Business Insurance

What insurance should my builder have?

There are a few types of insurance that a UK builder should have to protect them, their employees, you (the client) and other third parties. Here we explain what they are and what they cover.

While builder insurance needs can vary from one builder to another, there are some basic coverages to look for when hiring a builder. To confirm they have a valid policy in place, ask to see their certificate of insurance. If they have one, they'll have no problem showing it to you.

Public Liability Insurance

Public Liability insurance covers situations where a builder causes injury or damages to the general public, which includes their clients, other businesses on-site etc, the public etc. Public Liability covers compensation or medical expenses the court awards, and any legal costs the builder incurs in the process.

Public Liability (PL) isn’t required by law, but most builders wouldn't work without it. All clients should insist a builder holds a valid policy. Businesses, public sector organisations and higher-end clients may be more accustomed to insisting on PL cover and seeing proof, but really all clients can and should ensure their builder is covered.

Public Liability Examples:

  • A contractor for another business falls over an exposed wire, is unable to work due to injury and sues the builder for their lost income.
  • Your builder accidentally drops your hammer onto an expensive tile floor and damages it.

Employers’ Liability Insurance

Employers' Liability insurance is compulsory for any business that hires employees, irrespective of their role in the business, how they're paid (e.g., cash) or their tenure (e.g., temporary, short-term workers). With that in mind, your builder will be legally required to hold Employers’ Liability. It covers when an employee is injured or falls ill due to their work—and as you can see in workplace injury data, construction is one of the most dangerous professions, leading to a high number of serious employee injuries.

  • Employers Liability Example: A construction worker is seriously injured while building a tall brick wall.

Tools & Equipment Insurance

Tools Insurance protects the equipment your builder needs if they’re damaged or stolen. If your builder does not have this cover, could they continue working on your project? Could they afford to buy replacement tools to finish your project on time? Some tradesman policies include tool cover along with public and product liability, and your builder can also get cover for hired equipment.

  • Tools Insurance Example: Thieves break into your building site at night at steal the saws, drills and other tools needed to finish the fitted wardrobes in your new house. New equipment is urgently needed to finish the work on schedule. Your builder's tools coverage pays for replacement of this valuable equipment.

Professional Indemnity Insurance

Professional Indemnity insurance may be needed for a builder who is involved with the designs or giving professional advice or service. If your builder is simply executing on drawings given to them by an architect, for example, they may not need this cover.

  • Professional Indemnity Example: Your builder designs and constructs a conservatory for you, but it leaks due to a faulty design. You sue your builder for the cost of repairing the damage and making the conservatory watertight.

Contract Works Insurance

Contract Works insurance covers work on-site from damages, losses and theft. A policy can cover the existing work completed, the building materials on-site and tools or equipment. This type of cover may be more common in larger scale or public sector projects. It’s typically included in specialist construction insurance policies.

Building guarantees and warranties

A warranty can cover the client if there are faults in the finished product due to poor workmanship or other issues. Warranties typically only last for a certain period of time, so be sure to note that fine print.

Building guarantees (backed by insurance) can protect a client if the building company goes bankrupt. That way, paid sums can be covered and used to fund the continuation of work with another builder.

Erin Yurday

Erin Yurday is the Founder and Editor of NimbleFins. Prior to NimbleFins, she worked as an investment professional and as the finance expert in Stanford University's Graduate School of Business case writing team. Read more on LinkedIn.