Contractors insurance (requirement for)

[Hastings]

I am half-way through a self-build / new-build / renovation project and I have just asked a broker to find a policy to cover.

 

Even before submitting the project details to various insurers they say I should only use contractors that can prove they have £250,000 Contractors insurance as well as £5m Public Liability. This is so that insurers can fall back on those policies if there is any problem with the work done. They know I am doing some of the work and that I am not a professional builder.

 

Anyone else heard of this requirement?

 

Is every tradesperson used to being asked for this when they work on a site?

[nod]

Even when employing individual trades ALL must have public liability policy’s 

Even if they ask for cash in hand They should have a public liability policy 

They only cost around £250 per year 

Your site insurance will cover your liability 

[Hastings]

Thanks @nod. Good to know.

 

How about the other 'Contractors Insurance' ? I imagine that does not come cheap for them at all. Apparently it is law that came in in 2005 - maybe Scotland only.

[nod]

I’ve a contractors insurance which covers direct employees It doesn’t cover subcontractors Whilst for site work I can provide them with a risk assessment 

They need to have a public liability for a sole trader or a company one 

 

As a self builder you don’t need to get involved with contractor insurance Unless you plan to employ trades ( Holiday pay Sick pay etc (Cards in )

 

[SimonD]

2 hours ago, Hastings said:

insurers they say I should only use contractors that can prove they have £250,000 Contractors insurance as well as £5m Public Liability. This is so that insurers can fall back on those policies if there is any problem with the work done. They know I am doing some of the work and that I am not a professional builder.

 

Anyone else heard of this requirement?

 

Is every tradesperson used to being asked for this when they work on a site?

 

My understanding is that there are sometimes gaps in cover when a contractor only holds Professional Indemnity and Public Liability insurance and that the part of contractors insurance that's important is cover for unforeseen loss or damage to the construction work. This covers rebuild costs, for example. This part of the insurance is often arranged in joint names between the contractor and client. Contractor's insurance is also referred to as all risks.

 

Not all trades need this as the extent of the work being done doesn't necessitate this type of cover.

 

The problem is that contractor's cover isn't always a uniform policy but can be based on multiple separate policies depending on their operating model, so I'd be inclined to go back to the insurer and ask them to clarify exactly what they mean and what that level of cover has to cover!

[Hastings]

25 minutes ago, SimonD said:

The problem is that contractor's cover isn't always a uniform policy but can be based on multiple separate policies

 

Quite, which is why the insurer's statement was a surprise.

 

I mean, it just isn't practical to try and check the small print of the insurance policies of everyone that comes to do work. On the other hand, in theory it should mean my premium will be a lot less than otherwise since my insurer can pass much of their risk/liability onto other insurers.

 

Edited May 3, 2021 by Hastings
extra thought

[nod]

If something goes wrong 

The chances of getting a sole trader to claim off his insurance are slim to none 

Most take out a very cheap policy in order to comply with site legislation The  majority that work on private work are mostly No income tax no Vat No money back no guarantee and would probably have to Google public liability 

[Mr Punter]

As a builder / developer I get a contractors all risks policy and this covers everything.  It seems to cost about £1 in £1,000 of completed cost per year, so if we do £4M GDV we are up for £4k premium.

 

All subbies need their own policies too.

[Hastings]

Thanks all. I've learnt a lot.

 

[SimonD]

20 hours ago, Hastings said:

 

Quite, which is why the insurer's statement was a surprise.

 

I mean, it just isn't practical to try and check the small print of the insurance policies of everyone that comes to do work. On the other hand, in theory it should mean my premium will be a lot less than otherwise since my insurer can pass much of their risk/liability onto other insurers.

 

18 hours ago, nod said:

If something goes wrong 

The chances of getting a sole trader to claim off his insurance are slim to none 

Most take out a very cheap policy in order to comply with site legislation The  majority that work on private work are mostly No income tax no Vat No money back no guarantee and would probably have to Google public liability 

 

I think @nod sums it up. I was recently asked by someone to look over a quote they'd got from a local contractor known in the area. At the bottom of the quote it said the company is fully insured. The next page detailed the insurance cover which amounted to public liability only. No all risks, no professional indemnity. My sister was once getting some extensive renovation and extension work done and the builder who'd quoted and she preferred was adamant he had all risks cover. He told her to ring his insurer if she didn't believe him. Low and behold the insurer told her he didn't have all risks but only public liability. He then replied that he knew he had sufficient cover, she didn't know what she was talking about and wasn't prepared to take out anything else. Obviously he didn't get the job.

 

I do however know a tradesman who did successfully claim after dropping some heavy wall tiles into an expensive new bath and cracking it. The insurer paid out for a replacement but all in all it took about 9 months to get it all fixed.

 

I think if you want to make sure your contractor is fully insured you're gonna have to comb their paperwork ?