Written for contractor businesses with turnover of approximately £1 million to £10 million
This guide provides general UK insurance information. It is not legal, tax, health and safety or contractual advice. Insurance cover depends on the policy wording, schedule, endorsements, proposal information and circumstances of any claim. JCT and other building contracts should be reviewed by suitably qualified legal and insurance advisers before work begins.Anton Le Pore
Fortify Insurance Brokers helps established UK contractors arrange insurance for public and employers’ liability, contract works, plant, tools, professional indemnity and contractual requirements. The guide is aimed mainly at firms with turnover from approximately £1 million to £10 million, including general builders and specialist construction trades.
Fortify Insurance Brokers is a small, independent brokerage where Anton Le Pore works personally every day. Clients receive a direct broker relationship with time devoted to understanding the business, its contracts and its practical risk exposures.
Anton has been involved in property since a young age. His father was a portfolio landlord and owned an estate agency, and Anton managed the family letting agency between the ages of 18 and 24. He began buying rental property at 18 and has since been involved in managing, renovating and converting properties, including HMO projects.
He also spent seven years in Dubai’s high-end real estate market, where he ran his own real estate business and sold property in developments including the Burj Khalifa. This combination of property ownership, renovation experience and insurance broking shapes Fortify’s practical approach to contractor risks.
When Anton appoints contractors for his own renovation projects, one of the first checks he makes is whether suitable insurance is in place. Public liability is central, but the correct insurance programme may also need employers’ liability, contract works, plant, tools and professional indemnity cover, depending on the activities and contractual responsibilities.
Contractor insurance is often described as though it were a standard product: choose a trade, enter turnover and wages, select a liability limit and compare prices. That approach may be adequate for a very simple business, but it is not sufficient for an established contractor with employees, subcontractors, larger contracts and work at varied premises.
A business described as a builder might construct domestic extensions, refurbish occupied hospitals, convert commercial buildings, undertake structural alterations or act as a main contractor while subcontracting most of the physical work. Each presents a different risk, even if the turnover is the same.
The insurer therefore needs to understand what the contractor actually does. Relevant information may include the nature of the work, maximum contract value, types of premises, height and depth limits, use of heat, excavation, structural work, design responsibility, turnover, wages and subcontractor payments.
Anton’s Core Message
Contractor insurance should reflect the work the business actually undertakes. The trade name provides only a starting point. Turnover, wages, subcontractor arrangements, contract values, locations, heights, depths, design responsibility and contractual obligations all need to be understood before suitable cover can be arranged.
This guide is aimed principally at established small and growing contractor businesses with annual turnover of approximately £1 million to £10 million, including:
Some sections are also relevant to smaller contractors, but the guide includes issues that become particularly important as a business grows, such as subcontractor classification, design liability, JCT insurance requirements and larger contract works exposures.
Public liability is an important starting point, but it does not insure every risk faced by a contractor. It may not cover the contractor’s own work in progress, the cost of replacing hired plant, stolen tools, employee injury claims or allegations arising from design and professional advice.
Exposure | Cover commonly considered |
Injury or damage to third parties | Public liability |
Injury or disease suffered by employees | Employers’ liability |
Damage to work in progress and materials | Contract works |
Loss or damage to owned machinery | Own plant |
Liability for hired machinery | Hired-in plant |
Theft or damage to portable equipment | Tools |
Claims arising from design, specification or advice | Professional indemnity |
The correct combination depends on the business. The purpose of this guide is to explain the main covers, where misunderstandings arise and which questions should be addressed before a policy is purchased.
A good contractor insurance presentation should provide more than a broad occupation. The same label can cover businesses with very different activities and exposures.
The description of activities should cover all material work, including occasional work. A firm whose main activity is domestic building may also undertake roofing, plumbing, electrical work, groundworks or project management. If these activities are excluded from the description, the insurer may not have been given a complete picture.
The insurer may ask whether the contractor:
A builder working only on private dwellings presents a different exposure from one working in hospitals, schools, airports, data centres, industrial plants or heritage buildings. Specialist premises may involve higher property values, greater business interruption exposure, vulnerable occupants, strict permit systems or demanding contractual conditions.
Broker Insight
Two contractors may have the same trade description and turnover but require different insurers. The premises, activities and contract terms can be more important than the label used for the trade.
Annual turnover measures the overall scale of the business, while maximum contract value indicates the size of the largest individual project. Both are relevant. A contractor with £5 million turnover made up of many small jobs presents a different contract works concentration from one undertaking a single £3 million project.
The contract value should usually include the full value of the works for which the contractor is responsible, not merely the contractor’s profit or labour element. Materials supplied by the employer, professional fees and temporary works may also need consideration depending on the contract and policy.
For renovation and construction projects, a detailed schedule of works helps clarify the scope, responsibilities, sequence and values. It can assist with underwriting, project management and claim evidence.
A useful schedule may include:
Insurance should be reviewed before the contract is signed and before work starts. Contractual requirements can be difficult or expensive to satisfy retrospectively.
Public liability insurance protects a contractor against certain legal liabilities for accidental injury to third parties or accidental damage to third-party property arising from the insured business. It is one of the first covers Anton checks when appointing contractors for his own projects.
Subject to the policy wording, it may respond to claims involving:
Illustrative Scenario
A plumber accidentally damages a concealed pipe while carrying out work, causing water damage to the client’s property. Public liability may respond to the contractor’s legal liability for the resulting third-party damage, subject to the policy terms, exclusions and excess.
Public liability should not be treated as an all-purpose contractor policy. It will not normally cover:
Common limits include £2 million, £5 million and £10 million, but the appropriate limit depends on contractual requirements, client type, project size and potential severity of a claim. Local authorities, principal contractors, hospitals and larger commercial clients may specify a minimum limit.
The limit should not be selected solely because it is the cheapest option. A contractor should check each contract and framework agreement before work begins.
Roofing, plumbing, welding, cutting, grinding, soldering and other processes involving heat can create severe fire exposure. Insurers may apply hot-work conditions requiring precautions such as permits, fire watches, removal of combustible materials, suitable extinguishers and post-work inspections.
Common Mistake
A contractor may have public liability insurance but fail to comply with a hot-work endorsement. The existence of the policy does not remove the need to follow its conditions.
Many policies restrict cover for the particular part of property on which the contractor is working. The precise exclusion varies. A contractor should not assume that accidental damage to the item being repaired or installed is fully insured merely because other surrounding property may be covered.
Specialist extensions may be available for certain trades, but the wording must be reviewed carefully.
Employers’ liability insurance covers certain liabilities for injury or disease suffered by employees arising from their work. In Great Britain, most employers are legally required to hold this cover with an authorised insurer.
The requirement is based on the Employers’ Liability (Compulsory Insurance) Act 1969 and related regulations. Limited exemptions exist, so each business should confirm its position from the working arrangements and current guidance.
The answer is not determined only by the label used in an agreement. Insurers and courts may consider the practical relationship, including control, supervision, provision of tools, ability to substitute another worker and financial independence.
For insurance purposes, contractors should disclose direct employees, temporary workers, apprentices, work-experience placements and labour-only subcontractors as requested by the insurer.
Employers’ liability policies commonly provide a substantial limit, often £10 million, but the actual limit and any restrictions should be checked. Employers must also comply with requirements relating to availability or display of the insurance certificate.
Wages are a key measure of workforce exposure. Insurers may request a split by trade and category because a roofing workforce presents a different injury exposure from office-based administration staff.
The declaration should normally include the figures requested for employees and labour-only subcontractors. Bona fide subcontractor payments are often recorded separately.
Anton’s Advice
Do not reduce the wage figures simply to obtain a lower premium. If the actual workforce exposure is higher than declared, the policy may not reflect the real risk and problems can arise at audit or claim stage.
The distinction between employees, labour-only subcontractors and bona fide subcontractors is one of the most important areas in contractor insurance. It affects liability exposure, premium calculations and the information presented to insurers.
Direct employees are paid through the contractor’s payroll and work under its direction and control. Their wages should be declared in the appropriate trade categories.
Labour-only subcontractors generally provide labour and work under the contractor’s direction, often using materials, plant or tools supplied by the contractor. Insurers commonly treat them similarly to employees for employers’ liability and rating purposes, although the exact treatment depends on the circumstances and wording.
Bona fide subcontractors generally operate as independent businesses. They may control their own method of work, provide their own labour, tools and insurance, and accept responsibility for completing a defined part of the contract.
A contractor using bona fide subcontractors may be required to:
The insurer classifies a bona fide subcontractor from the practical working arrangement. A worker may invoice through a limited company while operating under close direction and using the main contractor’s equipment.
Common Mistake
Contractors sometimes place too much of the workforce cost into the bona fide subcontractor category to reduce the premium. If the working arrangement does not support that classification, the insurance presentation may be inaccurate.
Category | Examples of information |
Direct employees | Wages split by trade and manual/non-manual work |
Labour-only subcontractors | Payments split by trade and activity |
Bona fide subcontractors | Annual payments and nature of subcontracted work |
Office and management | Clerical, sales, project management and directors’ duties |
The broker should assess the current workforce and update the employee, labour-only subcontractor and bona fide subcontractor figures each year.
Contract works insurance, often included within a Contractors All Risks policy, protects the physical work in progress and associated materials against insured loss or damage during the construction period.
Public liability principally protects against liability to third parties. It does not normally insure the contractor’s own work simply because it is damaged.
Illustrative Scenario
A fire damages a partially completed extension and materials stored on site. Public liability may not respond because the loss concerns the works themselves. Contract works insurance may cover the insured physical damage, subject to the policy and contractual arrangements.
Depending on the policy and contract, cover may include:
The sum insured should reflect the maximum value at risk under any one contract, not merely the annual turnover or the amount completed at the start of the policy.
The calculation may need to include materials, labour, subcontract costs, professional fees and other amounts required by the building contract. The value should be reviewed if project sizes increase during the year.
Contract works insurance may cover the new works but not the existing building being altered. On an extension or refurbishment, the existing structure can be worth many times more than the works.
Responsibility for insuring existing structures should be agreed before work starts and aligned with the building contract. This is particularly important under JCT forms.
Contract works policies may exclude or restrict:
Anton’s Advice
Check the contract works limit against the largest project, not last year’s average job. A growing contractor can quickly outgrow an old maximum contract value.
Own plant insurance protects machinery and equipment owned by the contractor, subject to the policy. This may include excavators, dumpers, compressors, generators and access equipment.
The sum insured should reflect replacement values and include all relevant plant. Older equipment may cost more to replace than its book value suggests.
When a contractor hires machinery, the hire agreement may make the contractor responsible for loss, damage and continuing hire charges. Hired-in plant insurance can address this exposure, subject to the policy terms.
The limit should reflect the maximum total value hired at any one time. Annual hire spend provides a separate measure and may understate the equipment exposed on a single project.
If hired plant is damaged or stolen, the hire company may continue charging until the equipment is repaired, replaced or the agreement ends. Some policies include continuing hire charges within a limit; others treat them differently.
Tools insurance may cover portable tools owned by the business or employees, depending on the wording. Theft from unattended vehicles is often subject to strict conditions relating to locked vehicles, alarms, storage location, time of day and visible signs of forced entry.
Common Mistake
A tools policy may advertise overnight vehicle cover, but the endorsement can restrict where the vehicle is parked or require specific security. The schedule and wording must be read together.
Insurers may require immobilisers, tracking devices, secure compounds, key controls, plant registers and prompt reporting. High-theft items may attract specific conditions or excesses.
Professional indemnity insurance may be required where a contractor provides design, specification, advice, calculations or other professional services. It may also be required contractually even when most design work is subcontracted.
Examples include contractors who:
A contractor may assume responsibility for design through the building contract even if an architect, engineer or specialist subcontractor prepared the original design. Contract amendments can impose duties that are broader than the contractor expects.
The contractor should confirm:
Professional indemnity is usually written on a claims-made basis. Subject to the retroactive date and wording, the policy in force when the claim is made is normally the relevant policy.
Continuous cover and suitable run-off arrangements may therefore be important after a business stops providing design services or ceases trading.
Professional indemnity provides defined financial protection for covered claims. Exclusions, conditions and excesses apply, and cover may exclude deliberate acts, known circumstances, contractual guarantees or the cost of improving work beyond the required standard.
Broker Insight
A contractor does not need to employ an architect to have a design exposure. Product selection, system specification, calculations and responsibility for subcontracted design can all create professional liability.
Defective workmanship is one of the most misunderstood areas of contractor insurance. A reference to defective workmanship cover does not necessarily mean the insurer will pay the cost of redoing poor work.
The contractor is generally expected to bear the commercial cost of delivering work to the agreed standard. Insurance is not normally intended to replace the contractor’s quality-control obligations.
Some policies may cover resulting physical damage caused by defective work while excluding the cost of correcting the defective component itself.
Illustrative Scenario
A contractor incorrectly installs a pipe joint. The cost of replacing the faulty joint may be excluded, while resulting water damage to other insured property may be covered, depending on the liability and contract works wordings.
Contract works policies use different defect exclusions. Some exclude the defective part and resulting damage, while broader wordings may preserve a greater element of resulting-damage cover. The wording and scope determine the effect of a recognised defect clause.
Public liability policies may also restrict damage to the part of property being worked on. The result depends on the facts and wording, including how the damaged property is divided into parts.
Anton’s Advice
Review two separate points: cover for correcting the defective work and cover for damage caused to other property by that defect. The wording may treat these costs differently.
JCT contracts contain insurance provisions that allocate responsibility between the employer and contractor. The selected option must match the project and the insurance actually available.
The JCT 2024 forms continue to distinguish between insurance of new works and arrangements involving existing structures. The exact clause numbers and options depend on the form used, so the completed contract particulars and amendments must be reviewed.
A joint names policy recognises both parties as insureds in relation to the relevant interest. This can affect rights of recovery between the parties and must be accepted by the insurer.
Simply adding an employer as an interested party is not necessarily the same as providing the joint or composite cover required by the contract.
For a new building without existing structures, the contract may require the contractor or employer to insure the works in joint names. The policy must match the contract value, professional fees and required perils.
Refurbishment and extension projects are more complex because the contract may require insurance for both the works and the existing structures. The existing building may be insured by the employer, freeholder or another party who is not willing or able to extend the policy to include the contractor in joint names.
Resolve the insurance arrangement before the contract is executed. JCT forms provide alternative mechanisms where the standard arrangement cannot be used, and the replacement requires careful drafting and insurer agreement.
A contractor’s annual Contractors All Risks policy may be capable of meeting some contract requirements, but this should be confirmed. The employer’s interest, joint names status, project value, existing structures, professional fees and policy exclusions all need checking.
Common Mistake
Signing a JCT contract and sending the broker only the insurance page after work has started. The obligations may require changes that the current insurer cannot provide.
Bespoke amendments can materially increase the contractor’s liabilities. The fact that a contract is based on a JCT form does not mean the standard insurance allocation remains unchanged.
The contractor should obtain legal advice on the contract and insurance advice on whether the required cover is available.
On refurbishment, extension and fit-out projects, the existing building can be the largest property exposure. Contract works insurance for the new works does not automatically insure the existing structure.
The parties should establish:
A tenant employer may not control the building insurance. In a multi-occupancy building, the freeholder’s insurer may refuse joint names cover for a contractor carrying out work in one unit. Alternative contractual and insurance arrangements may be needed.
Non-negligence insurance is designed to address certain liabilities of the employer for damage to neighbouring or other property arising from specified events connected with the works, even where contractor negligence does not have to be established. It is often associated with JCT provisions historically referred to as clause 6.5.1, although numbering and requirements vary by contract form and edition.
Typical insured causes may include collapse, subsidence, heave, vibration, weakening or removal of support and lowering of groundwater, subject to the wording.
The building contract may require the contractor to arrange the policy for the employer’s benefit. The broker needs the contract details, site information, method statements, surveys, neighbouring property information and project values.
Public liability generally depends on legal liability, often involving negligence. Non-negligence cover addresses a different contractual exposure and should not be confused with ordinary liability insurance.
Broker Insight
Existing structures and non-negligence requirements should be considered at tender stage. They can affect the project price and may not be readily available after the contract has been signed.
An indemnity-to-principals extension can protect a principal or employer where the contractor is required to indemnify them and the claim falls within the policy wording. It is common in contractor liability policies, but it does not automatically accept every contractual indemnity.
The underlying claim must generally arise from the insured contractor’s activities and remain within the policy terms.
After paying a claim, an insurer may have a right to recover from a responsible third party. A waiver of subrogation limits that recovery right against specified parties.
Joint names policies often affect subrogation because each named or composite insured is protected for its insured interest. Refer every contractual waiver request to the insurer for written confirmation.
Contracts use terms such as interested party, additional insured, joint insured and composite insured. They can have different effects. The contractor should not promise a status that the policy does not provide.
Contractors may also provide collateral warranties or third-party rights to funders, purchasers, tenants or other beneficiaries. These can extend professional obligations and should be considered within the professional indemnity review.
Common Mistake
Assuming a standard indemnity-to-principals clause satisfies every request to add a client as an insured. The exact contract wording and policy extension must be compared.
Height is both an insurance and health-and-safety issue. Insurers may apply maximum height limits or exclude particular work, such as roofing at greater heights, tower work or work on certain fragile surfaces.
The Health and Safety Executive states that work at height must be properly planned, supervised and carried out by competent people using suitable equipment. Insurance does not replace compliance with the Work at Height Regulations.
The proposal should explain:
Excavation creates risks involving collapse, underground services, neighbouring foundations, water ingress and public safety. Insurers may impose maximum depth limits and ask about shoring, service plans and specialist subcontractors.
A groundworker excavating shallow domestic foundations presents a different exposure from a contractor undertaking deep drainage, basement construction or underpinning.
Work in hospitals, schools, airports, rail environments, data centres, petrochemical sites and high-value industrial premises may involve:
Refurbishing an occupied building can increase exposure because tenants, patients, pupils, customers or employees remain present. Dust, noise, temporary barriers, access routes and fire precautions require careful management.
Anton’s Advice
A broad trade description does not tell an insurer enough. A builder working on private dwellings only is different from a contractor working in live hospitals or schools, even if both describe themselves as general builders.
Turnover, wages and subcontractor payments are central rating information. Deliberately reducing these figures to obtain a lower premium can leave the business exposed.
Turnover is used as an indicator of the volume of work and liability exposure. It should reflect the basis requested by the insurer, which may be projected annual turnover or the latest accounts adjusted for expected growth.
Contractors should explain unusual changes, such as a major new contract, a temporary reduction, a change in trade mix or increased subcontracting.
Wages help insurers assess workforce exposure. The figures may need splitting between office staff and manual trades, and between lower-risk and higher-risk activities.
Some policies are based on estimates and may be adjustable after the period ends. Contractors should understand whether a declaration is required and whether additional premium may become payable.
Business insurance is subject to the duty of fair presentation under the Insurance Act 2015. Before entering into the policy, the insured must disclose material circumstances it knows or ought to know, or provide sufficient information to put a prudent insurer on notice that further enquiries are needed.
Information should be presented clearly and substantially correctly. Contractors should involve knowledgeable management and provide the broker with accurate information.
Anton’s View
Trying to reduce turnover or wages to bring the premium down may create a short-term saving but can result in an inaccurate policy. The figures should reflect the real business so the insurer can price and cover the actual exposure.
The contractor should notify the broker where required if there is a significant change, such as:
The following summaries highlight questions that may arise for Fortify’s target contractor trades. They are not exhaustive, and individual work should be assessed in detail.
Broker Insight
Specialist trades often have exposures that do not fit a generic liability policy. Fire protection, alarms and refrigeration work can create financial-loss and failure-to-perform risks even where there is limited immediate property damage.
A contractor should notify the broker or insurer promptly when an incident may give rise to a claim. Waiting for a formal demand can prejudice the investigation or breach a notification condition.
The insurer may investigate whether the contractor owed and breached a duty, whether the alleged loss was caused by that breach and whether the claim falls within the policy. Legal defence and expert evidence may be required.
The contractor may need to establish the value of damaged work and materials, the cause of loss, project status and contractual responsibility for insurance. A detailed valuation and programme can assist.
Professional indemnity policies often require notification of circumstances that may give rise to a claim as well as actual claims. Complaints, allegations, adjudication notices and demands to redesign work should be referred promptly.
Failed components, damaged materials and testing evidence may be important. They should not be discarded without agreement where a claim or recovery action is possible.
Practical Tip
Create an incident file immediately. Keep the contract, photographs, witness details, invoices and communications together. Good records can materially improve the investigation.
Public liability is generally optional under UK law. Clients, principal contractors and contracts may require it, and it provides fundamental protection for contractor businesses.
Labour-only subcontractors may be treated similarly to employees, depending on the practical working relationship. Explain the arrangement to the broker and provide an accurate wage and payment split.
It does not normally pay simply to redo defective work. It may cover certain resulting third-party damage, depending on the policy and circumstances.
It generally covers insured physical loss or damage to work in progress and materials. It does not automatically cover existing structures or every type of defect.
They may need it where they design, specify, advise, calculate, select systems or accept design responsibility under a contract.
Labour-only subcontractors generally work under the contractor’s direction, while bona fide subcontractors operate more independently. The practical working arrangement determines the exposure and classification.
The relevant limit usually reflects the maximum value of hired plant at risk at any one time, together with any continuing hire-charge exposure. Annual hire spend can be materially lower than the maximum equipment value exposed.
The works and existing structures are separate exposures. The building contract and insurance arrangements should state who insures each.
It is an arrangement recognising both relevant parties as insureds for the specified interest. It is not the same as merely noting an interested party.
It addresses specified liabilities of the employer for certain property damage connected with the works where contractor negligence may not need to be proved. Requirements vary by contract.
Use the basis requested by the insurer and provide a realistic estimate. Artificially reducing figures to lower the premium can create an inaccurate presentation.
Check trade restrictions, height and depth limits, hot-work conditions, security, work at airports or hazardous sites, subcontractor requirements, use of heat, excavation and any exclusions applying to specific activities.
The available limit applies only to claims that fall within the policy. Exclusions, excesses, conditions and aggregate limits may restrict the amount payable.
Before tender commitments are finalised and before the contract is signed. JCT, joint names, existing structures and professional indemnity requirements may need insurer approval.
A Fortify review can examine the schedule, statement of fact, endorsements and key wording sections to identify questions, restrictions and possible gaps. Insurer underwriting and claim validation remain separate from the review.
UK contractor businesses can approach Fortify Insurance Brokers for help arranging cover for liabilities, contract works, plant, tools, design responsibility and contractual requirements. The presentation can include turnover, wages, subcontractor payments, contract values, working height, excavation depth and specialist premises. Terms remain subject to insurer appetite and the individual risk.
Fortify provides a personal broker service. Anton works in the business directly, giving clients access to someone who understands their circumstances and cares about getting the cover right.
For contractor businesses, that means looking beyond the occupation and premium. Fortify aims to understand:
Fortify’s approach is based on clear explanations, accurate risk presentation and practical support. The aim is to help contractors understand what they are buying, why each cover matters and what could affect a future claim.
Request a Contractor Insurance Review
If your business has grown, taken on larger contracts, moved into new trades or accepted greater design responsibility, your existing policy may no longer reflect the risk. Fortify can review your current cover and discuss the insurance requirements of your work and contracts.
