Are Builders’ Insurance & Contractors’ All Risk Cover Different?

There are more insurance products on the market than you can count, and telling them apart can be tricky. But are builders’ insurance and contractors’ all risks different things, and which one do you need?

Yes – they cover totally different things. You may need just one or both types of insurance, depending on the job you are doing as well as how your business is set up.

Generally speaking, builders’ liability insurance covers your business, and contractors’ all risks insurance covers the physical development you are constructing.

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

• What is builders’ insurance?
• What is contractors’ all risks insurance?
• Do I need liability insurance as a builder?

Making sure you have adequate coverage is essential before you start trading, no matter what you do or the type of business you own.

What is builders’ liability insurance?

Public liability insurance is a common type of business insurance that protects against liabilities for injury to third parties (non-employees) or their property. This is an essential form of insurance to have, and it basically protects your clients and their visitors and loved ones against injury or damage.

If you work near other people and/or their property – which, if you’re a builder, is part and parcel of the job – you really need to have public liability insurance. This will ensure you are covered against any potential claims for damage or injury to the person and/or their property. Like most other forms of insurance, you need to renew it every 12 months.

For example, if you’re working in your client’s home and accidentally put a power tool through a partition wall, your public liability insurance will cover the cost of the labour and materials involved in the replacement.

Or, if a member of the public or your client injures themselves on-site while you’re working, your public liability insurance should cover any associated costs. For example, loss of income, ambulance call-outs, hospital charges, and more.

Public liability comes as standard with any kind of builders’ insurance: a catch-all term for a policy that may also include coverage for your tools, materials and more.

What is contractors’ insurance?

Contractors’ all risk insurance protects against physical damage to works and site materials that you were contracted to undertake. You should always consider getting insurance to cover any building works while they are in progress. Contract works insurance or contractors’ all risks (CAR) insurance – not to be confused with “car insurance”, just to make things more complicated! – gives you protection if the building works flooded or destroyed by fire. Not only that, it also covers damage to materials and equipment, including hired-in equipment.

So if a contractor causes damage to a property they were hired to work on, standard public liability insurance would not provide full coverage for everything. Having a contractors’ all risk policy in place would fill the gaps and help pay to rectify the damage.

Say for example you are building a house and it burns down before you hand it back to the owner, but no one suffered injury because it was empty. Public liability would not cover the disaster, but the cost of the build so far will come back to you thanks to your contractors’ all risks policy.

What about materials and equipment?

Your contractors’ all risk policy can be extended to cover your own plant, or any plant that you hire for the job and for which you are responsible.

Talk to your insurance broker, and they can help you find coverage for everything you need. Building materials and tools can be expensive, so it makes sense to ensure they have good coverage in place.

For example, adding Products Liability covers you in the event of a claim relating to parts and materials you install. Bought a faulty pack of ceramic wall tiles? This is the policy you need if the tiles arrive damaged or the wrong colour, and the job suffers a delay as a result.

In the majority of cases, the insurance provider you have your policy with will pursue the manufacturers. As long as the part turns out to be defective, it wasn’t your own fault and you installed the materials correctly, the manufacturer will be liable.

If you have any questions on builders insurance, public liability cover or contractors all risk cover, call us today and talk to our business insurance experts, and we can help you find the right insurance for your specific requirements.