Construction insurance protects your business from on-site injuries, property damage, equipment loss and project interruptions. Find out how to choose the right policy and how flexible finance can help you manage your risk and cash flow.
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Construction insurance protects you when things go wrong on site. It covers third-party injury or damage, the work in progress, any machinery you own or hire, and your tools or other small equipment.
UK construction insurance typically includes legally required Employers’ Liability cover and Public Liability insurance, which are often mandatory under contracts. In the UK, there were 51 construction worker fatalities whereas 47,000 workers suffered non-fatal injuries across the three year period, 2021 to 2024. Without the right insurance in place, one such incident alone can spell serious legal and financial trouble for your business.
Here's a snapshot of what construction insurance provides for your business and important conditions to know.
With the right policy in place, you can protect your business against claims and meet client requirements to win work.
Construction insurance protects you against liability and, with the right options, income loss when unforeseen events disrupt operations. It’s essential protection whether you’re a main contractor, specialist trade, sole trader, or developer.
A typical UK construction insurance policy provides core liability cover with optional add-ons, allowing you to tailor protection to your trade and project requirements.
Understanding each type of construction liability insurance helps you build the right protection. Here's what each cover does and when you need it.
1. Public Liability insurance construction coverage
This protects against claims when someone gets hurt or their property gets damaged because of your work. Some examples include if a passer-by trips over your equipment or falling debris damages parked cars.
This cover responds to claims and protects you from possibly high legal costs and compensation payments. Construction Public Liability insurance is typically required before you can access most sites.
2. Employers' Liability
Employers’ Liability is legally required if you employ anyone. Under the Employers' Liability Act 1969, you face £2,500 daily fines without proper cover. This includes labour-only subcontractors. Minimum cover of £5 million is mandatory.
3. Contract Works insurance
Contract Works insurance, also called Construction All Risk insurance, covers your materials and works in progress. For instance, a fire can destroy a half-finished extension, thieves might steal copper piping, or a storm may damage exposed brickwork. There are many such types of risk and many clients require this type of insurance before you start work.
4. Plant and Tools insurance
Provides protection for your equipment on site and in transit against loss or damage from theft, fire, flood, vandalism and accidental damage. This covers excavators, scaffolding, power tools and specialist kit. The exact cover depends on your policy wording and insurer.
5. Professional Indemnity
Coverage for when your design or advice causes financial loss. Claims can arise years after completion. This makes long-term protection essential for anyone providing design or technical advice.
6. Business Interruption insurance
Business interruption insurance, also referred to as contract works consequential loss insurance, protects against loss of income following an insured event. If site flooding or fire stops work, this cover replaces lost revenue and pays ongoing costs. It bridges the gap between an incident and resuming normal operations.
7. Personal Accident insurance
Provides income support for injured site workers. This cover pays benefits if you or your workers suffer injury preventing work and supplements other protections by providing direct financial support during recovery.
Public Liability insurance covers physical injury or property damage caused during your operations.
Professional Indemnity insurance protects against financial loss resulting from errors in your design, advice or specifications. No physical damage needs to occur for a Professional Indemnity claim.
Public Liability insurance responds to third-party claims, such as collapsed hoarding that damages parked cars. However, excesses and policy limits apply.
Defective workmanship and certain contractual liabilities often aren't covered. This catches many contractors out during claims, so it’s always recommended to review the specifics of what each insurance policy includes.
Employers' Liability is legally required if you employ anyone, including casual workers and labour-only subcontractors. Public Liability isn't legally required, but it is almost always contractually required on sites before you start work.
Professional Indemnity may be required under contracts where design responsibility exists. If you’re a design-and-build contractor, architect, engineer or surveyor, clients and contracts almost always require it. In such cases, you typically can’t tender for most contracts or access construction sites without it. But, if you’re a trade or general contractor, such as a roofer, plumber, carpenter or builder, it’s usually not required.
Contract Works insurance becomes essential when you bear project responsibility during construction. And financial exposure without it can be catastrophic.
Only Employers' Liability is legally required. But, other covers become requirements through contracts, site rules and lender demands. Missing required insurance can invalidate your contract and leave you personally liable.
Getting the right cover requires careful assessment of your specific situation. Follow these steps to identify your requirements.
Joint Contracts Tribunal (JCT) and New Engineering Contract (NEC) agreements set specific insurance obligations. They define indemnity limits and require evidence of cover through insurance certificates.
The following requirements are part of your contract, not suggestions: Ensure that you understand the minimum cover amounts, policy wording requirements and submission deadlines. Failing to meet them can delay project start or breach your contract.
Consider the maximum potential claim your work could generate. Working on high-value properties or in busy areas increases your exposure. Your coverage should reflect this risk. 76% of UK buildings are underinsured, highlighting the importance of adequate limits.
Check height and depth endorsements if you work above two storeys or excavate below ground. Verify hot-works coverage if you use welding or cutting equipment. Confirm your policy covers your specific trade activities without unexpected exclusions.
Labour-only subcontractors typically fall under your employers' liability and public liability. Good subcontractors need their own insurance. Verify this documentation before they set foot on site. This protects you from unexpected liability.
Cranes, demolition and temporary works require specialist knowledge. Construction insurance brokers navigate these requirements and can access better terms than you'll find going direct. They understand policy wording nuances that can make or break claims.
Dedicating time to review each of these five areas helps ensure that your policy matches your real exposure and meets contractual obligations.
Construction insurance costs vary widely depending on your trade, project values and risk profile. High-risk trades such as roofing and scaffolding pay considerably more than lower-risk work like decorating or carpentry.
Your turnover, wage roll, number of employees also influences premiums, and claims history. Cover limits, location, and site security also affect pricing. And it’s worth keeping in mind that building costs are predicted to rise by 15% and tender prices by 16% up to 2030.
When it comes to cost, your trade risk has the biggest impact. High-risk work like roofing or demolition costs significantly more to insure than lower-risk trades such as decorating. Insurers also factor in your turnover, wage roll and claims history when calculating premiums. The level of cover, excess amount, location, and number of employees can also influence your final price.
Height and depth limits influence pricing. Working above two storeys or excavating below ground increases premiums, and cover amounts, excesses and employee numbers all play roles.
Bundling policies with one insurer can often secure discounts, and good risk management can reduce your liability insurance construction costs.
6 construction site risk management best practices to lower your cost
Strong risk management helps keep your site secure and lowers insurance costs. Here are some of the best construction site practices to follow:
Embedding these six practices across every project keeps your workforce safe and helps control long-term insurance costs.
Accessing annual premium discounts without impacting cash flow
Paying annually is usually cheaper than monthly instalments, though yearly premiums can create cash-flow pressure. If needed, flexible finance options such as business loans can help spread costs while keeping access to annual-payment discounts. Consider using iwoca's flexible loans to preserve working capital while securing annual coverage at lower rates.
Construction insurance is essential, but it doesn’t remove every financial pressure that comes with running projects. Premiums are rising and higher cover limits can suddenly become mandatory when you take on larger contracts. Add the possibility of delayed claims decisions, partial settlements or exclusions, and even well-insured construction businesses can feel the strain.
That’s why many contractors pair solid insurance with flexible funding. It creates a buffer that keeps your work moving, even when project timelines and cash flow don’t line up neatly. A loan can help you take advantage of lower annual-payment premiums, cover increased limits for new contracts, manage supplier payments and stay operational while a claim is being assessed.
With iwoca, you can check eligibility in minutes and borrow £1,000 to £1 million with flexible repayments, no early-repayment fees and fast access to funds.
It gives you room to adapt when requirements change on site, whether you're taking on a bigger project, facing an unexpected cost or simply managing tighter margins.
Insurance protects you from unforeseen risks. Flexible finance gives you stability across everything else that keeps your projects running smoothly.
If you’d like to see what you could access, you can apply here.
