Builders Insurance | Quotes and Requirements

Builder Insurance UK

From building the city’s tallest skyscrapers to bringing to life people’s dream homes, there’s nothing as rewarding for a builder as a job well done. However, these jobs come with a number of risks that could really hurt you and your business financially if you're not well insured.

Whether you’re just starting up your business, or you’re a well-known brand in the market, this article will explain builders’ insurance and provide a unique insight into the costs you might expect to pay. If you’re interested to know what a quote might look like for your business, take a look at our quote form to receive no-strings-attached quotes from up to 5 specialist business insurance providers.

• What insurance is best for a builder?
  • Does a self-employed builder need insurance?
  • Does a builder really need insurance?
• What are the typical costs of insurance for a builder?
  • What about sole traders/contractors?
• Where can I get builder insurance quotes?

Not surprisingly, many of the coverages here overlap with insurance for a building site.

Popular Types of Insurance for a Builder

There are a wide variety of insurances available to builders in the UK, so it’s unsurprising that some may be more relevant to you than others. Here’s a rundown of the different types of cover you’ll typically find from providers.

Public Liability Insurance

Public liability insurance for builders will protect you in the event that your business accidentally causes injury or damages to the general public (clients, other businesses on-site etc, the public etc.) Public liability helps keep you financially protected in the event that something goes wrong and somebody claims against you, and will cover you for any compensation or medical expenses the court awards, and any legal costs you incur in the process.

It’s often sold in a package with Product Liability, that keeps you covered if any of the work you were responsible for causes injury or damage after it has been completed. The two combined will keep you financially safe in the event of an accident whether you’re working or finished.

Public Liability for builders isn’t required by law, but most builders don’t work without it. Most clients, especially businesses, public sector organisations or any higher-end clients will insist you hold a policy before even engaging with you (it’s required before you can even bid for a public sector piece of work!) so keep in mind what you might miss out on by operating without one.

Public Liability Examples:

• A contractor for another business falls over a wire you’ve left exposed. They are unable to work for 4 weeks, and so sue you for their lost income.
• You accidentally drop your hammer onto a wooden floor and damage it. You’re sued for the cost of repairs.

Employers’ Liability Insurance

Employers' liability insurance is compulsory for nearly any business that hires employees, irrespective of their role in the business or how long they work. Even if you hire someone for a one-off piece of work, you’re legally required to hold Employers’ Liability. It’ll cover you in the event that an employee sues you for an injury or illness they got while working for you—and as you can see in the workplace injury data below, construction is one of the most dangerous professions, leading to a high number of serious employee injuries.

• Employers Liability Example: Your employee is injured while building a brick wall. They sue you for damages.

Tools Insurance

Tools insurance protects the tools of your trade if they’re damaged or stolen (and you can get cover for your own tools or tools hired from a third party). Some tradesman policies include tool cover along with public and product liability, so keep a lookout for these if you’d like to keep your policies from one provider.

You can save money on your tools insurance by not keeping your tools in your van overnight (where they’re more likely to be stolen) if you have access to an alternative, secure storage location.

It’s also worth considering how you move your goods from A to B. If you’re responsible for taking your own/others tools from site to site, a form of goods In transit insurance might also be necessary.

• Tools Insurance Example: An expensive chainsaw is accidentally dropped and broken while you’re working, and you need to replace it urgently to finish the work on schedule. Your tools coverage protects you for the value of the equipment.

Professional Indemnity Insurance

Professional indemnity insurance for builders will keep you covered in the event that your client believes your design or build isn’t how they requested it, or that you have failed in any other professional duty and cost them money. It’ll keep you financially protected against claims irrespective of the client's reason for complaint—whether there was a miscommunication, you made a genuine error, or they’re simply unhappy with the outcome.

• Professional Indemnity Example: You’ve built a conservatory for a client, but they’re unhappy with the final result. They sue you for the cost of the conservatory, and the additional expense of having it changed to fit their needs (note that claims for building work can be made up to 6-12 years after the job is completed, depending on your type of contract).

Personal Accident and Critical Illness Insurances

As their name suggests, these will help keep your income protected in the event of an injury, accident or illness that puts you out of work. They vary in duration—personal accident will generally cover you for short-term issues (less than 1-2 years), whereas critical illness supports you if you’re going to be unable to work for the foreseeable future. You can also buy accident cover that you offer as a benefit for your employees.

• Personal Accident Example: While working on a piece of work, you hurt your back lifting and can’t work for 6 weeks. Your personal accident insurance covers you for 50-70% of your income over the 6 weeks.
• Critical Illness Example: You lose a limb due to a car accident and are unlikely to return to work for the foreseeable future. Critical illness pays out a lump sum to help keep you afloat financially.

Business Use Vehicle Insurance

'Business use' vehicle (van, car, motorbike) insurance will be required if you use your personal vehicle for business purposes, such as driving from one client to another. Most Social, Domestic & Personal providers offer business use coverage, so upgrading your existing policy is a fairly easy task.

If you own a number of business vehicles, such as vans or lorries, that are registered in your business’s name, then a form of commercial vehicle insurance should be looked into. These can often be bundled together into a fleet policy, reducing cost and keeping the policies from one provider for convenience, so keep an eye out for these when signing up.

If you use your vehicle to transport your expensive tools from A to B, consider goods in transit coverage to make sure you’re still protected while on the move.

• Business Vehicle Insurance Example: while driving from one worksite to another, your van breaks down. Your insurance comes and picks up the van for you, and covers the cost of having it repaired immediately.

Contract Works Insurance

More relevant for builders working on larger or more expensive projects, Contract Works insurance covers your property on a construction site from damages, losses and theft. Your policy will cover:

Again, it's sometimes a requirement for any public sector or large scale projects, so if you’re targeting these types of work then it’s worth looking into ahead of time. It’s typically included in specialist builders insurance policies, so if you’re looking into an all-inclusive package then work out how much you’ll be covered for on-site.

What Insurance Does a Self Employed Builder Need?

Whether you’re starting your own business or operating as a contractor, all of the insurances discussed above remain relevant for self-employed builders. If you’re going to be working for other businesses, many will insist you have, at minimum, a Public Liability policy to cover you against any third party damages.

Do Builders Need Insurance?

Yes, most builders will require some form of construction insurance in order to work. Irrespective of whether you’re self-employed, working in a partnership or as part of a company, it’s important to make sure you’re covered at all times in the event something goes wrong. Considering the average Public Liability settlement in 2019 was £13,500, it’s worth thinking about if you could afford for things to go wrong while you’re not effectively insured.

Building work can vary in so many different ways, so consider which insurances might work best for you and which you wouldn’t benefit so much from, and remember that even if somebody claims against you incorrectly, you’ll still need to cover your legal expenses for the court case to defend yourself.

Public Liability, while not mandatory, is considered must-have by most in the industry. It’ll help keep you protected in the event that you cause damages or injury to third parties or members of the public. And if you’re hiring staff, then Employers’ Liability is a legal requirement, in the event that they sue you in the event that they’re injured or become unwell. The fines for not having Employers’ Liability are severe—up to £2,500 per day that you employ staff uninsured.

Professional Indemnity (or Builder Indemnity Insurance) keeps you covered if your client isn’t happy with the end product of your work, whether you designed or built it, if they’re unhappy with the end result. You’re covered if they’re displeased due to an error on your part, a miscommunication with the client, or if they just don’t like the end product and want to be compensated. It’s worth checking if Professional Indemnity is ever a condition in your contracts.

Tools coverage protects your equipment if it’s accidentally damaged or stolen, helping to reduce the impact on your business and your clients if something goes wrong. You might also want to consider Goods in Transit insurance if you transport your tools from A to B in your own vehicle.

Business Use Vehicle insurance will keep your car or van protected from the additional risks of using a vehicle for business-related purposes—and remember that failing to inform your insurer that you’re going to be using your vehicle for work risks voiding the entire policy.

Income Protection insurances can help keep you financially safe in the event that you’re forced out of work due to injury or illness, whether it’s short-term Income Protection or longer term Critical Illness. If you’re worried about what you’d do without your work it’s definitely worth considering.

If you’re interested to know more about recommended insurances/coverages, Citizens Advice has a good article that will explain what a well-informed customer might look for from you before agreeing to work with you.

And just like a client might as to see your certificate of insurance, it's a good idea for you to ensure any other vendors you recommend or subcontract have appropriate cover in place. For instance, if you hire the services of a self-employed welder or hire a scaffolding company to scaffold a house you're working on, be sure these professionals are covered by the right business insurance as well.

How Much is Insurance for Builders?

The cost of builders insurance is just £100 for a sole trader only buying public liability insurance but can easily reach £1,000 - £2,000 or more for a small limited company with a few employees and some extra coverages. We’ve run some sample quotes for a sole trader and a limited company to see how costs vary, especially as you add extra features to provide a comprehensive insurance package.

Cost of Builder Insurance for a Sole Trader

Cost of Builder Insurance for a Limited Company

The cost of builder insurance for a small limited company is in the range of £1,000 to £2,000, depending on the coverage you need. For example, our sample quotes showed that public liability and employers’ liability would cost around £1,000 a year for a small construction company (with £5M of PL cover looking like good value for money compared to £2M of cover).

As you can see in the table and chart below, tools cover can double your insurance costs, especially if you leave tools in a van overnight.

How to Save Money on Builder Insurance

Where can I get builder insurance quotes?

Compare builder insurance quotes here—after filling out a short form you'll receive quotes from up to 5 builder insurance providers. You can speak with someone if you still have questions. Then choose the cover that offers the best price and features for your needs.

Builders Pay and Market Statistics

ONS reports that in 2017 construction-related employment in the UK exceeded its pre-recession peak and reached the highest levels on record. The most jobs were created in London, the South East and the North West.

Workplace Injury Statistics

Whether you’re starting your own business or operating as a contractor, all of the insurances discussed above remain relevant for self-employed builders. If you’re going to be working for other businesses, many will insist you have, at minimum, a Public Liability policy to cover you against any third party damages.

As demonstrated by the table above, workplace injuries are commonplace for builders, and only agricultural and electrical workers are more likely to be involved in an accident. This is just one of the many reasons why Employers’ Liability is such an important insurance to hold, especially to those in the construction industry.

What are the most common injuries? In the UK, injuries while handling/lifting/carrying and slipping/falling on a flat surface accounted for nearly 40% of all non-fatal workplace injuries in 2018/19.

FAQ's

What is Builders All Risk Insurance?

Builders all risk covers your materials, equipment and plant being used on a project for the duration of the work. It generally ends when the work is complete. A typical all risk policy will protect you against hazards like fire, wind and theft.

Most new-build/large-scale projects are required to hold an All Risk policy before work can commence, however in some cases the property owner will already have obtained coverage (often in times where there’s multiple businesses on-site), so make sure to check with the client what you will and won’t need to avoid doubling up the coverage.

Builders’ Liability insurance—what does it cover?

Builders’ Liability (aka public liability) covers you for the cost of any damages, compensation and medical expenses if a third party incurs damages or an injury as a result of your work. You’ll also have your legal expenses covered in the event it reaches that point.

How to claim on Builders Insurance?

Claiming on your builders insurance shouldn’t be any more complicated than other insurances you might be used to claiming on, such as vehicle or home insurance. There are a few steps you can take to make sure you have the best chance of making a successful claim, however.

Firstly, make sure to check your policy so you know what you are and aren’t covered for. If you’re confident that your insurance does cover you for whatever has happened, then contact your insurer and make a report as soon as possible—most policies will have a time limit on reports so make sure to let them know as soon as possible.

Then, make sure you’ve anticipated everything your insurer is going to ask for. This will likely include:

What are the additional risks of using my vehicle for business use?

The additional risks come from the things you’re likely to do as a business driver that you’re less likely to do while driving for social, domestic & pleasure (SD&P) purposes. This includes putting more miles on your vehicle, driving in areas you’re unfamiliar with and loading and unloading heavy equipment from your vehicle.

While it does make your policy more expensive, it’s a requirement for anybody using their vehicle for business purposes. Failure to inform your insurer or upgrade to an appropriate coverage before taking to the road risks voiding your policy and driving uninsured.

Traditional ways of saving money on your vehicle insurance still apply to business use, so consider some of the ways you can keep your costs down.

What insurance does a self employed builder need?

Legally speaking, if you don’t use a vehicle for business purposes then you’re not required to hold any form of insurance before working as a builder.

However, this is highly inadvisable, given the huge financial risk you expose yourself to by working uninsured—the average Public Liability settlement in 2019 was £13,500, so the £104 per year you spend annually on your £2M of coverage would require you to work for over 125 years before becoming more expensive than the average pay-out.

And remember, if you hire anyone to support you with a piece of work, even if it’s just a single day, then you’ll need Employers’ Liability before they pick up their tools, or you risk hefty fines for each day they’re working for you.

What insurance should my builder have?

Your builder should have a combination of the policies above before working for you. At minimum, we’d recommend checking that they have a valid Public Liability policy. If your neighbour’s property is damaged during construction work and they don’t have a policy then you could potentially be liable for the cost of the damages.

If they’re working on a complicated/expensive piece of work for you, we’d also recommend checking for Professional Indemnity insurance. This can help you recover the cost if you feel they’ve been professionally negligent—perhaps they’ve done a poor job of what was agreed and you’re unhappy with the result.

If they’ve hired staff, they should already hold Employers’ Liability—this isn’t your responsibility to check, but if they’re going to be bringing staff on site and don’t hold a valid policy then it might raise some questions for you.

If they don’t have these insurances, they don’t take too long to set-up, and if they value your custom they should be more than happy to set them up to give you peace of mind, and if it’s a valuable piece of work the illustration of typical insurance prices up above should hopefully prove they can keep the work profitable despite the additional cost.

What are soft costs in builders risk insurance?

Soft costs are a term used in the construction industry for an expense that isn’t directly related to construction. They could include things like architect, accountancy or legal fees. Many builders' risk insurance policies will include an option to cover you for soft costs.

Consider a new build apartment complex that architects decide to redraw after construction has already begun. The construction company cannot continue building until they’re completed, but they continue to rack up accountancy and legal fees and may have to have the property resurveyed.

Your policy will specify when your policy applies and to which types of soft cost it applies to. You’ll need to be able to prove that the additional soft costs would not have occurred if the delay hadn’t occurred (in the new build above, there would have been no need for a resurvey if the project continued, for example).