Why do Contractors need All Risks Insurance?


It sounds like a sensible measure to get insured when you run a company that operates within a risky industry, such as construction work. It prevents you from getting loaded with significant burdens that may come up unexpectedly. Work accidents, bad weather, third-party injuries, property damage etc. all represent risks that cannot be controlled, which may hinder business activity, compromise the company’s image, or ruin it financially.

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What is contractor’s all risks insurance?

Contractor’s all risks insurance UK is an optional cover which can be added onto your existing public liability insurance policy. Providing unique benefits to those working on a construction site, it protects the work underway on the site from all manner of hazards, including theft, fire, flood and vandalism, in order to help you keep work on schedule, even in unforeseen circumstances.

What will it cover?

It covers any contract work, plus the tools and equipment that are being used. It’s designed to protect both permanent and temporary construction works, to ensure protection against claims for loss or damage to the property. In addition, you will get covered for damage to machinery that’s owned or hired in for the work. The policy will offer protection in the event of a natural hazard, negligence or faulty constructions.

For example, if you were halfway through building an extension on the home of a customer and that extension were to be destroyed by fire, who would fit the bill?  The homeowner would be responsible for damage to the existing structure but as the contractor, you would be responsible for the contract works.  With contractors all risks insurance, the insurance company will pay for the partially completed extension to be re-built, so that you don’t have to.  Without this level of protection, having to pay for all the materials and the cost of labour in rebuilding the extension could cost a small fortune and may even render your company bankrupt.

The same applies to your hired in plant.  If you were to hire a digger to assist with the construction of an extension and that digger were to be stolen from site, as the hirer, you would be responsible for the cost of replacing that digger.  The hire company would also continue to charge you for the cost of hiring the digger until such time as it is replaced. This is where your contractors all risks insurance with Tradesman Saver would save the day!  We would cover the cost of replacing the digger and the cost of any continuing hire charges.

Who can take out an all risk insurance policy?

The responsibility for getting contractor’s all risks insurance (or CAR, for short) falls to the contractor. However, the policy itself can be useful for a number of different trades that may work on a construction site as part of their work, including:

  • Plumbers
  • Building contractors
  • Carpenters
  • Electricians
  • Bricklayers
  • Heating engineers etc.

Our cover typically begins at £50,000 for any one contract and goes up as high as £500,000. For any cover necessary above this amount, simply give us a ring and we’d be more than happy to arrange the cover that you need.

Examples of situations that call for contractor’s all risks insurance

Let’s have a look at some examples which would be covered by a contractor’s all risks insurance policy:

  • If you were building a loft extension on a property and the property below caught fire and damaged the work you’d been doing, your insurer would pay out to have the work repaired or re-done
  • If an electrician is re-wiring a property which is flooded before the electrical works are completed, this policy will cover the costs of re-doing or replacing the damaged works

All in all, the topic is a complex one and it’s best to discuss it with us before purchasing your policy, to ensure you get the right cover for your business’ needs.

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*This indicative price is for £1m public and products liability, £250,000 legal expenses, £10,000 financial loss and £10,000 accidental death insurance cover for a sole trader. The price includes insurance premium tax and our admin charge. 22% of new customers paid less than £59 between 1st January 2019 and 31st August 2019. The actual price you pay will depend upon your specific business requirements and will be affected by your trade, your claims history and the optional covers you select which are all priced separately during the quote process. This website is intended for customers based in the UK and is therefore subject to the UK regulatory regime(s) © Copyright 2021 Tradesman Saver | Tradesman Saver and Henry Seymour & Co. are trading names of Barkdene Limited which is authorised and regulated by the Financial Conduct Authority (FRN 303965) for our insurance distribution and credit broking activities. Barkdene Limited is a credit broker not a lender. You can check this on the Financial Services register https://register.fca.org.uk/.
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