What is public liability insurance for builders?

What insurance do builders need?  

The most common types of insurance are:

  • employers’ insurance
  • public liability insurance
  • professional indemnity insurance.

Despite being different, they are often lumped together and called ‘business insurance’.

Employers’ liability covers injury caused to your employees.

Professional indemnity covers damage caused because of advice you give.

…And what is ‘public liability insurance’?

It protects you and your business if a member of the public succeeds in bringing a claim against you for damage or injury caused by your work activities.

Such claims are relatively common. They could include anything: from paint spilled on a client’s computer to someone being hit by falling debris.

If the person who suffers injury or damage is successful in bringing a claim against you, they can request that you pay costs linked to that damage or injury. This could include lost earnings (if they are no longer able to work), hospital expenses, and legal fees.

It’s not hard to see how these costs can quickly add up. A claim can end up costing businesses hundreds of thousands of pounds.

If you have insurance, it will cover the costs up to the limit of the policy. This will normally range between £1 million and £10 million.

As a builder, must I have insurance?

You are not legally required to have public liability insurance. However, there are a number or organisations in the construction industry who will not enter into a contract with a builder or building firm unless they have public liability insurance of at least £5 million.

If you do not have cover, you could be in breach of contract or may not get a contract.

Your trade association, and some public sector organisations, may also require you to be insured as part of their terms and conditions of membership.

Finally, you need to consider whether you would be able to pay a successful claim without insurance. Even with careful planning, and lots of attention to health and safety, accidents do happen. If you can’t pay the amount ordered, your business and livelihood could be at risk.