Your guide to public liability insurance for building contractors

The construction industry is a particularly hazardous line of work; the inherent dangers of operating heavy machinery, navigating unstable surfaces, and exposure to harmful substances at building sites mean contractors are constantly exposed to potential accidents.

That’s why public liability insurance is a crucial safeguard for both self-employed contractors and larger building companies alike. It provides essential protection against third party claims for injuries or property damage caused by business activities.

This guide will walk you through everything you need to know about public liability insurance for building contractors, including what it covers, why it’s essential, and how to find the right insurance policy for your business. Let’s get started!

Are you looking for builders' insurance to protect your business? Get in touch with us! Our team of experts can help you find tailored cover to suit your business needs.

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Do you need public liability insurance as a building contractor?

Public liability insurance is particularly vital for tradespeople, as they face higher risks associated with injuries or damages caused during their work (increasing potential liability claims). While public liability cover isn't a legal requirement for businesses in the UK, it is highly recommended for all building contractors, given their frequent interaction with clients and the public, whether on their premises or elsewhere.

It's also worth noting that it's an industry standard for clients to require public liability cover from contractors before building work can start. So, while it may not be required legally, it's usually required contractually.

Let's take a look at some scenarios where builders could be held liable:

• Accidental property damage: While demolishing an old wall, a section collapses onto the neighbouring property, accidentally damaging their fence, and garden shed. Public liability insurance would cover the repair or rebuilding costs for any property damage caused.

• Accidental injury to a client: During an internal renovation of a commercial office building, a temporary access route becomes unexpectedly slippery due to tracked-in mud. A client visiting the building slips and falls, spraining their ankle. Public liability insurance would cover medical costs and potential compensation.

Find out more here: Is public liability insurance compulsory?

What does builders' public liability insurance cover?

Public liability cover protects contractors by covering legal fees and compensation costs if a claim is made against your business involving injury or death caused by your business activities, as well as damage to third-party property. This includes:

• Accidental bodily injury 

• Accidental death 

• Accidental damage to property 

• Total loss of property 

What does builders' public liability insurance not cover?

Public liability insurance won't cover every type of claim. Below are five common exclusions:

1. Employee injuries

If a contractor becomes ill or sustains an injury while working for your business, public liability insurance does not cover compensation claims or legal fees.

You'll need employers liability insurance for this, which is a legal requirement in the UK if you employ people, whether you're self-employed, a sole trader or own a limited company.

2. Your own property and equipment

Public liability insurance won't cover damage to your own building, equipment, or contents, even if the damage is caused by your business activities. Instead, you'll need to look into tools and equipment cover for the tools you use on the job, and business buildings and contents insurance to protect your own business premises.

3. Personal injury

If you become injured from your own business activities, you won't be covered under your public liability policy. Instead, you'll need separate personal accident insurance to cover this risk.

4. Professional negligence

Public liability insurance does not cover legal claims arising from errors in your professional advice, services, or poor workmanship that result in financial loss for a client. Professional indemnity insurance would cover this.

5. Criminal acts

Public liability insurance won't cover any damage or injuries that occur while you're breaking UK laws or committing a crime.

What insurance do I need as a building contractor?

Without a doubt, the first business insurance policy builders should secure is public liability insurance, to protect their business from the various claims that can arise. Builders might also want to consider several other key types of insurance to protect their business in the worst-case scenario.

Many insurance providers offer tailored builders' insurance policies (also known as contractors' insurance). These typically combine a range of individual cover types (almost always including public liability), into one policy specifically designed for building contractors.

Builders' insurance policies may include some or all of these cover options - if they aren't included, you can add them on as extras. Always check with your insurer first to see what's included.

Employers' liability insurance

Employers liability insurance is another essential for building contractors - protecting you financially should an employee make a claim against you for an incident that causes personal injury or property damage.

This type of insurance is legally required in the UK if you employ staff.

Contract works insurance

Also known as contractors' all risk insurance (CAR), this type of cover is essentially a ‘given’ in the industry, designed to protect builders and other tradesmen against loss or damage to ongoing construction works, materials, plant, and equipment on a construction site.

It essentially provides 'all-risks' coverage for the project itself, subject to specific exclusions.

Professional indemnity insurance

Even construction professionals can make errors of judgement. If, as part of your service, you offer business advice to a client, professional indemnity insurance covers compensation costs if your advice leads to financial loss or reputational damage for a client.

Note: Clients will almost always contractually require you to have these three insurance types in place before you can start any construction project.

Product liability cover

Product liability insurance protects you and your business from claims if a product you've provided (e.g., a boiler or kitchen unit) causes damage or injury after it's been installed or given to a client. While not legally required, some clients may insist you have it in place contractually.

Tools and equipment cover

Contractors are always using expensive tools on the job. Tools and equipment insurance covers the cost of repairing or replacing your trade tools and key equipment if they are lost, stolen, or damaged.

Legal expenses cover

Legal expenses insurance covers legal costs like solicitor fees and court expenses for business-related legal action taken against you.

Personal accident cover

Personal accident insurance is a must-have for builders and contractors, given the high chance of accidents. It protects you financially until you recover from any injury or illness that leaves you unable to work.

Hired-in plant insurance

Hired-in plant insurance provides cover for theft, damage or loss of hired plant machinery, such as drilling units or excavators.

Business van insurance

At the heart of any trading business is its van or business vehicle. You can protect yours with a business van insurance policy.

Commercial property insurance

Also known as business buildings insurance, it covers the cost of repairing or rebuilding your building business premises if they are damaged or destroyed by events like fire, flood, or storms. It typically covers the physical structure of the building and its permanent fixtures.

Business contents insurance

Also known as office equipment insurance, it covers the cost of repairing or replacing the fittings and fixtures (e.g. desks, furniture) of your business premises. This includes essential operational equipment (excluding tools), like computers, telephone systems and printers.

Business interruption insurance

Business interruption insurance covers lost income and additional expenses (like temporary relocation costs) if your building business is affected by an insured event such as a fire and cannot operate.

If you’re still not sure what insurance you need, read our guide: Do I need business insurance?

How much does public liability insurance cost for a builder?

There's no 'one size fits all' cost for builders' public liability insurance, and it depends on the insurance provider. However, generally, insurance premiums are calculated based on the following factors:

• The types and level of cover you choose

• The risks you face

• The nature and size of construction projects you’re working on

• The amount of excess you’re willing to pay

• Whether you’ll pay in upfront or in monthly instalments

• Your claims history

Ultimately, the best way to find out exactly how much your premiums will cost is to get a public liability insurance quote - which you can do with us at Howden today!

You'll also have the option to pay for your insurance policy via direct debit, if that's your preference.

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Which other tradesmen and professionals should have public liability insurance?

Here's a list of other tradesmen, professionals and businesses that should consider public liability insurance:

Trades & construction:

• Bricklayers
• Builders
• Carpenters
• Contractors
• Electricians
• Gardeners
• Gas Engineers
• Groundworkers
• Handymen
• HVAC Engineers
• Mechanics
• Painters and Decorators
• Plumbers
• Roofers
• Scaffolders
• Shopfitters
• Steel Fabricators
• Subcontractors
• Tree Surgeons
• Welders

Services: 

• Car Valeters
• Cleaners
• Personal Trainers

Specialist & commercial:

• Freight Forwarders
• Manufacturers
• Market Traders
• Window Manufacturers

Business related:

• Sole Traders
• Self Employed workers
• Landlords
• Limited Companies