Construction insurance is critical due to the risky nature of construction work and because certain construction insurance elements will be required by the law – and by your clients. In fact, commercial construction insurance requirements are a feature of most client contracts before work can begin.
Accidents of all kinds can occur on work sites. In fact, construction work is one of the riskiest types of jobs out there. The HSE reported that 61,000 construction workers suffered non-fatal injuries in 2019/20, and 40 construction workers suffered fatal injuries. Employers’ liability insurance is compulsory to protect workers and businesses in these cases.
In addition to employers’ liability, clients are likely to require that your business holds a valid public liability policy and potentially professional indemnity insurance and contract works insurance. Having these coverages in place not only protects your business in case of certain disasters, but it also makes your business look more professional. Not many clients would want to engage with a construction company without the right protections in place. And if a client doesn’t care, perhaps you wouldn’t want to work with them, anyway.
Popular types of construction insurance
Each construction business has unique insurance needs, but here are some of the more common types of insurance for those in the construction trades. Brief definitions are included, as well.
Public Liability Insurance. Covers legal expenses and compensation due for injury or damage claims against your business.
Employers’ Liability Insurance. Required by law if you have employees to protect against employee injury or illness claims.
Professional Indemnity Insurance. In case a client claims they suffered monetary loss because your service or advice was professionally negligent.
Personal Accident Cover. Provides a financial buffer for workers unable to work due to injury or illness.
Contract Works Insurance. Covers work damaged by disasters like a fire or vandalism.
Tools and Equipment Insurance. In case construction equipment is accidentally damaged, lost or stolen.
You can often find a combination of these grouped together in a “Construction All-Risk” policy. All-Risk can be extremely useful, keeping all of your coverages under one provider, meaning you’ll always know who to contact in the event you need to make a claim. Insurers are often happy to offer discounts for larger policies too, so you might save compared to taking out individual policies from different providers, but keep in mind it is always worth shopping around to see where you can get the best deal for your business.
Do construction managers need professional liability insurance?
If you’re working in the construction industry and providing your advice, designs or guidance, then you should absolutely consider buying professional indemnity insurance. Here are some examples of when a construction manager might need professional indemnity cover:
- You’ve designed, supplied and constructed the frame for a new build home; however, upon completion, and your customer feels it is unsafe. They get a second opinion, which agrees, and sue you to cover the costs of having the design redone and the work restarted.
- You’ve been hired to support the construction of a new apartment block. You recommend a design of a security system that is found to be ineffective for the circumstances, so the owners sue you to cover the costs of having a new system put in place.
Given the high cost of construction, it can quickly become expensive to provide compensation and cover your legal expenses in cases of professional negligence. Professional indemnity will cover both (up to the policy limits), so you won’t have to worry about finances if something does go wrong.
Do construction workers need business use car insurance?
If a construction worker is using their personal car to drive to work, they probably need business use car insurance. While most people can simply declare “commuting” to their car insurance company to cover driving to and from work, this won’t usually work for a construction worker. Why? Well, commuting refers to driving between home and one place of work. It must always be the same place of work. So commuting will work for someone driving back and forth from their fixed place of work and home.
But construction workers don’t usually have a fixed place of work. They’ll most likely use their cars to drive between multiple worksites or even run work-related errands with their car. If so, they must declare “business use” to their car insurance provider.
This might increase the premium you need to pay because business use typically costs a bit more than just social, domestic and pleasure car insurance. But you must declare business use and pay for it if this is the type of driving you to do. Failing to do so means you’d be driving uninsured, which is against the law.