The complexities of insurance can be intimidating for many in the construction industry and it's easy to see why.
As legal documents, it's necessary for insurance contracts to be packed full of dense legal terminology – leading many to dismiss it as simply another regulatory hurdle to be overcome.
But getting to grips with the ins and out of your contractor's insurance can help to protect your business from worst-case scenarios and in this guide, we'll attempt to break down the main types of insurance required by those in the construction sector.
Despite the best of intentions and safeguards, accidents can and will happen on construction sites and contractors simply wouldn't be able to operate without covering themselves from these eventualities.
Very few companies would be able to meet the cost of claims and payouts from their own resources – necessitating basic liability insurance cover.
This type of insurance covers contractors against accident or injury claims made by employees. It’s a legal necessity for contractors and they're required to keep a certificate at their place of business.
Some insurers will cover against a set amount of damages, while others will provide unlimited cover – this level is typically reflected in the premium you pay.
Unlimited cover has become rarer in recent years due to a number of issues, including the increasing use of sub-contractors, which can lead to ambiguities in terms of who and who isn't covered.
With changing cover limits, it's become crucial for contractors to be aware of what they're covered for – both to ensure they're not overpaying, while having sufficient cover in place to indemnify all parties should the worst occur.
This type of liability insurance covers contractors against injury to members of the public, surrounding property that's not involved in the project and sub-contractors.
Public liability will not only meet the cost of compensation claims, but will cover legal fees related to settlements or defence in terms of such claims.
Premiums are determined by the type of project being undertaken, how large the firm is and whether or not it's claimed in the past.
Given the vast sums that public liability claims can potentially involve, many employers require contractors to prove they have this in place before they commence any work.