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What insurance should a builder have?

10 November 2023

If you are a builder, it is important that you consider which builders insurance, whether you are a self-employed sole trader or under contract as a freelancer.

What types of builders’ insurance are there?

There are a few types of insurance to consider. Perhaps the most common is public liability insurance. This provides cover if something a builder does (or fails to do) causes damage to property or injures someone other than themself.

Particularly for larger projects, builders should also consider contract works insurance. This covers damage, loss, and theft that occurs on-site while a job is in progress. For example, if building work is damaged overnight by flooding, the cost of making it right will be covered.

Employers’ liability covers employees’ claims for illness or injury

What other insurance should a builder consider?

Professional indemnity insurance

Professional indemnity cover is an important consideration if, as part of their work, a builder offers professional advice. For a builder, this could mean giving advice on specifications or design.

If that advice is negligent, causing a client a financial loss, their professional indemnity insurance will cover the cost of any subsequent claim and legal fees.

Tools insurance

All builders should insure their tools so they can be replaced quickly if they are damaged or stolen. Being able to replace tools and get back to work means current jobs won’t have to be abandoned, risking breach of contract. It also means new jobs can start without delay.

Do builders need employers’ liability insurance?

If a builder employs anyone, they will need employers’ liability insurance, even if they are only employing one person or part-time workers. This also applies to apprentices and some sub-contractors. It is legally required if you employ anyone.

Employers’ liability provides cover for claims from current or former employees who suffer injury or illness as a result of their work. Punishment for not having it is a fine: up to £2,500 per day where cover was applicable.

If a builder provides professional advice, they should have professional indemnity cover

Who is responsible for getting builders’ insurance?

This depends on the project and the type of legal relationship between a builder and the key project stakeholder(s). This could be reflective of one of the following situations:

A client engaging a builder to work on their home or domestic project

In these circumstances, the builder is responsible for having the right insurance.

The client should check they are insured and ask to see documentation (insurance certificates). However, the builder is not legally obliged to be insured, although they may be required to prove their insurance status as a term of the contract with the client.

A small business employing a builder to work as part of their team

As an employer, it is the employer’s responsibility to make sure the builder is insured as part of the business’ insurance. That includes having all the above types of insurance in place.

A builder working for a contractor or sub-contractor

This can be a grey area. It will be important to clarify the employment status of the builder to determine whether they count as an ‘employee’. This may mean seeking confirmation from an insurer or company accountant.

Employers’ liability is a requirement for all employees and, in some cases, sub-contractors if they are deemed to be an ‘employee’ for insurance purposes.

If the builder is a genuine sub-contractor, they will use their own tools, materials, and usually work without the need of instruction with limited supervision. They will typically:

  • work their own hours
  • invoice for work
  • have other clients 

In these circumstances, it is the builder’s responsibility to arrange insurance, including employers’ liability if appropriate.

A self-employed contractor may have to arrange their own insurance

Obtaining reliable builders’ insurance cover

Trade Direct Insurance specialises in the provision of insurance for the construction industry, including contractors, the self-employed and small businesses.

With more than 40 years’ experience insuring tradespeople, we understand the risks involved in the building trade, and how best to provide adequate protection for builders and businesses employing them.

Whether you need information on a policy, help understanding a contractor’s employment status, or just general advice, we're always happy to help.

More information on our range of builders’ insurance policies, get in touch with Trade Direct Insurance today. Call us on 0800 0280 380 email: enquiries@tradedirectinsurance.co.uk or use our online form for a quote.

Trade Direct is authorised and regulated by the Financial Conduct Authority. The company is a leading UK independent broker providing a wide range of policies to tradesmen and construction workers.

This note is not intended to give legal or financial advice, and, accordingly, it should not be relied upon for such or regarded as a comprehensive statement of the law and/or market practice in this area. In preparing this note we have relied on information sourced from third parties and we make no claims as to the completeness or accuracy of the information contained herein. You should not act upon information in this bulletin nor determine not to act, without first seeking specific legal and/or specialist advice. We and our officers, employees or agents shall not be responsible for any loss whatsoever arising from the recipient’s reliance upon any information we provide herein and exclude liability for the content to fullest extent permitted by law.

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