What public liability insurance do I need to be a contractor?

What are the legal requirements?  

Legally, you are required to have employers’ liability insurance if you employ anyone. That can include volunteers and part-time workers. However, you are not legally required to have public liability insurance.  

That may seem a little strange. After all, public liability insurance is one of the most important forms of insurance protection.  

It will cover you in the event that a third party or member of the public brings a claim against you or your business for damages or personal injury caused by your work.  

Successful claims can quickly add up to thousands or even hundreds of thousands of pounds.  

What are the contractual requirements?  

While public liability insurance may not be a legal requirement, it is nearly always a contractual requirement in the construction industry.  

Most reputable businesses will insist you have public liability insurance in place before they enter into a contract with you. You will also need to be able to show them a copy of your insurance certificate.  

If you had public liability insurance prior to the contract, and either didn’t renew it or cancelled it for some reason, that would put you in breach of contract.  

It would be reason enough for the client to withdraw from the contract. In a worst-case scenario, they might sue you for damages, due to you breaking the terms of the contract.  

When it comes to your contracts, public liability insurance is essential. 

How much public liability insurance do I need?  

The amount of cover you need will often depend on multiple factors, including the type of work you undertake.  

That said, many larger companies in the construction industry, and most public sector organisations, will require you to have cover up to at least £5 million.  

This large figure represents the maximum your insurance company will pay out on a claim. Some companies may require you to have up to £10 million in cover.  

How much is cover going to cost? 

Although public liability insurance of £5 million or £10 million may sound a lot, it doesn’t mean that the insurance premium is going to be unaffordable.  

The average cost of public liability insurance is about £120 a year. While yours may be a little more, it is normally under £500 for the year.