No matter how careful you are, building work is hazardous and the potential for accidents is high. A building firm’s own property or property for which it is responsible can be lost or damaged. A building firm can also injure third parties and damage the property of those third parties.
Builder’s insurance covers building firms against these risks and that is why they need this insurance to protect their business. There are a number of different types of builder’s insurance policies.
Employer’s liability insurance
This is a legal requirement for any building firms that employ people. It covers claims made against building firms by employees who claim that they have been injured at work due to the fault of their employer.
Employer’s liability insurance claims can be extremely costly. One employee of a building firm fell from scaffolding that had been defective and broke his back. This resulted in him being confined to a wheelchair and unable to work again. That claim cost in excess of £500,000.
Public & products liability insurance
This type of builder’s insurance covers building firms against claims made for injury to third parties or damage to their property due to things that you have done or products that you have supplied.
Many builders public liability and products liability insurance claims are settled for relatively small amounts. For instance, if someone gets paint on their jacket because there was no “wet paint” sign, the claim would only cost around £100. Similarly, if someone suffered a minor injury tripping over a cable that you had left across a pathway, it could only cost around £1,000.
However, there is the potential for serious injuries. There is also the potential for major property damage, particularly where heat use is involved. One Heating and Ventilation Contractor doing a small job on a retail unit accidentally started a fire which spread to the rest of the retail complex. The claim for that fire ended up costing several million pounds.
Professional indemnity insurance
Professional indemnity insurance is also a form of liability insurance, but it covers claims made against a building firm that arise due to advice they have given such as designs or plans rather than something they have done or a product that they have supplied.
As with the other forms of liability insurance, some claims can be small, whereas others can cost millions of pounds. A small defect in a design that results in a minor inconvenience will be settled for next to nothing, but a major design defect in the design of a tower block could result in a claim that cost millions of pounds.
Contract works insurance
Contract Works Insurance covers the property that you have on-site, including property that you have hired in and are legally responsible for. It also covers the work in progress.
A claim for the theft of a small item of plant would not cost a great deal of money. But one roofing contractor had the roof they had nearly completed destroyed in a storm. The claim to replace the work that they had done up to that point cost £40,000.
Personal accident & sickness insurance
Personal accident and sickness insurance covers your loss of income if you cannot work because you have been injured or are ill. It pays a weekly benefit if you are only off work temporarily, or a lump sum if you are unable to work on a permanent basis.
One building contractor broke his wrist at work and because the injury did not heal fully, he was unable to continue with building work. He received a lump sum payout which he used to fund himself while he trained up for a different occupation.
Property & motor insurance
In the same way that you have to insure your car, home and household contents, any building firm that has buildings, office contents or vehicles used in connection with the business will need to insure them.