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The United Kingdom's largest industry is construction with over two million building employers and employees working in the trade. Those who own their own building companies know that even with the best planning in the safest working conditions accidents can occur. Unfortunately, they happen frequently in the building business and often lead to damages, injuries and illnesses. It is very important for any self-employed, contract builder in the UK to have insurance to cover these unfortunate mishaps and other legal situations that could literally destroy a business.

Investing a bit of time and gathering the right information, documentation and quotes from insurance websites in the UK will give builders the knowledge, cover and protection necessary to run a successful building company and watch it grow.

Public Liability Insurance

Since potential accident situations are frequent in the building industry Public Liability Insurance, although not mandatory, is a must for a builder. Public liability offers protection against injury or damages to anyone who is not an employee or to their property, whether they are clients or not. We live in a compensation culture and if someone files a claim, whether justified or otherwise, this insurance should cover any compensation and legal expenses involved. It allows a builder to be prepared for the worst case scenarios, covering the company's legal liability for damages to possessions or property, injury or death to any member of the public caused because of activities engaged in by the company.

As an example, an employee is working on a roof and accidentally spills tar, which drops on a car below, a blowlamp causes a fire, a passer-by falls into an excavation - public liability insurance should cover the claim and legal expenses if any are involved. If a builder has a small company, generally £2 million Public Liability Insurance is the norm, but this should be thought about very carefully - depending upon the type of jobs that are taken on this sum may well not be enough, particularly if possible personal injuries are a possibility

In many instances, particularly when an architect is involved, a prospective client will ask a builder to show and display proof of Public Liability Insurance before awarding the contract.

Employers' Liability Insurance

It is a legal requirement in the UK that if any employer has more than one employee, standard Employers' Liability Insurance must be obtained to cover employees in the event or injury, illness or death whilst on the job. Any expenses and costs incurred by the injured or sick employee are covered as well as any legal fees. An employer is also usually covered for expenses and costs compiled for defence of prosecution that relate to an employee's welfare as stated in the Health and Safety at Work Act of 1974.

Again, because of the nature of the building business, it's very important for a self-employed builder to have enough Employers' Liability Insurance to not only protect employees but to protect the business in case any incident occurs. Any employer must have a minimum of £5 million, but in the building industry £10 million is usually the minimum given the liabilities and risks that are part and parcel of the building trade.

Employers' Liability Insurance covers employees only and common examples of claims include employees injured while operating equipment that does not have the proper safety precautions in place, accidents caused by negligence of other employees, illnesses or disabilities that occur as a result of working conditions. The employer's obligations don't end when an employee leaves the company; there have unfortunately been many instances of former employees that worked on buildings containing asbestos becoming ill with lung disease, sometimes many years later.  Even though the employees no longer works for the companies they were entitled to file claims so it is important to keep records relating to all employees' insurance benefits, even if they are no longer with the company.

The only exemptions to Employers' Liability Insurance may be if employees are relatives, unless the company is  listed as a limited company. The other exemption is if the self-employed builder is working on his own and has possession of 50% issued shared capital belonging to the company. Generally speaking sub-contractors who don't work for you regularly and have other clients; arrange their own tax and national insurance contributions; provide their own materials; and decide their own hours of work do not have to be covered by employer's liability insurance but this area is a minefield and it is important to be completely satisfied that they are separate businesses in their own right.

These provisions are subject to change so it is always best to check the latest situation.

When an Employers' Liability policy is purchased by a builder, the insurer will give the builder a certificate that states the level of cover provided as well as any other companies covered in the policy. The certificate must be displayed where it can be easily read by employees. If an employer fails to purchase Employers' Liability Insurance, fines can run as high as £2,500 per day and this fine continues until the proper insurance is secured.

The best way to avoid paying out on employee illnesses and accidents is to keep up with all current and recommended health and safety rules and regulations for the building industry. Many builders will run regular risk assessments to help reduce the need to file a claim.

Other Insurances Recommended For The Building Trade

Product Liability Insurance covers builders from liabilities from third parties other than employees that might be injured or have damage occur on their property because of something supplied or sold to them. Many builders manufacture and supply goods for their clients, and there are cases when a slight defect in a product has caused damage or injury to a third party. Product Liability Insurance can protect a builder from circumstances that are unforeseeable in manufacturing quality like a small defect that went unnoticed. If the product or services are truly poor quality, any claim will be denied, but if it's legitimate, Product Liability will cover the claim and expenses involved.

Builders' Tools, Plant and Equipment Insurance protects your equipment, tools and gear from theft, damages, destruction or loss whether on or off the building site. Builders usually have a lot of money invested in tools, and for a small amount of money great peace of mind can be gained.

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