There are two main types of liability insurance – public and employers’ liability. They cover you against claims if a member of the public or one of your employees is injured on a job.

Employers liability

Employers’ liability insurance is required by law once you employ somebody to work for you.

The current minimum level of cover required is £5m for injury or disease caused while working for you.

Case study

A typical example is as follows. An employee is preparing a wall to be painted using sanding equipment. You as an employer have no signs or have not informed the employee that he needs to wear safety or breathing equipment. The employee becomes ill from inhalation of a substance.

You would be liable for a claim by this employee for negligence which could result in thousands of pounds being awarded.

How premiums are calculated

An insurance company or broker will weigh up the risks posed by your firm and calculate the premium accordingly.

An established small builder with a good safety record will get cheaper quotes than a firm that has a poor accident history. If you are refused employers’ liability insurance it is illegal to trade without it and you can be fined £2,500 a day for operating without cover.

Public liability

Public liability cover is not a legal requirement but is highly recommended to protect you. Many customers will also be wary about taking you on without it.

Public liability covers anyone outside of your employment if they are injured during work carried out by your firm. It also covers any accidental damage you do to a site or home during a job.

Case study

A typical example is as follows. You are working up a ladder when you drop a hammer which injures a passer-by.

The recommended minimum cover level is £1 million and not taking out a policy could ruin you.

Members of the public today will go straight to a ‘no win-no fee’ lawyer if they are injured by your work. The resulting court case could cost thousands and leave you with a huge compensation bill if you are not covered by public liability insurance.

Top 5 products

So which insurance policy should you take out? Here is our guide to the top products available and what they have to offer.

Trade Direct: Tradesman’s Liability insurance

Trade Direct offers Tradesman’s Liability Insurance for small builders who employ less than five people. The policy offers public liability cover from £1m to 5m with a £250 excess payable which means you pay the first £250 of any claim. Employers’ liability cover goes up to £10m and the policy can be extended to cover plant and personal accidents.

Setting up cover is easy on the firm’s website which guides you through on a step-by-step basis. Most trades are covered but some hazardous works like demolition are excluded from the policy.

Premiums start from as low as £57 but a small builder employing several people can expect an annual premium of around £600. All companies taking on a new liability policy are also offered a free years cover for tools and mobile phones worth up to £1,000.

Policyholders also have access to a 24 hour advice line to help with any problems. Policies can be set up and paid for online by credit or debit card. Payments can also be made over 12 month installments.

Federation of Master Builders

Trade body the Federation of Master Builders offers its members specially tailored liability policies through a link up with insurance specialist AON.

FMB Insurance Services has been going since 1998. The service offers some of the most competitive rates in the industry backed up by a dedicated broking and support team which is always on hand to deal with your queries.

For a policy quote call 0845 602 1037 or visit their website.

AON: Construction Direct

AON also offers its Construction Direct range of products to the general industry which contains a policy designed for small builders with a turnover of less than £1m.

It offers public liability cover from £1m to £5m and employers liability of £10m. Small builders with a good safety record can benefit from a 20 per cent no claims discount following three years without a claim.

AXA: Contractor’s Choice

Insurance giant AXA also has a policy aimed at small builders with a turnover of less than £1m. The firm’s Contractors Choice Insurance offers public liability cover as standard with many optional extras including employers’ liability.

Small builders signing up benefit from a free 24 hour emergency and legal helpline plus a free tax helpline open from 9am to 5pm. Personal Accident Cover is automatically included free of charge for any principal, partner or director.

Builders with premiums in excess of £5,000 can get a free risk management visit by one of AXA’s qualified health and safety surveyors. No claims discounts are also available of up to 10% for three years without a claim.

Direct Line: Tradesman Insurance

Direct Line Insurance offers cover to small builders through its Tradesman Insurance policy.

Standard public liability cover is £1m with employers’ liability of £10m. Cover can be extended to cover tools and computer equipment worth up to £1,500. Direct Line employs a specialist legal advice team and offers 0% interest on monthly premium payments for the first year.

Also recommended

Tradesmancover.co.uk offers public and employers liability cover for 200 different building trades via its online only service.

Public liability cover is available from as little as £2 per week and the website compares prices from leading insurance underwriters to provide the most competitive quote.

Author: Grant Prior