If you run a small building firm, and particularly if you are a one-man band, it can be tempting to wonder why you should buy Builders Insurance. After all, it’s an extra cost that you’d rather not incur, and what are the chances of a claim?
To an extent this is a valid school of thought. If your tools aren’t worth a great deal it might make sense to save the insurance premium and simply pay to replace them yourself if they are lost or damaged, particularly as you’d have to pay an excess in the event of a claim anyway.
However, there are some types of Builders Insurance that you really do need to have. Failing to purchase such insurance could prove fatal to your business.
Compulsory Insurance for a Builder
Most people know that Motor Insurance is required by law if you use a vehicle on the road but Employers’ Liability Insurance is also required by law if you employ anyone. What many builders fail to realise is that even if you aren’t actually paying anyone through a PAYE payroll scheme, you could still be deemed to be employing people.
If the main thing a person is providing to you is their labour, they may well be deemed to be an employee. This can be the case even if they claim to be self-employed and invoice you for their time. And people don’t need to be employed on a permanent basis to be deemed to be an employee. Even if you just employ a person for one day on a “cash in hand” basis to help you out with a specific task, you are legally required to have Employers’ Liability Insurance.
Employers’ Liability Insurance covers injuries to employees, and because injury claims can be very expensive – over £1,000,000 for some claims – being uninsured in the event of a claim being made against you could lead to your bankruptcy. Additionally, if you are prosecuted because you didn’t have Employers’ Liability Insurance, you could face a fine of £2,500 for each day you didn’t have that insurance.
Builders’ Public Liability Insurance
Public Liability Insurance is similar to Employers’ Liability Insurance in that it covers injuries to people, although it covers injuries to members of the public rather than to employees. As mentioned, injury claims can be expensive and this means that no builder should consider operating without Public Liability Insurance even though it is not a legal requirement.
It’s also worth thinking about what indemnity limit is appropriate. Although £1,000,000 might seem like a lot of money, it might not be enough if a claim for a serious injury is made against you. The small additional premium that is usually required to increase the indemnity limit to £2,000,000 or even £5,000,000 means that higher indemnity limits are often worth considering.
The other thing to bear in mind is that Public Liability Insurance is a bit like the CSCS card in the sense that even though neither is required by law, you won’t be allowed on site unless you can prove that you have them.
Personal Accident/Sickness Insurance for Builders
People think about insuring against other people being injured, but often overlook insuring themselves against injury or sickness. You don’t get sick pay if you’re self-employed. Even if you’re in perfect health, an injury could mean you were unable to work. What would happen if you were unable to work for several months because you’d been injured or had fallen ill? How would the bills get paid?
Personal Accident/Sickness Insurance isn’t the same as Private Medical Insurance. It doesn’t pay for medical treatment. What it replace your lost income if you are unable to work because you have been injured or are ill. This means it can be an invaluable safety net if you find yourself in this position.