Builder Insurance Guide — What Your Contractor Must Have Before Starting Work

Public liability (PL) insurance covers the contractor's legal liability for damage or injury caused to third parties in the course of their work. 'Third parties' include you (the client), your neighbours, passers-by, and the general public.

For example: a scaffold falls and damages the neighbour's car. A tile slips from a roof and injures a pedestrian. The contractor's team breaks a water pipe and floods the adjacent property. All of these would be covered by public liability insurance.

For residential construction in London, the minimum level of PL cover is £2 million. Most reputable builders carry £5 million or £10 million. Always ask to see the current insurance certificate — not a verbal assurance. Check the policy start and expiry dates and the level of cover.

Employer's liability (EL) insurance is legally required under the Employers' Liability (Compulsory Insurance) Act 1969 for any business that employs workers (including subcontractors in some cases). It covers the employer's liability if an employee is injured or becomes ill as a result of their work.

The minimum level required by law is £5 million, but most insurers offer £10 million as standard. A contractor who employs workers on your site without EL insurance is in breach of the law.

Be aware: some contractors work with self-employed individuals who claim not to be employees. If HMRC later determines that those individuals were employees (based on their working arrangements), the EL obligation falls on the contractor.

Contract works insurance (also called Contractors All Risk or CAR insurance) covers loss or damage to the works themselves during the construction period. For example: a fire damages a half-built extension. A storm collapses a partially constructed loft dormer. Vandals damage the shell of the building before it is weathertight.

Without contract works insurance, the cost of rebuilding damaged works falls on either the contractor (if they caused the damage) or on you (if the damage results from an act of God or third-party vandalism).

Contract works insurance is not always standard practice for smaller contractors. Ask specifically whether they carry it.

Professional indemnity (PI) insurance covers claims arising from negligent professional advice, design errors, or specification mistakes. It is typically held by architects, structural engineers, project managers, and design-and-build contractors.

If an architect produces drawings with a structural error that causes problems on site, PI insurance covers the claim against the architect. If a contractor makes a design decision that causes a defect, their PI insurance covers the resulting claim.

PI insurance is not universally required of all building contractors, but any contractor providing design services (including design-and-build firms like RCB) should carry it.

If your contractor is uninsured and causes damage to a neighbouring property, you may find yourself liable — because the work was being done on your instruction on your property. If a worker is injured on your uninsured contractor's site, and the contractor is dissolved or bankrupt, claims can fall back on you as the project client.

This is not a theoretical risk. It happens. Always obtain and verify insurance certificates before work starts.

Yes. You should inform your buildings insurer before significant construction work begins on your property. Most buildings insurance policies include a clause that requires you to notify the insurer of any material change — and construction work is a material change. Failure to notify can invalidate your policy. Your insurer may:

• •Require an increased premium during the construction period
• •Place a condition on the policy during construction
• •Confirm the policy covers the build period (less common)

Some insurers offer 'construction phase' endorsements for a premium.