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Ensure you’re insured

by Matt Downs
Ensure you’re insured | Total Contractor roofing magazine

Property developers are being warned to ensure roofers are adequately insured amid warnings that half the sector could be underinsured.

Representatives from ConstructionInsure.co.uk have warned that around half of all UK contracting firms, including builders, plumbers, roofers and electricians, do not have adequate insurance in place to cover their work.

This means they are putting themselves and their clients at risk by inadvertently failing to take out adequate insurance policies.

Inadequate cover puts contractors and the home owners or developers who have hired them at risk of liability if things go wrong on the project.

In some cases, this could even lead to the contractor going out of business if they end up being liable for problems that halt construction projects.

Whether contractors are building commercial office blocks, new build residential units or doing internal refurbishments, each project requires a different level of skills and expertise.

And with so many aspects to the construction industry, it’s the responsibility of contractors to inform insurers about every element of a build for adequate cover.

Mark Herbert of Construction Insure said: “Every week we see numerous cases of contractors being severely underinsured and this is down to them not properly informing insurers about the nature of their work.

“From our enquiries we estimate around 50% of all UK contractors do not have adequate insurance in place.  Many contractors take out a basic policy and fail to check the small print which often includes caveats about the nature of the work they are covered for.

“They assume they are covered but the reality is the policy may not be worth the paper it is printed on if it doesn’t cover them for the work they are actually undertaking.

“Contractors are not always to blame for this. Unfortunately, they might approach a broker who only facilitate for liability policies and are therefore not experienced enough to handle structural construction enquiries, or they might have gone on a comparison site which is the worst place to go as these sites will never be able to question and answer a client about their business like an experienced broker can to extract the correct risk information.

“For example, we have advised property developers who are building major projects but their existing insurance policy doesn’t cover them for excavations which means their foundations aren’t insured.

“If a building they had constructed suffered subsidence they could potentially be liable for damage and losses incurred and a mistake like that has the potential to put a multi-million pound turnover company employing scores of skilled tradesmen out of business overnight.

“This is a huge problem across the construction industry and we estimate up to one in four companies in the sector do not have adequate insurance in place.

“Business owners may feel they are saving money by taking out cheap insurance policies but if the policy doesn’t cover their needs it will be invalid anyway.

“It is far better to buy the genuine peace of mind of knowing your work is properly insured than to throw away cash on a policy which isn’t fit for purpose.”
Mr Herbert said there is a legal requirement for contractors to make sure they are insured by giving their insurance company full disclosure on the nature of the work they undertake.

He continued: “The insurer needs to know everything about each project – from all planned work, to the staff employed to carry it out.

“Employment of staff can vary for each build, so insurers need to know about all work sub contracted out to construction companies or if only labour sub-contractors are used.

“General builders with standard cover for internal renovation works and public and employer’s liability cover may think that they’re covered for everything, but often they are only covered for employees, sub-contractors and any damage to a third-party property, leaving other areas such as their tools uninsured.

“If tools are lost, damaged or stolen, this can be expensive to replace and could hinder other work opportunities for a time.

“Contractors also need to consider protecting themselves against other traders that are part of a client’s build – for example if you are the main contractor and another tradesperson makes a mistake on site and disappears, the client could make a claim against the main contractor if they can’t get hold of the other trader.

“If contractors don’t have the correct insurance to cover these costs, it could mean insolvency for the business, so it’s worth looking into a Contractor’s All Risk insurance and liability policy.

“The insurance world may seem confusing for many contractors, with so many avenues and aspects to consider, so having an insurance broker who knows the construction industry well and can advise the correct cover is invaluable.

“At ConstructionInsure.co.uk we’ve been brokering insurance for the construction and building industry for forty years. We have a thorough understanding of the industry and can offer contractors direction to the bespoke insurance services they need so their business and their clients aren’t compromised.”


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