What is construction insurance?
Construction insurance is the term used to describe the various types of business insurance that are useful to people and businesses in the construction and trade industry. From established building firms employing several members of staff to skilled tradespeople going it alone, construction insurance provides cover for the risks you face every day on the job.
Many insurance providers allow you to tailor your cover to suit the individual needs of your building firm. For example, if you’re working as a sole trader, you might want a straightforward policy that includes public liability insurance and cover for your equipment and tools, whereas construction firms working on complex projects may also need to consider contractors’ all risks insurance for contract works and employers’ liability cover. To find the best fit for you, it’s worth considering exactly what you need.
Why do I need insurance if I work in construction?
You have the skills and expertise to get the job done. You’re diligent and well-prepared. But no matter how much experience you have, accidents do happen, and equipment can (and will) break. In the construction and trades industry, mishaps can be costly and dangerous, so having the right insurance in place really matters.
Construction insurance can help cover:
Damage to property: mishaps happen all the time, even to the most experienced of tradespeople. Even a small mistake could leave you with an angry customer and a big bill. Imagine for example, you’re working on someone’s roof, and you accidentally knock off a heavy tool. It falls off and lands on someone’s car, smashing the windscreen. Construction insurance can help you cover the compensation and legal costs incurred (although sadly it won’t help you break the news to the irate car owner).
Injury to the public: construction is dangerous work and even passers-by face risks just walking past a building site. For example, someone could be struck by falling debris or get hit by a vehicle leaving the site. Construction insurance can help you pay any legal costs and cover the compensation if someone gets injured because of your construction work.
Disputes with clients: you work hard to give your customers what they want but disagreements do happen. If a customer accuses you of making a mistake or causing a problem that has cost them money, it can be extremely damaging to your business and your reputation. Construction insurance can help you cover costs if a customer takes legal action against you, so you can fight to protect the good name of your business.
Replacing work equipment and tools: if the equipment you’re using to complete a job gets damaged or stolen and you have to down tools while it’s fixed (or worse, you can’t afford to replace it) it could put a dent in your business income and reputation. Construction insurance can cover you for speedy replacement or repairs so you can get back to work quickly and not fall behind on any projects.
What does construction insurance include?
Construction insurance can be tailored to be more or less comprehensive, depending on the nature of your work. It normally includes liability cover to protect your business against claims for injury or damage caused by the work you’re doing.
The main types of liability insurance are:
Public liability insurance: this covers you for legal, medical or compensation costs if someone is injured or their property damaged as a result of your work.
Although it’s not a legal requirement, customers will often insist you have public liability insurance in place before you carry out any work for them.
Employers’ liability insurance: this is a legal requirement if you employ anyone, even if it’s just one person. It can protect you against claims by an employee who suffers an injury or falls ill as a result of working for you. The only possible exception is for companies who only employ immediate family members. However, limited companies with multiple directors are always legally required to have employers' liability insurance.
What other types of cover could construction insurance include?
This really depends on how comprehensive you need your insurance to be. Think carefully about the risks your construction firm faces and how construction insurance could protect you. You might want to consider:
Contractors’ all risks insurance (CAR): this could cover you for damage to the structure you’re currently working on and other risks related to the construction of a building project. For example, if a flood damages an extension you’re building. It may also protect temporary buildings and hire equipment. CAR cover is useful if you’re a contractor working on a building project where other parties are involved. This isn't normally a standard inclusion with construction insurance and you may need to speak to your insurance provider to get this type of additional cover.
Professional indemnity insurance: protects your business and reputation if someone accuses you of giving damaging professional advice.
Business interruption insurance: can cover loss of income if your building business is unable to operate for a period of time. For example, if a project is put on hold because of a flood or fire, or equipment breakdowns mean you can’t work.
Tool and equipment cover: this provides cover for the cost of replacing or repairing essential tools and equipment if they’re damaged, lost or stolen.
How can I compare construction insurance quotes?
It’s easy to compare construction insurance quotes. Simply use our price comparison tool to find a range of quotes that suit the needs of your construction business.
You can tailor the online form so the search results are specific to your trade. Just fill in a few details about you and your business, and within minutes we’ll show you a list of appropriate quotes to compare. All you have to do is pick the one that best fits your needs and budget.
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FAQs
Will construction insurance include my van?
You may be able to add on cover for your van or work vehicle to your construction insurance policy. Check the details of any commercial van or work vehicle cover carefully to make sure any tools or equipment stored in the van will also be covered by your policy.
Can I insure hired tools and plant equipment?
It depends on the policy. If you regularly hire tools or equipment to complete construction work, you should look for a policy that includes hired-in plant equipment cover.
Is construction insurance a legal requirement in the UK?
If you employ any staff at your building firm (who aren't immediate family), you are legally required to take out employer’s liability insurance. If you're a limited company who employs multiple directors, you're always legally required to have employer’s liability insurance.
It's also worth knowing that, while not a legal requirement, you may find that some customers will refuse to work with you if you don’t have public liability insurance.
What trades are covered under construction insurance?
Compare the Market can help you compare business insurance for over a thousand trades and professions, from architects and builders to plasterers, plumbers and roofers. To compare quotes, we’ll ask you some questions about your business, any employees you have and what cover you’d like to include.
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With over 10 years’ experience writing, editing and managing content, Emma has written and edited for some of Australia’s leading financial comparison brands, including Savings.com.au, Your Investment Property Magazine, and Your Mortgage.
Stephen Maunder is an experienced personal finance editor, having spent more than a decade working for consumer print and online titles. He won several industry awards for his personal finance features at Which?, before becoming Deputy Editor at Compare the Market.
Amy helps make sure you get the best value when choosing insurance. Thanks to more than four years’ experience at Compare the Market, she understands what people look for, working closely with insurance providers to offer you deals and services that are fair, easy to understand and right for your needs.
Our content is written by a Compare the Market expert, backed by data and enhanced by technology. Find out how we ensure accuracy and quality in our Editorial Guidelines.
