Recommended Base Cover Levels
The Employers Liability (Compulsory Insurance) Regulations 1998 legally mandates that all UK contractors carrying employees hold at least 5 million public liability insurance. This applies equally to sole traders, partnerships and limited companies - any builder with staff requires this minimal cover.
For self-employed builders without employees, no legal requirements exist stipulating compulsory insurance levels. However industry experts overwhelmingly encourage sole traders and partnerships without staff purchase policies with 1-2 million minimum coverage for their own protection. This defends business assets if clients or third parties ever pursue legal action for personal losses/injuries seemingly caused by a contractors work or negligence.
Bigger Firms Require Increased Cover
Although 5 million policies satisfy legal minimums, such base coverage frequently proves severely inadequate for larger construction firms managing multiple simultaneous projects. Under such policies, if multiple major claims arise within a year from different sites, the maximum annual payout limit can quickly become exhausted leaving the business unprotected from further claimant payouts.
Industry specialists therefore advise medium-sized and bigger contractors with 5-50 employees secure 10 million or higher coverage policies. This limit expansion costs relatively little over base premiums but radically reduces the risks of claims exceeding maximum payout thresholds in any policy year. Protecting business continuity is essential.
For major corporates in housebuilding, infrastructure and facilities management sectors employing over 50 personnel, coverage requirements again surpass baseline legal minimums by even greater degrees. https://www.tradesmansaver.co.uk/builders-insurance/ recommend FTSE and high turnover businesses hold between 15-25 million public liability policies given their immense scales and the correspondingly increased accident risks. Although premiums for such vast covers cost substantially more, this represents insignificantly tiny proportions of total company values. So protecting against potentially company-crippling lawsuits is wholly advisable.
Why All Builders Require Some Cover
Obtaining public liability insurance remains universally recommended for all UK builders irrespective of sizes. Trades by their hazardous manual nature carry inherent and unescapable risks of accidents occurring on-site leading to damages or injuries - however careful contractors aim to operate.
Without insurance, just one serious claimant victory from an injury or negligence lawsuit could instantly bankrupt builders by mandating immense compensation payouts. By contrast, having even minimal policies protects against personal assets seizures, defending the livelihoods and family homes so many builders have invested into growing their businesses. So some cover always proves incalculably better than none at all.
Factors Determining Ideal Cover Levels
Beyond company sizes, ideal public liability cover levels depend on these additional factors:
Work Risk Profiles - Higher-risk specialists like steeplejacks, demolition crews or asbestos removalists warrant much greater covers than routine domestic builders given their elevated accident likelihoods.
Contract Values - Tradesmen regularly securing contracts worth 500,000+ should proportionally expand covers to match higher project values at stake. This includes home extension/renovation specialists.
Location Risks - Builders operating in remote regions far from emergency services require added insurance buffers allowing for delayed medical assistance and potentially worse accident outcomes.
Subcontracting Terms - Firms relying heavily on subcontracted workers should scrutinise policies ensuring adequate cover extensions safeguarding against risks from outsourced on-site labour.
Profit Margins - Businesses earning potentially volatile year-to-year profits may benefit extending cover during boom periods to financially protect against future claims arising amid economic downturns.
So whilst 5 million policies satisfy basic legal requirements, determining optimal public liability cover ultimately requires evaluating all the above considerations as a package. Seeking specialist broker advice when assessing appropriate protection levels is highly advisable for all contractors. Make sure you have adequate cover!
