What's the Best Insurance for Self-Employed Builders?
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As a self-employed builder, you’re used to operating on a wide variety of work-sites. You may take work with a number of different contracting companies, or might prefer smaller jobs by yourself or with a small team. Irrespective of the work you do, it’s vital to make sure you’re properly insured so both you and your customers are covered if something goes wrong.
Our guide to Builder’s Insurance goes into more detail about some of the optional extras you may want to consider if you’re curious, but otherwise we’ll cover everything you need to know here.
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Best Insurances for Self-Employed Builders
Public Liability
Public Liability insurance is generally considered a must-have by most in the building world. It’ll cover you if a third party, such as a customer or member of the general public, is injured or incurs property damage as a result of your work.
It could be something as mundane as damaging a skirting board or causing a customer to trip over, but if it causes them financial loss or injury you’ll be responsible for covering the damages. Public Liability covers both the compensation a court awards against you and any legal expenses you rack up defending yourself.
However, when you consider the average settlement is around £13,500 in the UK, the cost of something going wrong can be very high.
Examples
- You’re walking through a customer’s home with some tools when you drop a hammer and damage their wood floors. They sue you for the cost of having it repaired.
- While working on a busy worksite, a contractor from another business trips over a wire you’ve left exposed. They can’t work for 3 weeks, and so sue you for their lost wages.
Product Liability
You may often find Product Liability insurance sold alongside Public Liability, due to the natural synergies between the two. Product Liability can help keep you protected after your work is finished, covering you in the event that a product you’ve sold to a customer causes injury or illness.
As with Public Liability, you’re covered for both compensation and legal fees, and the combination of the two can help keep you protected both while you’re working and after you’re complete.
Examples
- You sell a sharp tool to a customer that has a defect, causing them to cut themselves. They sue you for damages.
- You’ve sold poor quality cement to a customer, and a wall they’ve built falls down. They sue you for the cost of repairing the wall.
Professional Indemnity
Professional Indemnity insurance covers you in the event that a customer is unhappy with the professional advice or service you’ve provided them. It can protect situations when professional advice, designs or knowledge is part of the “product”, such as drawing up blueprints or professional advice that is negligent, and it can protect if a client doesn’t believe a job was completed to the agreed standard.
Examples
- A pond you’ve built recently for a customer has a leak in it and needs to be repaired. The customer believes you’re at fault for the poor design and build and sues you for the cost of repair
- An employee has followed a blueprint inaccurately and mismeasured the depth of an extension. The client sues for having the extension rebuilt.
These three coverages can provide a solid base for eventualities on the customer-side. Look into all risks policies as well, which can also include cover for works in progress (e.g. in case of fire or theft on a work site). The insurances we’re about to cover are designed more to protect the business-side of the equation, and will cover you from employee claims, any equipment damages, and if you’re unable to work for medical reasons.
Business Protection insurances
Employers’ Liability
If you hire any staff, it is a legal requirement to have a form of Employers' Liability insurance. Even if it’s a family friend you’re bringing on-board for a short piece of work, the government requires you to have a policy before having them work for you.
It’ll cover compensation and legal fees in the event that someone working for you (employee, contractor etc.) sues you, believing that the work they did for you caused them to become unwell or they sustained an injury resulting from it. The penalties for not having a policy are severe—up to £2,500 per day in fines.
Example
- A contractor you’ve brought in to support with a piece of work is injured as a result of falling off of a faulty step ladder you provided them. They can’t work for 4 weeks due to back injury, and so sue you for their lost wages.
Tools and Equipment
Tools and Equipment insurance will protect the items you use to support your business from certain damages and theft. The insurance itself is fairly simple— covering the cost of an equivalent replacement in the event that your tool(s) are stolen, lost or damaged in a fire or flood. It can cover both individual, expensive equipment or a collection of tools that it might be costly to replace.
Example
- You keep your tools locked securely in your van on your drive, however overnight someone breaks into the van and steals them. Your insurance pays you the amount it cost to replace them with an equivalent piece of equipment.
Income Protection
Income Protection/Critical Illness insurances offer financial protection if you’re unable to work due to illness or injury. In trades like building, where things can go wrong and put you out of action, this can prove invaluable, especially as a self-employed builder.
Income Protection is typically the shorter-term policy. Perhaps you’ve hurt your back and a doctor has written you off work for 6 weeks—your Income Protection coverage would pay out a % of your average income for the 6 weeks (usually 50-70%), so you’ll still be able to cover those pesky bills and mortgage payments while you rest and recover.
Critical Illness is usually the longer-term policy. Policy keywords often refer to being out for the “foreseeable future”, often referring to life-threatening illness or injuries or anything that will make returning to your previous work extremely difficult if not impossible, such as an amputation.
Example
- A leg injury is going to keep you out of work for the next 8 weeks as you have difficulty walking and can’t carry heavy goods. You’re covered for 65% of your weekly income for each week you’re out of work.
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