How does builders’ insurance work?

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If you’re in the building or construction industry, you need insurance. However, understanding the language of insurance and how it works isn’t always straightforward.

What is builders’ insurance?

This is a phrase used to mean several different types of insurance products. Together, they provide cover for the main types of risks that builders face.

Builders’ insurance will nearly always include:

public liability
product liability
employers’ liability
• insurances to cover your tools or your van

You may also need professional indemnity insurance.

Is everything covered in one policy?

If you are comparing policies or have a quote, check exactly what is included. Not every policy will include the same types or levels of cover. If you are not sure about what insurance you need, talk to your insurance company.

What do the different types of insurance cover?

Each type of insurance covers a different aspect of your business.

Public liability covers you in the event your business causes injury to a third party or damages their property

Product liability covers you for injury or damage caused by a product you make or install.

Employers’ liability covers your business if a current or former employee suffers an illness or injury as a result of working for you.

Professional indemnity covers you if you give design or specification advice which turns out to be wrong, resulting in a loss for your customer or client.

What level of insurance should I get?

This will vary depending on the insurer. It may also be affected by the type of work you do and the clients you work for.

For example, if you employ anyone, you are legally required to have employers’ liability insurance. Cover provided is typically £10 million.

Meeting contractual requirements

Professional indemnity insurance and public (or product) liability are not legally required. However, some clients may need you to have a certain level of cover before contracting with you.

You may also be denied membership of certain trade bodies and associations without first having appropriate insurance.

For public liability and product liability, the amount of cover needed may range from £1 million to £10 million.

Professional indemnity cover may be lower, starting at around £100,000. This may also depend on your business and the type of work you do.

Other types of cover

While there is no legal requirement to insure your tools, it’s important that you consider this. Many insurance policies offer cover of between £1,000 and £15,000.