What insurance should a builder have?
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Whether you’re planning on starting your own building or construction company in the near future, or you’re considering setting yourself up as a contractor now that you have some experience under your belt, having the right builders’ insurance in place before you start is an absolute must.
Simply put, not only does having the right builders’ insurance at your disposal mean you’ll be covered against any and all eventualities, but it proves to your customers that you’re a tradesperson who takes site safety seriously.
Of course, if you’ve never had to invest in insurance before, you might not be sure which type of insurance is right for your business. After all, what insurance should a builder have when starting out? And what are some of the more niche insurance areas you might want to look at?
Well, to help shed some light on this topic, we’ve broken down the key types of liability insurance for builders you should have in place before you start work, as well as insight into the additional forms of builder’s insurance we’d recommend investing in.
What does builders' insurance cover?
At its core, builders’ insurance is there to cover your business against any potential negative outcomes that may impact your finances during your business’s lifespan, typically as a result of one or more of the following:
- First or third-party injury
- Public property damage
- Theft
- Legal expenses
However, it’s also important to note that there is no single builders’ insurance policy that you can take out. Instead, you’ll need to pick and choose from several separate policy options that cover various areas of work in order to fully insulate yourself and your business against the financial impact of handling these worst-case scenarios.
What insurance does a builder need?
Generally speaking, if you want to put yourself in the best position possible to operate as an independent builder or construction business owner, we recommend investing in the following core insurance areas as soon as possible:
- Employer’s liability – a legal requirement for any business owner with employees, employer’s liability insurance will cover you in the event that one or more of your team members is injured while working for you.
- Public liability – another staple of all trades, public liability insurance protects your business against accidental public injury and property damage as a result of your work.
- Personal accident cover – an insurance policy that’s essential for solo traders, personal accident cover is a must in case you’re injured on the job and can’t work for a prolonged period of time.
- Professional indemnity cover – a sometimes forgotten area of trader insurance, professional indemnity cover will shield you against any claims that accuse you of carrying out negligent work or providing negligent advice to customers.
Naturally, this is just a surface-level look at what each of these insurance areas can cover, and you should absolutely do your research on them to get a better understanding of their specifics.
What other types of insurance should a builder have?
While the four insurance areas we’ve outlined above are non-negotiables for any trade business, any self-respecting builder who’s interested in fully shielding their business against all outcomes should look to invest in the following insurance policies as well:
- Tool insurance – a simple insurance option that can save your business in more ways than one, tool insurance will cover you against tool theft both on and off your work sites, giving you the funds you need to replace them as soon as possible and get back to work.
- Vehicle cover – another crucial insurance type to consider, vehicle cover will ensure that you can repair or replace your work vehicles if they’re ever damaged or stolen.
- Plant insurance – a hybrid of vehicle and tool insurance, plant insurance will protect you in the event that any hired or owned plant vehicles are damaged or stolen from your place of work.
- Contract works protection – a niche form of builders’ insurance, but one that you’ll be glad to have should you ever need it. Contract works protection protects you against damage and destruction to your work from a third-party or natural disaster, such as a storm or flooding.
Non-insurance cover to consider
Alongside general business insurance and specific cover options, as a builder, there are a couple of other non-insurance-related programs you’ll definitely want to consider before you start actively trading:
- CSCS Cards – a legal requirement for any builder wanting to work on a construction site, getting hold of the right CSCS cards early on will make it far easier for you to find new work.
- Competent person schemes – although they’re not a legal requirement, joining a competent person scheme is a fantastic way to prove to customers that you know what you’re doing and that your work can be trusted to adhere to building regulations.
- Trade associations – similar to competent person schemes, trade associations can further bolster the professional image of your business by providing you with additional accreditations that prove you’re a skilled tradesperson who knows what they’re doing.
Why is liability insurance for builders so important?
As we mentioned right at the start, the main reason why you want liability insurance for builders is to protect your business finances and reputation in the event of unforeseen circumstances costing you money.
However, the honest truth is that builders are just expected to have insurance in place before they start trading. All reputable competent person schemes require traders to have at least employer’s and public liability insurance before joining, and practically all local authorities will want a certain minimum cover in place before you can start working in public spaces.
In other words, without the right liability insurance as a builder, you’ll be missing out on many lucrative work opportunities.
How much does builders’ insurance cost?
Working out the cost of builders’ insurance for your business very much depends on several key factors, including all of the following:
- Your required cover level.
- Any additional policy features you choose to purchase.
- Project workloads and timelines.
- Project work locations.
- Any previous claims you’ve made as a business.
Naturally, this makes going through an insurance broker essential to ensure you’re getting the best deal possible for your business. You should also obtain multiple quotes for insurance before settling on which policies to commit to.
Enhance your business reputation with Which?
Hopefully you now have a much better idea of the types of insurance a builder should have, as well as insights into why it’s so important to sort liability insurance for builders in the first place.
Having suitable insurance in place is just one way you can increase customer confidence in your business. But if you want to go one step further, then you should consider becoming a Which? Trusted Trader.
Once you’ve been vetted by our team to make sure you meet our rigorous standards, you’ll be given your own business page to display previous examples of your work and customer reviews, as well as a dedicated account manager to help you keep track of everything.
