What is Contractors Insurance?

Contractors insurance is a flexible comprehensive package designed to safeguard your business from a wide range of potential risks. It can cover everything from the value of your contract works in progress to liability insurance for employees and members of the public.

What can be included under a Contractors Insurance Policy?

A Contractors Insurance policy is an annually renewable policy for your contracting business which works at multiple contract sites throughout a year. Cover can include:

• Public Liability Insurance: Protects you against claims for injury or property damage caused to third parties, including bona-fide sub-contractors. Indemnity Limits available for £1m, although £5m is most commonly purchased and often more appropriate.
• Employers’ Liability Insurance: Covers claims from employees and persons under your supervision and control for injuries sustained at work, including labour only sub-contractors.
• Contract Works Insurance: Provides cover for physical damage to your work and that of subcontractors, for instance the contract value of an extension, from commencement to completion. Contract Works cover means in the event of theft of materials intended for that site, or damage to the works before practical completion has been achieved, your insurer will put you client back into the position you were in immediately before the loss.
• Plant Insurance: Can cover both own plant and hired in plant (often must be hired under Contractors Plant Association Hiring Conditions), as well as employees’ tools.
• Legal Expenses: A good legal expenses policy can extend to cover construction contract disputes.

What about Professional Indemnity Insurance?

Professional Indemnity Insurance is a key requirement for the majority of contractors, covering financial loss caused to third parties as a result of errors and omissions in the design and build process. The cover is is typically insured as a standalone policy, under a specialist Design & Construct Policy Wording. Even contractors who are not carrying out designs themselves, often have a professional indemnity exposure, as demonstrated below:

A Contractors Duty to Warn

As a specialist contractor, by law, you have a responsibility to highlight defects in designs you follow. Similarly, you also must identify any dangerous design aspects of the works you are constructing for a client.

Defence Costs

When something goes wrong on a project, typically there are many different contractors and specialist sub-contractors involved. Therefore, whilst the responsibility for the loss is investigated, it is common for all parties to named by the claimant as defendants. As a result, you will need to arrange legal representation, which is covered under a professional indemnity policy. It is not uncommon for defence costs alone to reach well above six figures!

Contingent Design & Build

Where you subcontract the design work to other professionals, you are still likely to have a professional indemnity risk. Often you will have taken on primary contractual responsibility for the design, meaning you still have a contingent exposure. Professionals such as architects and engineers should carry their own insurances, but occasionally these fail. For instance, once a sub-contractor who has carried out the design goes bankrupt the insurance typically also ceases. This means the professional indemnity exposure now rests with you.

Temporary Works

Temporary works such as formwork, scaffolding, access roads, perimeter fencing, storage facilities are often part and parcel of a contract, and despite being temporary, are still classified as design exposures. Some are solely left to the contractor to arrange on site. When the design for temporary works is wrong it can lead to significant expense and consequential losses.

Design Alterations

Any firm involved in building anything will nearly always need to ‘tweak’ the plans a little in order to make them work, sometimes referred to as ‘buildability’. The problem is that a small alteration could have a much larger knock-on effect, causing a real problem later in the job. If plans are altered on site, there is a real professional indemnity exposure.

Inappropriate Use of Materials by Contractors

Contractors may inadvertently utilise materials that do not meet the specifications and have not been approved. This can be very expensive to replace further down the line if the materials prove not to be fit for the purpose intended.

Design Checking Services

Often contractors, formally or informally, double check designs to ensure they work. Failure to carry out checks, or failure to identify issues, can lead to a claim, or at least a contribution towards the overall liability.

What Other Insurances Are Required by Contractors?

We are able to place the entire Insurance portfolio for Contractors including the following classes of cover:

• Directors’ and Officers’ Liability Insurance
• Motor Fleet Insurance
• Office Insurance

Why Choose Daines Kapp for your Contractors Insurance?

The construction industry is diverse, with projects ranging from small-scale renovations to large-scale developments. That’s why it’s crucial to have insurance tailored to your specific needs. Our experienced brokers can assess your business and recommend the right coverage. We understand the complexities of the construction industry and can help you navigate the insurance landscape.

We work with a range of contractors, from main contractors, sub-contractors, specialist trade contractors as well as property professions, so you can rely on us to find the most appropriate cover for you.

Contact us today to discuss your insurance requirements with one of our expert brokers.