What insurance does a UK contractor need?

If you work in the construction industry as a contractor, it’s important to make sure you have the right insurance. This FAQ explains what you need to know about the insurance a UK-based contractor will need to operate correctly.

What are the legal insurance requirements for UK contractors?

You must have employers’ liability insurance if you employ anyone. This protects you and your business if an employee or former employee suffers an injury or illness as a result of working for you. You will need a minimum of £5 million in cover.

Employers’ liability covers a wide range of situations and workers. It’s important to understand that the term ‘employee’ includes trainees, friends helping for free, part-time workers, and even some sub-contractors you may work with.

If you don’t have employers’ liability insurance when you should, you can be fined up to £2,500 per day.

If you are in any doubt, check with your insurer.

What are the contractual insurance requirements for UK contractors?

Your contractual requirements will vary depending on the specifics of each contract. However, it is not uncommon for large businesses and public sector organisations to insist you have public liability insurance as part of your contract.

Public liability insurance is designed to protect you and your business should something you do (or fail to do) injure members of the public or clients, or end up causing damage to property.

You could lose out on contracts if you don’t have public liability insurance. Your professional body may also insist you have it to be a member.

What other forms of insurance do UK contractors need?

This may depend on the nature of your business. However, you should always consider insurance for your tools in case they are lost or stolen. Being insured allows you to replace them quickly and get back to work.

You may also need professional indemnity insurance. This protects you and your business if, as part of your work, you provide advice to a client which turns out to be wrong and ends up causing them a financial loss. The advice could be about plans, design, or specifications.

There may be other types of insurance you find helpful, such as contract works cover to protect ongoing projects that may be subjected to damage or vandalism. It is worth speaking to an insurance company so you can find the right type of cover for your business.