Focus on contractors insurance: are you over-insured?

As a contractor, you’ll likely need several different kinds of insurance to protect yourself and your business against accidents or mistakes at the various sites that you are working on. But are you paying too much for your cover?

In particular, when working on a construction site that’s managed by a larger organisation, they will often have insurance in place that will also cover you and your work – up to a certain amount. This means you may be over-insured.

What insurance is necessary when working on a construction site?

You can find more information about the types insurance and what they cover in our previous article ‘Focus on contractors insurance: what’s essential?’ But here’s a brief summary of the cover you’ll need as a contractor:

• Employers liability insurance– covers the cost of compensation and any legal fees payable if you're found liable for an employee's illness, injury, or death as a result of the work they do for you. You're also legally required to have this insurance in place.
• Public liability – if you're found liable for injuries or damage to property, public liability insurance can cover compensation you're due to pay and legal fees incurred defending your case.
• Products liability - can cover you for accidents and injuries caused by the products you supply.
• Contractors’ all risk insurance – protects contractors when working on sites, contractors’ all risks insurance covers your materials, tools and equipment and any work in progress.
• Professional indemnity – protects you and your business if you face allegations of errors in your work. This insurance can cover legal defence costs and damages awarded concerning alleged errors in the design or the construction of a project.
• Goods in transit – valuable cover if items relating to your work are lost or damaged while being transported from one place to another. These incidents are unlikely to be covered by your motor insurance, so it's worth checking your policy to ensure you have the appropriate cover in place.

Where might you be over-insured?

Depending on the contractual arrangements you have agreed, you could benefit from some of the insurances already arranged by the employer or main contractor. This means you might find you don't need to arrange standalone protection for certain risks, avoiding dual-insurance and making financial savings.

However, on the other hand, if you and the main contractor have cover for the same risks, you could be paying too much for your insurance. For example, if your turnover is £10m – of which £2m relates to work already covered by the employer's policy – in that case, you may only need insurance based on 80% of your turnover for specific sections of your cover.

How to check if you have dual insurance

It is essential to fully understand your work and the contract conditions you are operating under. If you think you might be over-insured or doubling up your insurance, check the levels of cover the employer or main contractor for the site has in place. Speak to your insurance provider or broker to adjust your cover.

Need expert advice? Call our team of construction insurance experts.