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A construction policy bundles the covers for building and civil engineering work. It usually protects the job in progress, your plant and tools, and claims from the public or your staff. Policies vary, so check which sections each quote includes.

Quotezone lets you request prices through a single short form, and UK providers can then get in touch. Seopa Ltd, which runs Quotezone, is FCA authorised and regulated, firm number 313860 (see About Quotezone).

What does a construction policy cover?

Most construction policies are a package. You pick the sections that match your work, and each section has its own limit and excess. Depending on the insurer, a package may include:

• Contract works: the building or structure you are working on, plus materials on site, until the job is handed over
• Public liability: claims from neighbours, passers-by or the client if your work hurts someone or damages their belongings
• Employers’ liability: claims from staff hurt or made unwell by the work they do for you
• Own plant: diggers, dumpers, mixers, scaffolding and other equipment you own
• Hired-in plant: machinery you hire for a job, if the hire terms make you responsible for it
• Tools and site huts: hand and power tools, temporary buildings and site offices

Some providers can add legal expenses, or professional indemnity if you design as well as build. Read the policy schedule to see what is included and what is left out.

Contractors’ all risks and contract works cover

Contractors’ all risks insurance, often called contract works insurance, protects the job itself while it is being built. It can pay to repair or redo work damaged by events such as fire, flood, storm, theft or vandalism.

Cover usually runs from the start of work until the job is finished and handed over. After that, the client normally insures the finished building. Check the policy for any limit on materials kept off site or in transit.

Your building contract may say whether you or the client must insure the works, and for how much. Read the insurance clauses before you sign. If the contract names other parties, tell your insurer, as some policies can note their interest.

Damage to existing buildings

Contract works cover is usually for the new work. Damage to a client’s existing building while you work on it may fall under public liability, or need extra cover. Ask each provider how they treat it before you start a renovation or extension.

Public and employers’ liability on a building site

Employers’ liability is the cover the law requires most firms with staff to hold. GOV.UK says you must have it as soon as you become an employer, with cover of at least £5 million from an authorised insurer (GOV.UK).

Going without it can mean a fine of £2,500 for each day without proper cover. You must also display your certificate where staff can see it, or risk a £1,000 fine. There is an exception if you only employ close family members, as listed by GOV.UK. More on employers’ liability cover.

The law does not make public liability compulsory. Even so, business.gov.uk says almost all businesses need this cover, and lists clients who require it in a contract as a reason to buy it (business.gov.uk).

Councils can ask for it too. In England and Wales, a licence to dig up or occupy a road for building work needs a public liability insurance certificate (GOV.UK). Our public liability insurance page explains limits and claims.

The safety rules point the same way. Under CDM 2015, contractors must plan their work around the risks to anyone affected, including members of the public. They must also take reasonable steps to prevent unauthorised access before work starts (HSE).

Who needs cover for construction work?

HSE describes a contractor as anyone who directly employs or engages construction workers or manages construction work. That includes sub-contractors and self-employed workers (HSE). Firms that often look for a construction policy include:

• Main contractors and principal contractors running sites with several trades
• Groundworkers, civil engineering firms and demolition contractors
• Developers and businesses building or refurbishing their own premises
• Subcontractors whose main contractor asks them to hold their own cover
• Small building firms taking on extensions, conversions and refurbishments

On a job for a homeowner, the client’s legal duties under CDM 2015 normally pass to the contractor. Where there is more than one contractor, they pass to the principal contractor (HSE).

Sole traders and small building firms

If you work on your own or with a small team, our page on insurance for builders covers public liability, tools and other cover for building trades.

Building your own home?

Self-build projects are usually insured in a different way. Our self-build house insurance guide explains site cover for people building their own home.

Annual cover or single-project cover

Contractors who run several jobs a year often choose annual cover. It can protect each contract you start during the year, up to a maximum contract value set in the policy.

Single-project cover protects one named site for the length of the build. It can suit a one-off development, or a contract bigger than your annual policy allows.

Whichever you choose, check the sum insured covers the full cost of rebuilding the works, including materials and labour.

Plant, tools and vehicles

Plant cover can protect diggers, dumpers, mixers and other machinery against theft or damage. If you hire machines in, the hire agreement may make you responsible for them while they are with you, so check it before you sign.

Our pages on digger insurance and JCB insurance cover machines that also travel on the road.

Tool cover can pay out if tools are stolen from a site, a locked van or a store. Insurers often set conditions, such as keeping tools out of sight overnight, so read the security terms.

Vans and pick-ups need their own motor policy. GOV.UK says you must have motor insurance to drive a vehicle on UK roads (GOV.UK), and a construction policy does not usually replace it. You can compare van insurance separately.

What affects the price of construction cover?

Prices depend on the work you do and the limits you choose. Insurers usually look at:

• The type of work and the trades on site
• Your turnover and your largest contract value
• How many employees and subcontractors you have
• The liability limits your contracts require
• The value of your plant, tools and site huts
• Site security and how you store materials
• Any claims in recent years
• Work at height, below ground or with heat, which some insurers treat as higher risk

Insurance Premium Tax is added to most general insurance. HMRC sets the standard rate at 12%, the rate in force since 1 June 2017 (HMRC).

An illustrative example

As an illustration, a firm with four employees takes on a two-storey extension for a homeowner. It hires a mini digger for the groundworks and keeps materials on site.

Employers’ liability covers the four staff, as the law requires. Public liability covers a neighbour’s car damaged by a falling scaffold board. Contract works cover protects the half-built extension if a storm damages it.

The hire agreement makes the firm responsible for the digger, so it adds hired-in plant cover. Details differ for every job, so this is an example only, not a guide to what any policy covers.

Is construction insurance a legal requirement?

Not as a single policy. The law requires employers’ liability once you have staff, plus motor insurance for any vehicle used in the business (business.gov.uk). Public liability is optional by law, but clients and councils often ask for proof of it.

Do subcontractors need their own insurance?

Often, yes. Under CDM 2015, sub-contractors and self-employed workers count as contractors, each with their own safety duties (HSE). Some main contractors ask subcontractors to show their own public liability before they start.

You might also need

Van insurance covers the vehicles you drive between sites. If you design or specify work as well as build it, construction professional indemnity insurance can cover claims about your designs.

Compare quotes for your construction business

Tell us about your firm and the projects you take on in one short form. Before you start, note your largest contract value, the limits your contracts ask for and any claims in the last five years. UK providers may then contact you with quotes to compare.

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