A Guide to Builders Insurance

Posted by BuildSafe on 10th January 2023 -

The construction industry in the UK is worth hundreds of billions of pounds. If you are interested in becoming a builder, you will need to understand the required insurance plans due to the financial implications should something go wrong with the work.

While most insurance policies are optional for builders, they can prove to be extremely beneficial. Builders often have to deal with many unexpected events. These can be extremely costly to the business, and insurance plans can lower your liability significantly.

In this guide, we cover some of the various insurance policies you should take out as a builder to ensure that you and your business are protected.

Do you need insurance to be a builder?

Builders who don’t have employees don’t by law have to take out any form of insurance. Also, if you only employ immediate family members, you will be allowed to operate without any insurance plan. However, once you hire people outside your family, the UK government will require you to take out employers liability insurance. This plan is designed to protect you in case your employees get sick or injured while working on the site. The provider of the policy will cover the legal costs and any damages awarded to the employees.

Aside from employers liability insurance, you won’t have to pay for any other insurance policy. This doesn’t however mean you should operate without other insurance policies. There are myriad of risks associated with building works, and the right builders insurance policies will give you peace of mind that you will be covered for unexpected events. It is also essential to remember that many clients will require builders to purchase certain policies before they begin working on the project.

What insurance should I have as a builder?

Builders insurance is a special cover that protects builders and other professionals in the construction industry against the risks associated with the trade. There are a number of insurance plans included in these insurance policies. They include public liability insurance, professional indemnity insurance, contractors all risk insurance, and worker’s compensation insurance. Many companies will allow you to tailor the package to include or exclude certain insurance plans. Let’s look at some components of builders insurance.

Public liability insurance will protect you from claims made by third parties for injury resulting from the construction project. The policy also covers damage to property. For example, if debris from the site falls on a vehicle, the insurer will cover any legal costs and any damages awarded.

Contractors all risk insurance is also essential for builders. It provides coverage for a wide range of risks, including damage to construction materials, damage to the construction site, and third-party claims for injuries and property damage. This plan also covers the loss of any profits resulting from delays.

Another policy you need to purchase is professional indemnity insurance. This plan protects you against claims for loss or damage resulting from negligence or insufficient services. Professional indemnity insurance is a legal requirement for several professions, but builders don’t have to purchase it. However, you will find it quite useful as it can end up saving you a lot of money.

Builders also need to take out materials and equipment cover. This will cover any costs associated with the loss or damage of materials and equipment that are used in the construction project. The plan may also cover the loss of profits resulting from the delays in the construction. This cover is extremely important in construction projects since builders use expensive and specialised tools. Replacing or repairing this equipment can significantly eat into your profits. You should check the limits of the policy to determine whether the company will cover the full costs of the repairs and replacements.

Worker’s compensation insurance is also essential. This is the same as employers liability insurance and will provide financial protection for employees who are injured on the construction site. It includes the cost of medical treatment, as well as lost wages.

What is builders contract insurance?

Builders contract insurance is a cover that protects builders, contractors, and other construction professionals. It covers work that is ongoing on a site. In case the property is damaged or destroyed, the insurer will pay for the cost of repairing or redoing the work. It can cover the cost of labour, materials, and tools required to restore the building to the state it was in before the damage.

You should note that builders contract insurance doesn’t cover existing constructions on the site. For example, if you are building an extension, the policy will only cover the new construction. Existing structures won’t be included in the policy. In case there is a fire in the property, the insurer will only cover the cost of repairing the extension that is in progress.

It is important to check the level of coverage in the policy. The cover should include labour and materials. Builders contract insurance isn’t legally required, but you will find it essential. You should check the client contract to determine whether you will be responsible for unfinished work. Completing such jobs can be extremely costly, which is why you need to purchase builders contract insurance.

What insurance does a self-employed builder need?

Construction is amongst the most dangerous industries in the UK. Even if you observe all the recommended safety procedures, accidents can still occur. This is why it is important for self-employed builders to purchase the correct insurance policies. One of the most important policies you should get is public liability insurance. This will protect you against liabilities for injuries to non-employees on the construction site.

You also need goods in transit cover. This will protect any goods you carry during transit. In case of damage, loss, or theft, the insurance company will cover the repair or replacement costs. Self-employed builders may also need to purchase employers liability insurance. This protects you from any liabilities to your employees for illness or physical injury.

Here are other insurance policies you will need as a self-employed builder:

• Contractors all risk insurance
• Equipment insurance
• Product liability insurance

---

Discover  real estate services and properties on The Landsite 

Read more articles in TLS Insights magazine - Your #1 source for real estate trends, data and insight December / January 2023 

The Landsite is the go-to hub and community for property developers, investors and landlords looking for land and property opportunities plus real estate sector services including;

• Property development finance
• Property insurance
• Build warranty
• Property technology
• Architectural and planning consultants
• Construction services
• Up-to-date information alongside guides, case studies and professional insight