Will Builders’ Insurance Cover Me If I Am Sued?

It’s every builder’s worst nightmare: a past client has followed up on a threat to take you to court. But will your builders insurance cover it?

It depends what you’re being sued for. If there are allegations against you for causing bodily injury or third party property damage, your builders’ insurance will cover you.

However, your builders’ insurance will not cover you for failures such as not completing the work on time or to an agreed standard.

In this article, we’ll cover the following questions:

• What happens if I get sued?
• Will builders’ insurance cover being sued for damages?
• Can my insurance cover me if I don’t finish the work?

More insurance products and add-ons are available which will give you extra cover if you need, but for this article we’ll be discussing standard builders’ insurance.

What happens if I get sued?

Being sued is a very serious matter. Despite what you may think, an unhappy customer will not sue you as a knee-jerk reaction. Taking a claim to court means investing a considerable amount of time and money into an allegation of wrongdoing, and no one takes it lightly.

You must – and this should go without saying – avoid getting sued in the first place, if at all possible. Uphold a good standard of work throughout, and keep clear and direct channels of communication open with your client at all times.

If any problems arise, you should aim to fix these as soon as possible before they get too large. Don’t think you can hastily cover any mistakes and get out of town before the tape peels off – the statute of limitations on professional negligence is six years.

Three causes of litigation against builders include:

• Strict liability
• Professional negligence
• Breach of contract

Strict liability is a standard of liability under which a person is legally responsible for the consequences flowing from an activity even in the absence of fault or criminal intent. For example, a contractor works on a building that fails to support the contents being moved inside of the building. Although the building is technically structurally sound, if it can’t maintain its structural integrity when a reasonable amount of property is moved in.

Professional negligence can run from minor inconveniences to critical failures. Faulty electric wiring, dangerous plumbing or unstable walls can all be considered negligent.

Finally, a breach of contract would constitute any scenario where you, as the builder, failed to uphold your end of the contract, for example getting the work done on time.

Will builders’ insurance cover being sued for damages?

Yes. If you are being sued because it is alleged that you caused bodily injury or third party property damage, then your builders’ insurance will cover you.

For example, if a child was able to access your tools and caused themselves harm, or if you knocked down the wrong wall by mistake, your builders’ insurance will cover you for the damages. You will have cover for any damage to individuals or property belonging to your clients or members of the public.

However, whenever a claim is made on your insurance, it’s likely your premium will go up. To protect your interests you must always adhere to health and safety guidance, and act in a responsible manner. Failure to do so may make your claim unsuccessful.

Can my insurance cover me if I don’t finish the work?

No – if you are being sued over failure to complete the work or that you didn’t complete the project, your combined liability policy will not activate.

This is because a contract is binding, and as long as you are fit and able to do so you need to complete the work as promised. If you don’t, you have broken your side of the agreement and the fault is on you.

You should have personal accident and sickness insurance in place to be able to cover the cost of work lost due to poor health. Builders are at risk for many health issues including bad backs, strain as well as injuries on site, so this could be well worth getting.

If you’re concerned about other issues affecting the timeliness of your project, you need professional indemnity insurance. This will cover you in the event that you’re unable to finish a project for any reason.

Talk to our Builder’s Insurance experts today!

If you need any advice about builders’ insurance? Give us a call today and talk to our insurance experts. We can help find the best cover for your business. We look forward to working with you!