Accidents can happen on any job. Find out what insurance you need as a builder to protect your business, including public liability, employer’s liability, and tools cover.

“Builders Insurance” is a common search term, but in reality it refers to a range of insurance covers designed for people working in construction. These policies can be tailored to suit most types of building work, including:

• Building new or repairing old private and commercial properties

• Public contracts

• General building jobs

Because every project is different, builders insurance allows you to choose the specific protections you need – such as public liability, employers’ liability, tools cover or contract works – depending on the nature of your work.

The insurance you need as a builder will depend on a range of factors, including where you are working, and the amount of risk involved in the job.

It is a good idea to talk to a specialist insurer or broker who not only understands the risk you face in your industry but also knows how to calculate the risk you personally face. They can offer you a tailored builders insurance package that offers the cover you need. Some of the most common covers include:

• Public liability

• Employers liability

• Theft or damage cover for your tools

• Contact works - to cover on-going jobs from damage or prolongment

• JCT (non-negligence insurance) - to cover work already completed

Public liability insurance is designed to protect you if something goes wrong while you’re on the job. It covers claims made by a third party, which is anyone who isn’t you or one of your employees. This includes customers, suppliers or even someone walking past your worksite – for example a passer-by tripping over your equipment and getting injured.

Legal action, for the consequences of third-party personal injury or property damage from your activities, is a real threat. For example, if a passer-by trips over your equipment on a job and gets injured. Public liability insurance will step in to help you cover the cost of legal defence costs of these allegations.

Depending on your industry, your business may have more or less risk associated with it for the public. For example, a construction firm is considered higher risk than a retail store due to the level of potentially hazardous nature of premises worked at or on.

If you are working using processes involving the application of heat; at height or depth; or where there are many people around; you will need more extensive public liability cover.

The type of premises you work at also has an influence on the cover you need. Work at ports and airports is particularly hazardous due to the number of people and high values at risk e.g. terminals and aircraft. You will need therefore specialist public liability cover to work as a builder at an airport.

If you have staff, employers' liability insurance is a compulsory legal requirement. It protects you from financial losses resulting from allegations of negligence against you, from employee claims for injuries or illnesses sustained during work. Employers liability insurance covers legal defence costs and pays compensation if you are at fault.

If you employ contractors, you must be aware of the differences between types of contractor, and ensure your policy covers all workers that require it.

A contractor can be:

• Self-employed

• A worker or an employee (working for a client and employed by an agency)

There are two types of subcontractors, both with different requirements under employers' liability insurance.

Labour only subcontractors work entirely under your direction as the main contractor. You supply the materials, tell them exactly what needs to be done, supervise the work and the health and safety arrangements they must follow.

Under UK law, if you use a labour only subcontractor they count as your employee, and you as their employer take on the full risk of public, product and employers' liability. 

Read more in our article on covering contractors under employers' liability insurance.

Tool insurance is there to cover the cost of replacing or repairing equipment if it is accidentally damaged (except whilst in use), stolen or damaged through storm or flooding.

Whilst losses are insured from unattended vehicles, there are security requirements and often restrictions in the cover provided for theft losses occurring overnight. It's important to check the cover meets with your needs and can vary between providers.

Contract works insurance is an insurance policy that protects work in progress on a construction or renovation project against accidental damage, loss, or destruction. 

JCT is a specialist insurance that covers an existing building structure and contract works while you as a builder are renovating the property.

If you want to build a solid foundation for your business, talk to the experts at Everywhen about builders’ insurance.