In a nutshell, a Contractors policy; also known as a ‘Contractors All Risks’ or ‘Contractors Combined’; is a one-stop, fully comprehensive insurance policy that combines various covers under one policy, for one single insurance premium.
So, what insurance do I actually need as a Contractor?
You will need Public Liability for starters, then depending on the other activities you carry out will determine what other covers you will need to add in. We’ve put together a simple table to give you an idea of the some of the main covers you might need to add in;
|If you use or do this…||Then you need this…|
|New build houses, extensions or responsible for an element of a contract including materials||Contract Works|
|Use valuable tools||Tools cover|
|Leave tools in your van overnight||Tools cover to include ‘in van overnight’|
|Hire in or Own any Plant machinery||Plant cover|
|Employ any staff even if part time, temporary or Labour only subcontractors||Employers Liability|
|Temporary buildings or structures on site e.g. portacabins||Temporary Buildings|
|Digging foundations close to a neighboring property||JCT Extension|
|Carry out any heat works||Heat work|
|Carry out any design work even if you subcontract this or make any amendments during the construction||Professional Indemnity|
|Have a fleet of vehicles in your company name||Fleet Insurance|
|Transport goods or materials||Goods in Transit|
|Have any business equipment or computer||Business equipment cover|
As annoying as it might be, a good broker should be asking you lots of questions about the exact works you carry out to make sure you have all the correct elements of cover.
The following would usually be included as standard;
- Legal expenses in case your company has to defend itself in a commercial dispute.
- Demolition and site clearance costs following a major insured event.
- Engineers or other professional fees incurred during the investigation of repairs.
What levels of liability do I need as a Contractor?
We recommend a minimum of £5m public liability, and depending on your business and circumstances this can be increased to £10m or even £20m. Employers Liability is standard at £10m, and this is usually sufficient.
Why can’t I just have a Tradesmen’s (public liability) policy?
A tradesman policy works on a ‘per capita basis’, which means the number of employees, labour only sub-contractors and bona fide sub-contractors, (the limit is usually 15). On larger contracts, you can easily go above this limit without thinking about it and your tradesman policy becomes void.
Most tradesman policies only allow a maximum turnover of £500,000, contract works up to £250,000 and have set limits on hired-in plant, tools and equipment. Height limit is usually 12 meters with 1 meter on the depth limit. Heat work is also usually excluded where the public liability is above £2m.
How much does a Contractors policy cost?
There is no set price as each policy is different (and prices are changing rapidly in the current hard market conditions), but here’s a real life example of a recent contractor we arranged insurance for;
- Turnover £750,000
- Labour only Sub contractor payments £180,000
- Bona Fide payments £150,000
- Contract works £250,000 (new build timber frame and extensions)
- Including heatworks
- No height limit
- No depth limit
- Public and Products liability £5m
- Employers Liability £10m
- Own plant £10,000
- Legal Expenses
- No hazardous locations
Premium is £3,500 inclusive of tax.
Do I need professional indemnity insurance as a contractor?
If you carry out, are responsible for or have any input at all for design work (even if you pass the design work on to a third party – you’re still exposed), then we’d recommend you take out a Professional Indemnity policy. The majority of contractors will require this without realising they need it.
If you’re unsure whether you have the right cover, we can offer a free no obligation policy check and highlight any gaps.
We’re here to make insurance easy for you, just contact the team on 01730 239387.