There are a lot of expenses involved with becoming a self-employed tradesman or construction contractor.
Not only do you have to buy the right tools, hire or purchase the right vehicle and find the right staff, but you also need to make sure you have the right kind of insurance in place too. And there’s not just one type of insurance you need, there might actually be many.
Here we take a closer look at 5 different types of insurance that a construction contractor might need.
Public Liability Cover
Alongside Employers’ Liability Insurance – which we’ll talk more about in a minute – Public Liability Insurance is probably the most well-known insurance around for people who work in any kind of trade.
Public Liability Insurance covers you, the contractor, against any injuries to third parties who don’t work for you and also property that you are not working on.
As you can imagine, the risk of injury or damage to the general public or their property is very high in the construction trade and any potential damages as a result of an accident could quite easily run into millions of pounds, so this kind of cover really is essential.
Employers’ Liability Insurance
Then we have Employers Liability. Employers Liability Insurance covers you, the contractor, against any injury or illness which may arise to one or your employees as a result of the work that they are doing for you.
Again, the costs of this type of claim could be astronomical if a case is brought against you, so it is vital to have the right cover in place in this area.
It’s also a legal requirement for employers to have the correct Employers Liability Insurance in place and not doing so could land you with a hefty fine from the government.
You would do well to check up on what might make you ‘an employer’ in the eyes of the law, as you might even need this type of cover if you use subcontractors or you may not need it if you only employ close family members.
Contract All Risk Insurance
Contract all risks insurance is designed to cover against loss or damage associated with a contract that you are currently working on.
If, for example, you were working on building an extension to an existing property and there was a fire on site as the project was approaching completion, contractors all risks insurance would cover the cost of repairing the work. This kind of insurance would also cover against theft or vandalism on site.
The type of damages mentioned previously are often excluded from public liability cover and if so, will therefore need to be purchased separately.
Structural Warranty
If you are planning to build new properties which will then be sold on to prospective buyers, then you might also want to look at the cost of buying a 10 year structural warranty to protect against any latent defects.
Although structural warranties exist to protect the potential buyer of the property, it is the builder or developer of the property that pays for the cover.
While it is usually the developer or builder who pays for the warranty, it may well end up paying for itself in the end as it will likely make a new build property more saleable and could therefore reduce long-term costs.
Professional Indemnity Insurance
The final type of cover we want to mention is Professional Indemnity Insurance. Professional Indemnity Insurance can be beneficial if you are providing advice to clients or if you are advising on the design of a site or building, as this type of cover will protect against claims arising from professional negligence or negligent advice.
Summary
Here we’ve discussed 5 different types of insurance that you may need to put in place as a construction contractor to ensure that you are fully protected against claims arising from injury, damage to property or any other kind of liability. Although as a construction worker, we would also suggest life insurance.
We hope you’ve found them useful and that you can now move forward as a contractor knowing that you have the correct covers in place to protect not only yourself and your employees but also the general public against financial loss.
