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There’s no denying that construction work is full of risks. One brick out of place and everything you’ve worked on can come tumbling down.
That’s why it’s a good idea to consider construction insurance, which can cover you financially if there’s an accident at work.
If nothing else, you should be able to sleep a little bit more soundly at night knowing that you’re protected if your work causes injury or damage to property – and if you employ anyone, you should know that insurance is a legal obligation. Read on for all the details.
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What is construction insurance?
Construction insurance is an umbrella term used to describe a collection of insurance policies that could be relevant to the construction industry. Often, a construction insurance package can be tailored to the needs of your business with the option to pick and choose which specific insurance products you need.
Public liability insurance can be useful if there is an accident at your construction site. It can cover compensation costs awarded to a member of the public if they are injured or die, or if their property is lost or damaged, while your construction work is taking place. It’s important to note that public liability insurance won’t cover you or your employees for injuries at work – just members of the public.
If you’re injured in the workplace or elsewhere, personal accident cover could ensure that you still get an income even if you’re off work with an injury, either as a lump sum or through weekly payments.
If any of your employees were to get injured or fall ill because of the work they did for you, then your employers’ liability insurance could cover any compensation they are owed. This type of insurance is legally required as soon as you hire even a single employee, unless they are a family member or work abroad. You can be fined up to £2,500 for each day you do not have employers’ liability cover.
You’re a professional and you know your stuff – but we all make mistakes occasionally. If you gave someone advice and they lost money because they followed it, they could make a negligence claim against you. Professional indemnity insurance could cover your legal costs and any money the claimant may be awarded to compensate for their financial loss.
Contract works insurance can protect your business if your work suffers setbacks as a result of fires, floods or storms, for example. You may also be protected against vandalism and theft. If your work is delayed or needs repairing because of events outside your control, contract works insurance can pay out to get you back on track, covering the cost of labour, tools and materials.
And if you work as a contractor, you may also want to consider Contractors All Risks insurance. This package of cover will often include some or all of the following policies:
- contract works insurance
- employers’ liability insurance
- public liability insurance
- tools insurance
- plant insurance
Do I need construction insurance?
Of course, you hope nothing will ever go wrong with your business. But if it does, construction insurance may be able to protect you. Employers’ liability insurance is the only legal requirement, but you may want to consider taking out other types of insurance too.
Public liability insurance could cover the cost of compensation if a member of the public was injured as a result of your work. On the other hand, if you were injured and found yourself out of work, personal accident insurance could ensure you still had an income while you recovered. Some policies also include coverage for accidents outside the workplace.
If your tools were damaged or stolen, tools and equipment cover could pay for you to buy new tools. If there is more extensive damage to your site – say a fire ripped through the site you were working on overnight, ruining your progress on a project – it could be expensive to repair. Contract works insurance could cover the labour and materials needed to get your project back on track, without you needing to pay out for damage that wasn’t your fault.
When considering taking out an insurance policy, you should think about whether you would be able to pay for unexpected expenses, such as compensation claims and legal fees, without insurance cover.
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What does construction insurance cover?
Construction insurance isn’t one set policy but rather a name given to a group of individual policies that can be put together to fit your needs while operating within the construction sector.
With construction insurance, you can choose the most appropriate level of cover based on the risks related to your specific business. Therefore, construction insurance can usually cover as much or as little as you require.
Below, we give a rundown of what is usually covered in construction insurance packages, as well as what you may need to take out separately.
What is usually included in construction insurance?
Construction insurance can change to fit the needs of your business, but it may include:
- public liability insurance
- professional liability insurance
- employers’ liability insurance (if required)
- tools and equipment insurance
- stock and materials insurance
- personal accident cover
- contract works insurance
- Contractors All Risks insurance
What isn’t usually included in construction insurance?
To some extent, you can choose what is and isn’t included in your construction insurance, as it will depend on the policies you decide to pay for. You should consider whether you could pay out if you did not have insurance for unforeseen events, such as accidents and theft.
For example, if you accidentally damage a load-bearing wall while building an extension on a client’s house, without public liability insurance, you could bear the brunt of compensation costs if the client decided to claim you.
If you use your van to get to work sites, you will need to take out separate commercial van insurance. Standard vehicle insurance is not appropriate if you use your vehicle for business purposes. You can usually take out van insurance as a standalone policy. This is often not included as part of construction insurance and you would need to take this out separately through a car insurance provider.
There may also be exceptions to your cover. For example, if your tools were stolen, you may not be able to claim if your tools were in an unsecured place at the time of theft.
It is important to check that you have an appropriate level of coverage for your business. For instance, if you undervalued your tools when you took out your policy your insurer may not pay out as much as you expect in the event of a claim.
You should always keep to the terms of your insurance policy to make sure you stay covered.
» MORE: Do I need business insurance?
How much does construction insurance cost?
The cost of construction insurance varies depending on what coverage you wish to include for your business. Factors that may influence the cost of your insurance include:
- the level of cover you want
- how many staff you have (if any)
- your claims history
- how much your contracts are worth
- the type of work you do
- the risks associated with your business, such as working at height
How to choose the best construction insurance policy for you
To find the best construction insurance for your business, you should think about the risks associated with your work and consider the level of insurance you may need to cover these.
If you are employed you should check to see what insurance is already provided by your employer as a first step in reviewing your insurance needs.
Construction Insurance FAQs
Construction insurance can protect you and your business if things go wrong.
If a client was injured while you were working at their house, you could be liable for their compensation. Public liability insurance could cover the cost of this for you. It could also cover any compensation owed if you were to damage their property while working.
You should consider whether you could afford the cost of an accident or mishap upfront without insurance coverage – for example, if your tools were stolen and you had to pay out unexpectedly to replace them.
Construction liability insurance isn’t a specific product, but rather another term used for insurance you may need as a construction worker. Your business may have liability for injuries, death and loss or damage that happen as a result of your construction work on site. In this case, you could also be liable to pay out compensation to those affected.
Public liability insurance is the building block of many construction insurance packages. It covers incidents, such as injury and property damage, that may happen because of your construction work, so your business is protected financially in the event of an accident.
It’s important to note that public liability insurance covers the general public – for example, a client visiting the construction site – but it does not cover claims made by you or your employees. This would be covered by personal accident insurance and employer’s liability insurance, respectively.
Contractors All Risk insurance usually comes as a package made up of various policies related to contract work. It can protect you financially if there is an accident at work and someone is injured, or if you or an employee cause damage to third party property.
You may consider taking out Contractors All Risk insurance, so you have various types of cover under the same policy. You may be able to add extra policies if you need to.
It’s important to find the appropriate level of cover for your business, so you should assess whether this type of insurance fits your needs.
Unless you employ someone (in which case you require employer’s liability insurance), you do not legally need any type of liability insurance. However, it is worth considering public liability insurance as part of your construction insurance package.
Public liability insurance can cover the cost of compensation if someone is injured, or dies, on site as a result of your business activities. Similarly, it can pay out if someone’s property is damaged or lost because of your work.
As a contractor, you could be liable to pay this compensation out of your own pocket if you are not covered by a public liability insurance policy.
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