If you’ve just been appointed principal contractor on a project, two things usually land on your desk at the same time: a set of CDM duties and a set of insurance requirements from the client or their contract administrator. They’re often treated as the same thing. They’re not — and confusing the two is one of the most common ways contractors end up either under-insured or paying for cover a contract never asked for.

This guide explains what the Construction (Design and Management) Regulations 2015 actually require, what insurance a principal contractor genuinely must have in place, and where the two overlap in ways that affect your premiums and your ability to defend a claim. It’s written for principal contractors, design-and-build firms and growing subcontractors stepping up to run sites for the first time.

What CDM 2015 actually requires — and what it doesn’t

CDM 2015 applies to every construction project in Great Britain, from a domestic extension to a distribution warehouse. On any project involving more than one contractor, the client must appoint a principal designer and a principal contractor in writing. The principal contractor’s core duties include planning, managing and monitoring the construction phase, preparing a construction phase plan before work starts, controlling site access, providing site inductions and welfare facilities, and coordinating the contractors beneath them.

Projects also need to be notified to the HSE using an F10 form where the work is expected to last more than 30 working days with more than 20 workers on site at the same time, or to exceed 500 person-days in total.

Here’s the important point: CDM 2015 does not mention insurance once. It is a health and safety regulation, enforced by the HSE, with criminal penalties for breaches. There is no such thing as a “CDM insurance policy”, and anyone selling you one is renaming something else.

So why does every serious conversation about CDM end up being about insurance? Because the duties CDM creates are exactly the duties that generate claims when something goes wrong on site — and because clients, funders and JCT contracts translate those duties into hard insurance requirements before they’ll let you start work.

The insurance a principal contractor must actually have

The requirements come from three directions: the law, the building contract, and the practical reality of running a site. Taken together, this is the core programme. Our construction insurance team arranges all of it as a single package.

Employers’ liability

The one cover required by statute. If you employ anyone — and for insurance purposes that includes labour-only subcontractors working under your direction — you must carry employers’ liability insurance with a minimum limit of £5 million. In practice almost all policies are written at £10 million, and many principal contracts require it. As principal contractor you’re responsible for site-wide safety arrangements, so the distinction between your direct employees, labour-only subbies and bona fide subcontractors matters enormously here; misdeclaring it is one of the fastest routes to a disputed claim.

Public liability

Not a legal requirement, but no client will appoint a principal contractor without it, and JCT contracts specify a minimum limit — commonly £5 million or £10 million per occurrence for principal contractor roles, and higher on major projects. Check whether the contract requires an indemnity to principals clause (extending your cover to protect the client against claims arising from your work) and whether liability for damage to the existing structure sits with you or the employer under the contract’s insurance options.

Contract works / contractors all risks

Contract works cover insures the works themselves — materials, partly built structures, and items on site awaiting installation — against fire, flood, storm, theft and vandalism until practical completion. On new-build projects under a JCT contract, the principal contractor is usually the party required to take this out in joint names with the employer, for the full reinstatement value of the works plus allowances for professional fees and debris removal. We covered the JCT insurance options in detail in our construction insurance guide; the short version is that who insures what is set by the contract, not by habit, and it needs checking on every project.

Professional indemnity

CDM 2015 puts coordination and management duties on the principal contractor, and on design-and-build projects you’ll also carry design responsibility — sometimes formally, sometimes by accident, when your site team “solves” a detail the drawings left open. Professional indemnity insurance covers claims arising from errors in design or professional services. If your contracts include any design portion, or you’re ever appointed principal designer as well as principal contractor, PI is not optional. Make sure the level of cover matches what the contract requires and that it’s maintained after the project completes, because PI operates on a claims-made basis.

Legal expenses and HSE investigation costs

This is the cover most directly connected to CDM. If there’s a serious incident on site, the HSE investigates, and its Fee for Intervention regime means you pay the HSE’s costs where a material breach is found — currently charged at an hourly rate that adds up quickly across a long investigation. A prosecution under CDM or the Health and Safety at Work Act is a criminal matter: fines themselves can’t be insured, but defence costs, representation at interviews under caution and cover for directors under a management liability policy all can. For a principal contractor, we’d treat this as core protection, not an add-on.

Where CDM compliance and your insurance meet

Insurers price construction liability risk on how well a site is run, and CDM compliance is the best available evidence of that. Expect proposal forms and renewal conversations to ask about your construction phase plans, induction and training records, RAMS, and how you vet subcontractors. Strong answers genuinely move premiums; weak ones move them the other way, or narrow the cover on offer.

Three points deserve particular attention:

• Subcontractor checks are often a policy condition. Many liability policies require you to verify that bona fide subcontractors carry their own public liability at a stated minimum limit. If you don’t collect and keep their insurance details and a claim involves their work, you may find your own insurer pointing at the condition.
• Your documentation defends your claims. When an injury claim arrives two years after the project finished, the construction phase plan, induction register and toolbox talk records are what your insurer’s solicitors will use to defend you. CDM paperwork isn’t just compliance — it’s evidence.
• Height, depth and hot works need declaring. Maximum working height and depth, use of heat, and any unusual site activities are rating factors and sometimes warranties. If the risk profile of a new contract differs from what your policy was rated on, tell your broker before you start, not after something happens.

Common mistakes we see from principal contractors

A few patterns come up repeatedly when we review cover for contractors taking on principal contractor roles — usually through our free review service:

• Assuming the client’s project insurance covers you. Owner-controlled or project policies exist, but they rarely cover your plant, your tools, your vehicles or your liability as an employer. Read the contract’s insurance clauses, don’t assume.
• Public liability limits frozen in time. A firm that grew from subcontracting into principal contracting often still carries the £2 million limit it bought years ago, while its contracts now demand £10 million.
• No PI despite creeping design responsibility. “We don’t do design” and “we never signed a design-and-build contract” are different statements. Value-engineering suggestions, specification substitutions and site-drawn details all create design exposure.
• Vans and plant treated as an afterthought. Site vehicles and hired-in plant sit outside the liability programme — if you’re running several vans between sites, a properly structured fleet insurance arrangement is usually cheaper and far easier to manage than piecemeal policies.
• Cover bought on price for a contract deadline. Insurance bought in a hurry to satisfy a client’s procurement checklist tends to be exactly the cover that fails when tested. A specialist broker can usually match the deadline and get the cover right.

Quick answers

Does CDM 2015 require me to have insurance?

No. CDM sets health and safety duties, not insurance requirements. But employers’ liability is required by separate law, your building contract will require public liability and usually contract works cover, and a serious CDM breach is precisely the scenario where liability and legal expenses cover earn their premium.

I’m a subcontractor stepping up to principal contractor for the first time. What changes?

Your duties expand from managing your own work to managing the whole construction phase — and your insurance needs to follow. Expect to need higher liability limits, contract works cover in joint names, subcontractor vetting procedures, and possibly PI. Have your cover reviewed against the specific contract before you sign it.

Are HSE fines insurable?

No — fines for criminal offences can’t be insured in the UK. Defence costs, investigation costs and Fee for Intervention exposure can be covered under legal expenses or management liability policies, which is why we recommend them for anyone holding principal contractor duties.

Get a construction insurance review

If you’re taking on principal contractor duties — or already hold them and haven’t had your programme checked against your contracts recently — Cornerstone’s construction insurance specialists will review what you have, flag the gaps, and structure cover that stands up when it matters. As an independent Leicester-based broker we work with specialist construction underwriters and back every policy with our Total Customer Care claims support. Call us or request a review through the website — it costs nothing, and it’s considerably cheaper than finding a gap the hard way.