What does builders’ insurance cover?

The building trade can be incredibly dangerous. Heavy machinery, weighty equipment, and working at height means that accidental death and injury is an inevitable risk. According to the Health and Safety Executive (HSE) there were 39 fatal injuries to construction workers between 2020 and 2021.

DIY projects are even more dangerous as non-professionals often do not know the correct safety procedures. In 2020, 5,600 people in the UK were hospitalised after using electric hand tools. A further 2,700 people sought medical help after being injured from manual tools.

When hiring a tradesman it is imperative they have the correct insurance. This protects your building, other people, and their property, plus the builder themselves. This article will look at the different types of insurance for builders and what type of protection it provides.

What is builders’ public liability insurance?

As has been established the building trade is a risky business. However, it is not only builders themselves that are at risk of accident or death. Accidental death can be caused by a builder’s work, for example, a wall or scaffold could fall on top of someone. Similarly, this could cause injury or damage to someone else’s property. Builders’ public liability insurance provides coverage of legal costs should someone claim compensation against you.

Public liability insurance is not a legal requirement for builders but most still consider it essential. You could be left severely out of pocket if you are taken to court without legal cover.

What is employers’ liability insurance?

When you have anyone else working for you on a building site, that is not a family member, you are legally required to have employers liability insurance. This covers you if one of your employees is killed or hurt at the hands of any building work that has been done. Failing to provide employers liability insurance comes with a hefty fine.

The fine is charged at a substantial £2,500 per day you are not insured. A further £1,000 charge can be handed out to employers who refuse to show their insurance certification to inspectors. These fines add up quickly and can often exceed the price of the job you have been contracted to do.

What is tools insurance?

Without tools, builders can’t do their work. Tools are just as essential for builders as their building materials. This is why as part of a builder’s insurance package, it’s also good practice to take out tools insurance. This provides financial cover if your tools are; lost, stolen or damaged. This includes:

Hand toolsPower toolsEquipment

However, if there has been an overnight theft where tools are left in a van, for example, this will not be covered. Hired plant machinery is also not covered by tools insurance.

Can I include stock and materials in my builders’ insurance?

As well as tools, building materials are vitally important in a builder’s arsenal. Like many other industries construction businesses are seeing a shortage of building materials and that shortage is increasing the cost of supplies. For example, the Department for Business, Energy and Industry strategy has shown that there has been a 23.5% rise in the cost of new materials in 2021. Certain products like sealants were up 39%.

A number of reasons have been touted as to why there has been a rise in stock and material prices. This includes Brexit and Covid-19 causing a supply issue, because of the restrictions on travel and the shortage of drivers. Inflation is another reason for the rise, but 23.5% is vastly higher than the 4.8% inflation rate experienced that year. Materials like silicones specifically are only produced by a small portion of countries so any delays cause shortages.

This has translated to a rise in theft of stocks and materials from building sites, as they are now sought after, high-value items. As you would expect, stock and materials insurance protects you from this. As well as theft, it protects stock from damage or loss.

Luckily, you can include cover for stock and materials, just speak to your insurance broker. In the case that a claim is made on the insurance for damage, loss, or theft, you receive a payment to replace the products.

To further cover stock and materials in transport, a stock in transport insurance policy can be added.

What is van insurance?

As part of your work as a builder, you may require various types of van insurance. In general, any builder, even if you are a sole trader, will need commercial insurance if you use your vehicle for work or travel to work. This gives cover to the van whether it is stolen, vandalised, involved in an accident, or set on fire. As with standard car insurance, this depends on the level of cover you have selected.

Additional cover options that are specifically beneficial for builders include:

Financial protection of tools – If you carry tools and they are lost stolen or damaged for example.Breakdown cover – Ensures you have access to roadside assistance if your van breaks down.Courtesy Van – If your van cannot be fixed by roadside assistance and has to go into a garage, you can get a replacement vehicle until it is fixed, meaning you can limit or prevent any lost earnings.Windscreen protection – Vans are often driven down gravelly backroads and worksites, meaning windscreen chips and cracks can often happen. This protection will cover any costs of repairing a windscreen.

What is hired-in plant insurance?

Hired-in plant insurance covers you for any plant machinery you have had to hire to do a job. This includes such items as:

ForkliftsRollersCement mixersBreakersExcavatorsAny other heavy machinery required

Again this provides financial cover if any plant machinery is, damaged, lost, or stolen from the building site.

What is own plant insurance?

Much like hire-in equipment cover, own plant insurance provides insurance for plant machinery. The difference is that instead of being hired, it is owned by you.

What is contract works insurance?

This is a specific insurance that provides cover for builders and other tradesmen. This covers any building work that is in progress in case it is destroyed before completion. For example, a storm or flood may demolish the building project. This is where contract works insurance for builders comes in. Builders are covered financially if you need to begin the project from scratch or repair damages.

What is personal accident cover?

You may opt for personal accident insurance cover for yourself and any staff working under you. If someone covered under this insurance is accidentally injured whilst at work they will receive, loss of income benefits, expenses paid for medical costs, and expenses for hospitalisation for example.

However, this has the added benefit of protecting people included in the policy outside of work. For instance, if they were to have a fall, break their arm, and could not work.

What are building guarantees and warranties?

An insurance policy-backed building guarantee covers the person hiring the builders, financially. This is in case there are any issues with the building company itself. Specifically, if the building company collapses into bankruptcy and liquidation, the person is covered for losses.

Some builders offer a warranty as part of their work. However, some will add this warranty to the price of the building work. A warranty will cover a buyer for repairs if any faults emerge after it has been built.

Should a customer ask to see a builders insurance certification?

Absolutely yes. There is no other way a customer can rest assured that the correct insurance level is in place than asking to see details. You can also walk away if you are not happy with the level of insurance a builder has provided, even if it meets legal requirements.

A reputable tradesman will happily show their certifications of insurance, as they know it will inspire trust in their business. If the builder avoids showing their insurance credentials, it is a red flag and it may be wise to move on to a different tradesperson.

Builders insurance cover: Summary

Construction is a high-risk industry for everyone involved. From builders to sub staff and the general public, accidents can and do happen. This is why builders’ insurance is incredibly important.

Although public liability insurance is not legally required, it is perhaps the most important. This is because builders’ public liability insurance provides cover to you if a member of the public is accidentally injured by a builder’s work. Similarly, it covers peoples’ property damage. Public liability insurance provides cover for legal costs to fight against any compensation claims.

Employer’s liability insurance is a legal requirement and must be taken out for any of your staff. Again this provides financial cover against legal and compensation costs if an employee is hurt at work. Failing to get this insurance can be met with substantial fines as prices start at £2,500 per day.

Further cover, should be considered for tools and equipment. Tools insurance provide builders cover if your tools are lost, stolen, or damaged. However, tools left in a vehicle overnight are not covered.

Stock and materials insurance should take higher precedence after shortages have led to a rise in theft. It’s therefore sensible to take out insurance that covers theft, damage, and loss of materials and equipment.

Hired in, and own plant insurance is a type of builders insurance that protects plant machinery such as forklifts and cement mixers. These can be repaired or replaced if stolen, damaged, or lost.

Personal accident cover protects you (builder) and your staff if they are injured at or outside work, providing cover for financial loss if they can’t work, or if they require medical expenses.

Contract works insurance protects a building site if anything such as a storm or flood demolishes or damages any work in progress.

A legitimate building business will have no problem showing their insurance papers when possible, to instil trust in their customers. Customers on the other hand should feel free to ask about what insurance a builder has in place before any work commences.

Vehicle insurance is also important for tradespeople especially when transporting tools. Commercial insurance is the basic level needed for a builder with optional extras like – Financial protection of tools is highly advised.