Insurance is one of the foundations of a well-run business – and builders are no exception. In fact, given the sometimes hazardous nature of the work, dedicated builders' insurance, including public liability insurance, is absolutely vital. And if you have employees, the law requires you to have employers’ liability insurance.
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What does builders' insurance cover?
Builders' insurance policies offer a menu of covers from which you can choose. This might include:
Builders' Public Liability. Public liability cover for builders protects against injury or death of third party persons, or damage to third party property, from incidents arising as a result of your business activities. For example, if a pedestrian was to be hit by masonry or a dropped tool or piece of equipment when passing a site at which you were working, you might be held liable for damages, compensation and legal fees. The same would apply if the items hit a car or damaged another property.
Another example might be damage or injury caused by collapsed scaffolding or by a structural defect for which you could be held liable.
Employers' Liability. As an employer you are responsible for the health and safety of your employees while they are at work. Staff may be injured at work or they, or your former employees, may become ill as a result of their work while in your employment. They might try to claim compensation from you if they believe you are responsible. The Employers’ Liability (Compulsory Insurance) Act 1969 ensures that you have at least a minimum level of insurance cover against any such claims.
Injuries and illness relating to motor accidents that occur while your employees are working for you may be covered separately by your motor insurance.
Remember, even with employers' liability cover in place, you have legal responsibilities to protect the health and safety of your employees. If your insurer believes that you have failed to meet your legal responsibilities for the health and safety of your employees and that this has led to the claim, the policy may enable the insurer to sue you to reclaim the cost of the compensation.
The minimum legal requirement for employers' liability cover is £5 million, although most policies provide at least £10 million. You must display a copy of your certificate of insurance where your employees can easily read it. You can be fined up to £2500 for any day which you are without suitable insurance. If you do not display the certificate of insurance or refuse to make it available to HSE inspectors when they ask, you can be fined up to £1000.
You may not need cover if all your employees are closely related to you in a family business. This exemption does not apply to family businesses which are incorporated as limited companies.
You can find out more about employers liability cover from the Health and Safety Executive: www.hse.gov.uk
Buildings Cover. Protects your business premises against perils such as weather damage and flooding. Business building insurance cover can also sometimes include business interruption insurance
Business / Office Equipment. Covers business equipment whether it is lost, stolen or accidentally damaged. You may need additional cover if you take equipment overseas. You should also check whether mobile equipment, such as laptops and phones, are covered outside the premises.
Tools. Covers hand and power tools in the event of loss, theft or accidental damage. You can also choose to include tools left in your vehicle overnight.
Own Plant. Provides cover for accidental loss of, or damage to, an item of your plant.
Hired-in Plant. Provides cover for your legal liability under the terms of your hiring agreement to pay compensation for damage to hired-in plant.
Stock. Provides cover for stock, materials in trade and customers goods for which you are responsible.
Do I need builders insurance if I'm contracting/sub-contracting?
If you, as a contractor, supervise self-employed individuals or other small firms who also use your materials and/or equipment, they are covered by your public liability insurance. If you sub-contract to individuals or firms that work without supervision using their own materials and/or equipment, they will need their own cover. You should ask to see certification.
If you sub-contract work on a supervised basis, you should be covered under the contractor’s policy. Equally, if you are unsupervised, you should have appropriate cover of your own.
As a contractor working on site, contract conditions may make you responsible for the works and materials whilst on site. Cover can be provided up to around £500,000 depending on the nature of your contracts.
Cover for vehicles
As a builder, you may have one or more vans or trucks that are used to carry equipment and materials. These vehicles will obviously need their own commercial vehicles insurance cover. If you have three or more vehicles you might be better off with a fleet policy.
Where to buy builders' insurance cover
You can use MoneySupermarket.com to help you compare quotes from a range of specialist insurance companies. This will ensure you get the best quote for the protection your business requires.
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