Builder's Insurance: What to Check Before They Start

Your builder's mini-digger clips a gas main during trench work. The gas network operator arrives, declares the main compromised, reroutes it. Total cost for the emergency works: £856. The gas company sends the invoice to your builder. If your builder has valid public liability insurance, this gets handled. If they don't, that invoice lands with you, and you're chasing an uninsured individual through small claims court for money you'll probably never see.

That's a minor incident. A scaffolding collapse injuring a delivery driver. A fire in the partially built extension spreading to your roof, or a neighbouring property's ceiling cracking from excavation vibration. These are the scenarios that turn a building project into a financial catastrophe, and insurance is the only thing preventing it.

Most people assume their builder's insurance covers everything. It doesn't. Most people assume their home insurance carries on as normal during an extension. It often doesn't. The coverage gaps between the two are where real money gets lost.

What Your Builder Must Carry

Three types of insurance. Not optional, not negotiable, and if your builder can't produce certificates for the first two, they should not be on your site.

Public liability

This is the big one. Public liability insurance covers damage your builder causes to other people and their property. That includes your existing house, your neighbour's wall, and anyone who sets foot on the site.

The industry minimum is £2,000,000. For an extension project, push for £5,000,000. The difference in annual premium between £2,000,000 and £5,000,000 cover is often only £20 – £50 for the builder, so there's no good reason to accept the lower figure. Any builder who carries only £1,000,000 or less is underinsured for extension work.

Public liability only responds to negligence. That's an important limitation. If your builder does something wrong and it causes damage, their PL insurance covers it. If damage occurs without anyone being at fault (ground movement from excavation, vibration cracking a neighbour's wall), PL insurance won't pay.

Employer's liability

If your builder employs anyone, even one labourer, employer's liability insurance is a legal requirement under the Employers' Liability (Compulsory Insurance) Act 1969.

"It's just me" is the most common line you'll hear from builders who don't carry EL cover. Sometimes it's true. A genuine sole trader with no employees doesn't legally need it. But if that sole trader has a mate helping with the heavy lifting, or brings in a labourer paid cash in hand, those people are likely to be classified as employees or labour-only subcontractors, and EL cover is required.

The distinction matters. A bona fide subcontractor (an electrician running their own business, sending their own invoices, carrying their own insurance) is genuinely independent. The main builder's EL doesn't need to cover them. A labour-only subcontractor (someone who turns up, gets told what to do, and gets paid a day rate by the builder) is treated as an employee in the eyes of the law. The builder's EL policy must cover them.

You don't need to police this distinction yourself. But if you see multiple people on site working under your builder's direction, and your builder told you "it's just me," ask the question.

Contractor's all-risk (contract works insurance)

This is the one most homeowners don't know about, and the one most likely to be missing.

Contractor's all-risk insurance covers the works themselves: the partially built extension, materials stored on site, temporary structures. It covers fire, storm, flood, theft, and accidental damage. Without it, if a storm destroys half-built walls over a weekend, nobody's insurance covers the rebuild.

Your builder's public liability won't cover it (no negligence involved, it was a storm). Your home insurance won't cover it (the extension isn't part of your insured property yet). Without CAR, you pay to rebuild from your own pocket.

Many small builders don't carry CAR because the annual premium runs £600 – £1,500. This is where your contract becomes important. Under the JCT Minor Works contract (clause 5.4B), for works on existing structures like extensions, the homeowner is expected to arrange a joint names insurance policy covering both the existing building and the new works. This gives you control of the cover, and protects you if the builder goes bust mid-project.

If your builder does carry CAR, check that the policy value covers the full contract works. If they don't carry it, you need to arrange extension insurance yourself. Either way, someone must hold this cover. The alternative is gambling that nothing goes wrong during construction. On a project lasting six to nine months, that's a bad bet.

How to Verify a Builder's Insurance

"Yeah, I'm insured" is not verification. Asking for a policy number is not verification. You need to see the certificate and check it properly.

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Common legitimate insurers for small UK builders include Simply Business, AXA, Zurich, Hiscox, and Markel. If you've never heard of the insurer on the certificate, that doesn't automatically mean it's suspect, but it's worth a phone call.

Printable

Insurance Verification Checklist

Printable checklist of everything to verify on a builder's insurance certificate: policy name, cover amounts, expiry, work description, and insurer contact details.