What Does Public Liability Insurance Cover for Builders?

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Working as a builder carries with it a higher chance of injury than in other occupations. This applies not only to building staff but to members of the public. Therefore public liability insurance will be needed to guard against claims. To learn more about what this covers and to get a quote, use the NimbleFins’ builder public liability insurance quote form to search for competitive policies.

Public liability insurance for builders will protect the company from injury and damage claims that are brought by a third party, whether a client or a passer-by. In addition, coverage will protect companies that have clients who visit the premises or operate at an off-site customer location.

Accidental damage to a person or property caused by errors or mishandling of tools may also be covered. Public liability insurance will cover the costs and expenses associated with claims and shield the builder from liability, protecting finances, assets, and property.

Policies are available in a range of limits that may be lower or higher depending on the needs of the business. For example, public liability insurance can typically be purchased that will provide coverage up to £1 million, £2 million, £5 million, £10 million, or more. Large enterprise organisations may require even higher limits, and specialised policies can be designed to offer appropriate levels of protection.

Why is public liability insurance important for a builder?

Hazards are high on a building site, and claims are frequently seen that are caused by slips, trips, and falls or falling objects. Any type of injury or damage can trigger a claim, and if the person is injured, they can sue.

If the company is at fault, compensation, settlements, medical expenses, and other costs will need to be paid.

Without this kind of insurance, the builder will be personally responsible for paying out of pocket. With many public liability claims running into tens of thousands of pounds, it can get expensive.

Costs can add up quickly for items associated with a claim and can include things such as:

  • Compensation
  • Settlement payments
  • Legal fees
  • Repair costs
  • Medical treatment
  • Transportation fees

With the number of claims made each year sometimes exceeding 100,000, it is logical to assume that most companies will have a claim brought against them at some point. As the average number of settlements is high, public liability insurance will be needed to protect businesses from financial ruin.

How much is public liability for a builder?

While a sole trader builder might only pay around £100 for a £2 million public liability insurance policy, premiums for a larger limited company can easily reach nearly £1,000 a year or more.

There won’t be a big increase in premium to increase the policy limit, so it can be safer and a good deal to opt for a higher level of cover when in doubt. For example, NimbleFins analysis found that a sample small limited company would be quoted around £972 for £2 million of public liability insurance, and only £1,095 for £5 million of cover. That’s 2.5X as much cover for just 13% additional premium.

In addition, to varying by level of cover, pricing can also be based upon the size of the business, the number of employees and the type of work performed.

The business structure can also impact the cost of public liability insurance. Companies with 1 director can cost much less than businesses with 2, and sole traders will generally be cheaper than partnerships or limited companies to insure. Things like dangerous working conditions in specialised locations will increase the monthly premium as the perceived risk increases.

Is public liability insurance required for builders?

While public liability insurance is not required for builders in the legal sense, most companies see the value of obtaining coverage to guard their business against legal claims. There may also be some instances where companies are expected to have public liability insurance. For example, it may be demanded when sub-contracting for a large organisation to perform building work.

Some local authorities or trades groups may require that coverage be obtained before allowing any building work to commence. In these instances, the governing party may set the minimum required policy limits, and proof of coverage might be requested. Builders will need to produce their policy certificate either digitally or in paper form to verify public liability insurance coverage and prove that they have high enough limits to satisfy any claims brought.

Not having adequate public liability insurance may lead to a substantial loss of earnings.

Customers who are shrewd enough to know that companies without public liability insurance might not cover the cost of claims may opt to give work to another business. Usually, one that has appropriate insurance coverage and can meet any unforeseen expenses caused by accidents or injury.

There is no penalty for businesses that choose not to have public liability insurance, but not having it in place will leave companies and their directors fully exposed to claims. With the average settlement in the UK being £13,500, two or three claims can easily drive smaller companies to the brink of bankruptcy or at least cause financial pressure. However, accidents can and do happen. In building works where the chance of danger or potential issues are intensified, having public liability insurance can protect a business from financial disaster.

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