Construction Insurance: Explained

Construction Insurance: Explained


Any builder will know the importance of laying firm foundations and using the reliable materials. We’ve all seen enough horror stories about so-called cowboy builders who cut corners and rip off customers. Doing a great job isn’t just about professional pride – it can enhance the reputation of your company and lead to more work.

Part of being professional is also about having the right construction insurance in place so that you can take on any job safe in the knowledge that you are fully equipped to deal with anything which may come your way.

Just like building the perfect house, constructing an insurance policy that’s right for you involves bringing together a number of different components.

Public liability insurance

The cornerstone of any construction insurance policy, this will fight your corner if you have had a claim made against by a customer or member of the public. Many building projects take place in and around people’s houses or in the centre or busy towns and cities, so there are considerable risks involved. If someone is injured, suffers an illness or has their property damaged due to your work practices, they may seek compensation from you. Public liability will help you contest any such claim and pay out any compensation which is awarded.

Professional indemnity insurance

Most builders can stand over the quality of their work, but things go wrong from time to time. If your work impacts on someone else’s livelihood, professional indemnity can help you. For example, if you are carrying out renovations to a shop or restaurant and something goes wrong which causes the owner to close for longer than expected, they may pursue you for loss of earnings.

Personal accident & sickness insurance

A particularly effective form of cover for self-employed builders or contractors, personal accident cover can help if you’ve suffered an accident at work which puts you out of action for an extended period of time. It will compensate you for the money you are losing while laid up and unable to work.

Employer’s liability insurance

Anyone who has people working for them is legally obliged to have employer’s liability insurance. A building site can be a hazardous place to work and even if you follow all safety procedures, accidents do happen. If one of your employees is hurt, becomes sick or suffers damage to their property, they can seek compensation from you. You are also obliged to display a valid employer’s liability insurance certificate at your place of business.

Products liability insurance

If a product you supply to a customer or material you use in your work turns out to be faulty and causes damage or injury, products liability can cover your for any claim made on that basis.

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Indemnity limits

All forms of liability cover come with indemnity limit, which is the maximum an insurer will lay out on any single claim. Indemnity limits are usually set at anywhere between £1 million and £5 million, but can be adjusted according to your needs. Your insurer will be able to advise you as to how much cover you need based on the size of your operation and level of risk.

Tools insurance

A bad workman may blame is tools, but a good one would be lost without them. Tools insurance is an optional extra on many construction insurance policies, but if you frequently work with expensive tools, the cost of replacing them if they are damaged, lost or stolen, could really put a dent in your company finances. With tool cover, you can have them replaced, with many computers offering new for old replacements.

Plant & machinery insurance

A lot of firms tend to hire machinery, but if your construction company owns plant and machinery, it may be a good idea to take insurance to cover them against damage or vandalism.

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