Construction is one of the hardest sectors to insure well, and one of the easiest to get wrong. A standard off-the-shelf policy rarely fits a business that moves between sites, takes on work under contracts written by someone else, and carries liability for subcontractors, plant and half-finished buildings. This guide explains construction insurance in the UK in plain terms — what each cover actually does, what JCT contracts oblige you to insure, and how the CDM 2015 regulations sit alongside it all.
It’s written for builders, contractors, civil engineers and trades who are pricing a new contract, renewing a policy, or trying to work out why a main contractor has rejected their certificate. If you only take one thing from it, make it this: in construction, the contract usually dictates the insurance — not the other way round.
What “construction insurance” actually covers
There is no single “construction insurance” policy. The term describes a package of covers assembled around a contractor’s specific work, sites and contracts. For most building and contracting businesses the core of that package is liability cover and cover for the works themselves, with plant, tools and professional indemnity added depending on what you do.
Cornerstone arranges these covers for everyone from spray plasterers and ground workers to steel fabricators, glazing contractors working at height and civil engineers — including the difficult-to-place risks that standard insurers turn away. The sections below walk through each cover and the mistakes we most often see when reviewing existing arrangements.
The covers most construction businesses need
Public liability
Public liability covers injury to third parties or damage to their property arising from your work — a member of the public hurt near a site, damage to a neighbouring building, a client’s property harmed during a job. There’s no legal minimum, but contracts set their own. A £1 million limit is rarely enough on commercial work: £5 million is a common floor, and main contractors and public-sector clients frequently demand £10 million before you set foot on site.
Employers’ liability
If you employ anyone — including labour-only subcontractors who work under your direction — employers’ liability is a legal requirement. The statutory minimum limit is £5 million, though £10 million is provided as standard on most policies. In construction, the common trap is how labour-only and bona-fide subcontractors are declared: getting that wrong changes both your premium and whether a claim is paid.
Contract works / contractors all risks
Contract works cover — often called contractors all risks (CAR) — insures the building work itself while it’s in progress: the structure, materials on site and work already completed, against fire, theft, flood, storm and accidental damage. This is the cover JCT and most other building contracts have in mind when they talk about “insurance of the works.” Underinsuring the contract value, or forgetting to extend cover for an overrunning project, are the two failures we see most often.
Own and hired-in plant
Plant cover protects the machinery and equipment you own — excavators, generators, scaffolding, site cabins — and, just as importantly, plant you hire in. Hire agreements almost always make you responsible for hired plant and for continuing hire charges if it’s damaged or stolen. Many contractors discover that gap only after a generator walks off site.
Tools and own vehicles
Tools cover is low-value but high-frequency — van break-ins are one of the most common claims in the trade. If you run several vehicles, it’s usually worth reviewing them as a fleet rather than individually; you can read more on that in our guide to fleet cover. Overnight storage conditions and the way tools are declared will affect whether a claim succeeds.
Professional indemnity (design and build)
The moment you take on any design responsibility — most obviously on design-and-build contracts — you need professional indemnity insurance. It covers claims arising from design errors or negligent professional advice, which public liability specifically excludes. Contractors increasingly get caught out here because design risk has crept into contracts that look, on the surface, like pure build.
What JCT contracts require you to insure
Most formal building contracts in the UK are based on a JCT (Joint Contracts Tribunal) form, and the insurance clauses are where contractors most often come unstuck. JCT contracts deal with insurance of the works through three standard options, and which one applies changes who buys the cover:
Option A — used for new buildings. The contractor takes out a joint-names all-risks policy covering the full contract works for the duration of the project.
Option B — also for new buildings, but the employer (the client) insures the works instead of the contractor.
Option C — used for work to existing structures, such as extensions and refurbishments. The employer insures both the existing building and the works, again in joint names. This is the option that most often trips up smaller contractors working on occupied premises.
“Joint names” matters: it means both parties are insured under the same policy, so the insurer can’t recover from the contractor by subrogation after paying a claim. The practical points to check on any JCT job are the required public liability limit, whose option applies, whether the policy is genuinely in joint names, and that the contract works sum insured matches the real contract value. Getting a broker to read the insurance clauses before you sign is far cheaper than discovering a gap mid-project.
CDM 2015: where your legal duties meet your insurance
The Construction (Design and Management) Regulations 2015 — CDM 2015 — apply to virtually every construction project in Great Britain, however small. They set out duties for clients, principal designers, principal contractors, designers and contractors covering planning, site management and health and safety. CDM doesn’t require you to hold insurance, but it shapes your risk — and your insurer’s view of it.
Insurers increasingly ask about CDM compliance, method statements and site management when pricing liability cover, and a good claims and safety record genuinely lowers premiums. More to the point, a serious failure of your CDM duties can sit behind a public or employers’ liability claim. Demonstrating that you manage sites properly is one of the strongest things a contractor can do to keep cover available and affordable — something well-run construction businesses should make a point of evidencing at renewal.
Common mistakes we see on construction policies
Liability limits set below what the contract demands — leading to a rejected certificate and a delayed start on site.
Contract works underinsured because the sum insured was never updated as project values rose.
Subcontractors misdeclared, or the split between labour-only and bona-fide subcontractors handled incorrectly.
No professional indemnity in place despite taking on design-and-build elements.
Hired-in plant and continuing hire charges left uninsured, with the gap only found after a loss.
Cover bought to last twelve months when the contract — and the exposure — runs longer.
How Cornerstone helps
Cornerstone is an independent insurance broker based on New Walk in Leicester, arranging construction and contractors insurance for businesses across the East Midlands and nationally. We place liability and contract works cover through trusted insurers, specialist markets and Lloyd’s brokers, which means we can accommodate the difficult and challenging risks that standard insurers decline. Every client gets a dedicated account executive who reviews the cover against the contracts you’re actually working under.
Well-managed construction businesses with good site management and claims records are exactly who we’re set up to help, and our reputation is built on referrals. To get a contractors all-risks quote or a same-day review of your existing cover, call us on 0116 3440 040 or request a call-back. During working hours we aim to come back to you within 30 minutes.
Frequently asked questions
Is construction insurance a legal requirement in the UK?
Only employers’ liability is required by law, and only if you employ staff (including most labour-only subcontractors). Public liability, contract works and the rest aren’t legally compulsory — but building contracts almost always make them contractual requirements, so in practice you can’t take on most work without them.
What’s the difference between public liability and contract works cover?
Public liability covers injury or damage you cause to third parties and their property. Contract works (contractors all risks) covers the building project itself — the structure, materials and completed work — while it’s under construction. They do different jobs, and most contractors need both.
Who insures the works under a JCT contract — me or the client?
It depends which insurance option the contract uses. Under Option A the contractor insures new-build works; under Option B the client does; under Option C (work to existing buildings) the client insures both the existing structure and the works. Always check which option applies before signing.
Does CDM 2015 mean I need extra insurance?
No — CDM 2015 sets out health, safety and management duties, not insurance requirements. But insurers take your CDM compliance and site management into account when pricing liability cover, and good practice helps keep premiums down and claims defensible.
Can you cover difficult or previously declined construction risks?
Often, yes. Through our network of specialist underwriters and Lloyd’s brokers we can place trades and risks that standard insurers turn away — from work at height and steel fabrication to contractors with a mixed claims history. Speak to a construction insurance broker about the specifics.
How much does construction insurance cost?
It depends on your trade, turnover, the limits your contracts require, your claims history and how you manage sites. Because contractors’ needs vary so widely, the only reliable figure is a quote based on your actual work — which is exactly what a broker can pull together quickly.