Building contractors insurance: what cover you need

Most building contractors need employers’ liability insurance if they employ anyone, because it is a legal requirement, plus public liability insurance, contractors all risks cover for the works, and cover for their own tools and plant. If you design any part of the work, you may also need professional indemnity insurance. Clients and main contractors may set minimum limits in the contract, so check those before you buy.

Is employers’ liability insurance a legal requirement for builders?

Yes, if you employ anyone. Government guidance says you must have employers’ liability insurance from an authorised insurer covering you for at least £5 million. You can be fined £2,500 for every day you are not properly insured. You must also display the certificate where employees can easily read it, or face a fine of £1,000. HSE guidance confirms that since 1 October 2008 you can display the certificate electronically, as long as employees know how and where to find it.

There are limited exemptions. You do not need it if you only employ close family members, and HSE guidance exempts companies employing only their owner where that employee also owns 50% or more of the issued share capital. Once you take on anyone else, the duty applies. Our page on employers’ liability insurance requirements goes into the detail.

Keep old certificates. HSE says there has been no legal requirement to keep copies of out of date certificates since 1 October 2008, but it still advises keeping records because some diseases can appear decades after exposure. Asbestos and dust related illness are obvious concerns in building work.

Do subcontractors and labour only workers count as employees?

They can. HSE guidance says it does not matter whether you usually call someone an employee or self employed, or what their tax status is; what counts is the real working relationship. A worker who is told what to do and when, uses your tools and works only for you can look like an employee for insurance purposes even if they are paid gross or under the Construction Industry Scheme. Factors pointing the other way include working for other people as an independent contractor.

Tell your insurer how many people you use and on what basis, including labour only and bona fide subcontractors. Getting this wrong can leave a gap when someone is injured on site. Our guide to the Construction Industry Scheme covers the tax side, which is a separate question from insurance status.

Is public liability insurance compulsory for building contractors?

No law makes it compulsory for most contractors. The Association of British Insurers lists public liability as cover to consider if relevant, while employers’ liability is the one you must have. In practice, building work carries obvious risks to the public and to the property you are working on: a dropped scaffold board, a fire from hot works, a flooded flat below a bathroom refit. Public liability is designed to pay compensation and legal costs if your business causes injury to third parties or damage to their property.

In practice the contract is the bigger driver. Clients, main contractors and local authorities may ask for a minimum limit before you can start. Our guide on how much public liability insurance you need explains how to choose a limit, and employers’ liability versus public liability explains the difference.

What does contractors all risks insurance protect?

Contractors all risks (CAR) insurance is designed to cover the works themselves while they are being built, together with materials on site, against events such as fire, storm, flood, theft and malicious damage, subject to the policy terms. It answers a different question from liability cover: if the half built extension burns down, who pays to rebuild it?

The building contract may decide who must insure the works: the contractor, the employer or both in joint names. Read the insurance clause carefully. Some policies are written for a single project, others cover all your contracts up to a stated contract value. See our page on contractors all risks insurance for more.

How should you insure tools and plant?

Tools kept in vans and on site are exposed to theft. Policies differ on whether they cover tools left in a vehicle overnight, what security is required, and whether there is a limit per item. Value them at current replacement prices; the ABI warns that if a claim exceeds your maximum cover you will have to pay the rest yourself, and payouts on smaller claims can be cut too.

Plant can be owned or hired in. If you hire plant, the hire agreement may make you responsible for loss or damage and for continuing hire charges while it is out of use. Lifting equipment has legal inspection duties: HSE guidance sets thorough examinations at least every 6 months for equipment used to lift people and for all lifting accessories, and every 12 months for other lifting equipment, unless an examination scheme sets other intervals. These examinations must be carried out by a competent person who completes a written report. Our page on engineering inspection insurance explains how that service can be bought alongside cover.

When does a building contractor need professional indemnity insurance?

When you give advice or take on design. Public liability is aimed at injury and property damage; it is not designed for a claim that your design was wrong and the client lost money putting it right. Design and build contracts, specifying products, sizing beams or drainage, and producing drawings all bring design responsibility.

HSE guidance under the Construction (Design and Management) Regulations 2015 describes a designer as an organisation or individual whose business involves preparing or modifying designs for construction projects, and says designers can be principal contractors, specialist contractors or tradespeople if they get actively involved in design. Our guide to what professional indemnity insurance covers sets out how that cover works.

What do clients and main contractors ask for?

Expect to be asked for copies of your employers’ liability certificate, your public liability schedule with the limit, and confirmation of CAR or other works cover if the contract requires it. Design work may bring a professional indemnity requirement, sometimes for several years after completion. Health and safety duties come up too: HSE says a contractor is anyone who directly employs or engages construction workers or manages construction work, and on a domestic job where you are the only contractor you take on the client duties as well as your own.

Cover	Legal position	What it is for	Who may ask for it
Employers’ liability	Compulsory if you employ anyone, at least £5 million	Injury or illness to your workers	The law, plus main contractors
Public liability	Not compulsory by law	Injury to the public, damage to third party property	Clients, main contractors, councils
Contractors all risks	Set by the building contract	The works and materials on site	Clients under the contract
Tools and plant	Hire terms may set liability	Theft or damage to your equipment	Plant hire firms
Professional indemnity	Set by the contract	Financial loss from design or advice errors	Clients on design and build work

Example. Dan runs a small building firm with three employees and two regular labour only workers. A main contractor offers Dan a design and build package for a rear extension. Dan sends employers’ liability and public liability documents, but the contract also asks for contractors all risks in joint names and professional indemnity for the structural design. Dan tells the broker about the labour only workers, adds CAR for the contract value, and arranges professional indemnity before signing, so each requirement in the contract is matched by a policy.

Frequently asked questions

Do sole traders with no employees need employers’ liability insurance?

Not if there are genuinely no employees. But labour only workers can count as employees depending on the real working relationship, so check before you assume you are exempt.

What drives the price of building contractors insurance?

The type of work (for example roofing or demolition compared with decorating), turnover and wage roll, the limits you need, heat and height work, the value of tools and plant, your claims history and whether you do any design.

Does public liability cover damage to the building I am working on?

It depends on the wording. Damage to the part of the property you are working on may be excluded or limited, which is one reason contracts ask for contractors all risks cover as well.

Can Solar Protect arrange cover for my building business?

We are an FCA authorised insurance broker. Tell us what work you do, who you employ and what your contracts require, and we will look for cover. Call 01795 841 310, Monday to Friday 9am to 5pm, or ask us for a quote.

See also: Does Public Liability Cover Damage to Client Property?.

More on public and employers’ liability insurance. Ready for a price? Ask for a quote or call 01795 841 310.

Sources

• GOV.UK: Employers liability insurance
• HSE: Hse40
• ABI: Smeinsuranceguidejanuary2026
• HSE: Thorough examinations lifting equipment
• HSE: Designers
• HSE: Contractors

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 November 2026. Solar Protect is the trading name of Solar Insurance Services (Medway) Limited, authorised and regulated by the Financial Conduct Authority. This page is general information, not personal advice.