What Builders Insurance Really Covers on the Job Site
Walk onto any building site and you’ll see countless ways things can go wrong. A scaffold could collapse. Materials could be stolen overnight. A tradesperson could be injured. A client’s existing structure could be damaged during renovations. The list goes on, and every scenario carries financial consequences that could cripple an unprepared building business.
Most builders understand they need insurance, but there’s often a significant gap between what they think their policy covers and what it actually protects them against. This misunderstanding only becomes apparent when something goes wrong and they discover—too late—that their claim isn’t covered.
Builders insurance isn’t a single, simple product. It’s typically a combination of different coverage types, each addressing specific risks you face on site. Understanding exactly what protection you have, what’s excluded, and where gaps might exist is essential for every building professional.
This article cuts through the confusion to explain what builders insurance actually covers on the job site, what it doesn’t, and how to ensure you’ve got the right protection for your specific building activities.
The Core Components of Builders Insurance
Before diving into specific scenarios, it’s important to understand that “builders insurance” is really an umbrella term for several different types of coverage that work together to protect your business.
The main components typically include public liability insurance, contract works insurance (also called construction insurance), tools and equipment cover, and potentially professional indemnity insurance. Some policies bundle these together, whilst others require you to purchase them separately.
Each component addresses different aspects of your on-site risks. Public liability covers damage to third-party property and injuries to people. Contract works protects the actual building work you’re doing. Tools cover protects your equipment and machinery. Professional indemnity covers financial losses arising from your advice or design work.
Understanding which component covers what scenario is crucial. Many builders assume their public liability policy covers everything that happens on site, only to discover it doesn’t protect the work itself or their tools. Let’s explore what each component actually covers in practical, on-site situations.
What Public Liability Insurance Covers On Site
Public liability insurance is the foundation of most builders insurance packages, and it’s often legally required before you can work on certain sites or projects. This coverage protects you when your business activities cause property damage or bodily injury to third parties.
On a building site, public liability typically covers scenarios where you accidentally damage a client’s existing property. If you’re renovating a home and your team accidentally breaks a window, damages flooring, or causes water damage to areas not being renovated, public liability should cover the repair costs.
It also covers injuries to people who aren’t your employees. If a client visits the site and trips over materials, or if a passerby is injured by falling materials, or if your work causes someone to be hurt, public liability insurance provides coverage for compensation claims and associated legal costs.
What Public Liability Doesn’t Cover
Understanding the exclusions is just as important as knowing what’s covered. Public liability insurance doesn’t cover damage to the work you’re actually performing. If you’re building a wall and it collapses before completion, public liability won’t cover rebuilding it—that’s where contract works insurance comes in.
It doesn’t cover your own property, tools, or equipment. If your expensive tools are stolen from the site or your machinery is damaged, public liability provides no protection. You need separate tools and equipment coverage for these scenarios.
Public liability also won’t cover injuries to your own employees—that requires workers’ compensation or employers’ liability insurance. And it typically excludes certain professional activities like providing design advice or architectural services, which need professional indemnity coverage.
Most public liability policies exclude damage caused by deliberately faulty workmanship. If you knowingly use substandard materials or cut corners and this causes damage, don’t expect your insurer to cover it. The coverage is for accidents and negligence, not intentional poor work.
What Contract Works Insurance Actually Protects
Contract works insurance (sometimes called construction insurance or works under construction cover) is specifically designed to protect the building work itself whilst it’s being constructed. This is essential coverage that many builders either don’t have or don’t fully understand.
This insurance covers damage to the actual construction work you’re performing, from the moment work begins until it’s completed and handed over to the client. If you’re building an extension and a storm damages the partially completed structure, contract works insurance covers the cost of repairs and completing the work.
It typically covers a wide range of perils including fire, storm damage, vandalism, malicious damage, theft of materials incorporated into the works, and accidental damage during construction. This means if something happens to the project you’re working on—through no fault of your own or even through your mistakes—you’re protected.
The Scope and Limitations of Contract Works Cover
Contract works insurance generally covers materials once they’ve been incorporated into the building. So timber that’s been used to frame walls is covered, but timber still sitting in a pile waiting to be used may not be unless your policy specifically includes materials on site.
The coverage usually extends to temporary works necessary for the project, such as scaffolding, site sheds, and temporary fencing. However, there are often limits on the value of these temporary works, so if you’re using extensive temporary infrastructure, check your policy limits are adequate.
One crucial aspect many builders miss: contract works insurance should cover the full contract value, not just your profit margin. If you’re working on a project worth a certain amount and it’s completely destroyed, you need enough coverage to rebuild the entire project, not just cover your labour costs.
Most policies exclude damage from faulty design (unless you also have professional indemnity cover), wear and tear, gradual deterioration, and damage that occurs after practical completion. Once you’ve handed the keys over to the client, contract works insurance typically stops, and any issues become warranty or defects liability matters.
Tools, Plant, and Equipment Coverage on Job Sites
Your tools and equipment represent a significant investment and are essential to earning income. Without them, you simply can’t work. Yet tools coverage is one area where builders often have inadequate protection or make incorrect assumptions about what’s covered.
Dedicated tools and equipment insurance covers theft, damage, and loss of your tools, machinery, and equipment both on and off site. This includes hand tools, power tools, surveying equipment, generators, compressors, and smaller plant items.
On a job site, your tools face numerous risks. They can be stolen—either in opportunistic thefts during the day or organised raids overnight. They can be damaged during use, in vehicle accidents whilst being transported, or by other site activities. Good tools insurance covers all these scenarios.
Understanding Coverage Limitations for Tools
Most tools policies have conditions about security that you must meet for coverage to apply. Tools left in unattended vehicles overnight might not be covered unless the vehicle was locked and alarm-activated. Tools left unsecured on an open site overnight typically won’t be covered.
There are usually limits on individual item values and total claim amounts. If you have particularly expensive equipment, you may need to specify these items separately on your policy with agreed values to ensure they’re fully covered.
Some policies distinguish between tools used on site and tools in transit or storage. Make sure your coverage extends to all locations where you keep or use tools, not just the job site. Many builders have tools stolen from home or storage facilities and discover their policy only covers on-site theft.
Wear and tear, gradual deterioration, and damage from lack of maintenance are universally excluded. Tools insurance covers sudden, unexpected events—not the natural consequence of using tools in a demanding environment over time.
Professional Indemnity for Design and Advisory Work
Many modern builders do more than just follow plans—they provide advice, suggest design modifications, recommend materials and methods, and sometimes prepare detailed specifications or simple designs. All these advisory activities create professional liability exposure that standard trades insurance doesn’t cover.
Professional indemnity insurance covers financial losses that arise from your professional advice, designs, specifications, or recommendations. If you suggest a particular construction method that later proves inadequate, recommend materials that turn out to be unsuitable, or make design decisions that cause problems, professional indemnity coverage responds.
On a job site, this might involve scenarios like recommending a foundation type that proves insufficient, suggesting structural modifications that later cause issues, specifying materials that don’t perform as required, or providing drawings that contain errors leading to construction problems.
When Builders Need Professional Indemnity
If you’re a builder who sticks strictly to following architects’ and engineers’ plans without providing any input or advice, you might not need professional indemnity. However, this scenario is increasingly rare in modern construction.
The moment you start making suggestions, providing opinions about design matters, recommending alternatives, or preparing any form of design documentation—even simple sketches—you’re engaging in professional services that create professional indemnity exposure.
Professional indemnity is particularly important for builders involved in design-and-construct projects, owner-builder projects where you’re providing design input, or renovations where you’re making structural or design decisions rather than simply following existing plans.
This coverage typically operates on a “claims made” basis, meaning you need coverage in place when a claim is made against you, not necessarily when the work was performed. This makes continuous coverage and proper run-off arrangements essential if you ever stop trading.
What Happens to Existing Structures During Construction
One area of frequent confusion is coverage for damage to existing structures when you’re doing renovation or extension work. Different insurance components may apply depending on the specific circumstances, and understanding this can prevent nasty surprises.
If you’re working on a renovation and accidentally damage part of the existing building that’s not included in your scope of works, this typically falls under public liability insurance. For example, if you’re renovating a kitchen and accidentally damage the adjoining living room ceiling, public liability should respond.
However, if you’re demolishing an existing structure as part of your contracted works and you accidentally cause more damage than intended—say, demolishing a wall causes unexpected damage to the roof structure—this might fall under contract works insurance rather than public liability, depending on how the policy is worded.
Damage to the structure caused by the construction process itself—vibration damage from machinery, cracks from excavation nearby, or damage from temporary propping—can fall into grey areas between policies. This is why clear policy wording and potentially an “own damage” extension on your public liability policy are important.
Pre-Existing Damage and Documentation
A critical practice that many builders overlook is thoroughly documenting the condition of existing structures before starting work. Photograph everything, note any existing damage, cracks, or issues, and have the client sign off on this documentation.
Without this evidence, you may be blamed (and face claims) for damage that existed before you started. Your insurer will struggle to defend against such claims if you can’t prove the damage was pre-existing. This documentation protects both you and your insurance coverage.
Some insurers offer specific “own damage” or “existing structures” extensions that broaden protection for damage to parts of buildings you’re working on. If you regularly do renovation work, explore whether your policy includes this extension or if it’s available.
Coverage for Materials and Goods on Site
Building materials represent significant value on any site, and they’re vulnerable to theft, damage, and loss. Understanding what insurance covers materials and under what conditions is essential for managing this risk.
Materials that have been incorporated into the building works are typically covered under contract works insurance. Once that timber becomes part of the frame or those bricks become part of the wall, they’re protected as part of the construction project.
Materials delivered to site but not yet incorporated into the works sit in a grey area. Some contract works policies include limited cover for materials on site, whilst others exclude them entirely. If your policy doesn’t cover stored materials, you might need separate cover or rely on suppliers maintaining insurance until materials are used.
Materials in transit from suppliers to site are typically covered by the supplier’s insurance or the courier’s insurance, not your builders insurance. However, once materials are signed for and accepted on site, responsibility typically transfers to you. Check your policy to understand exactly when coverage begins and ends.
Protecting High-Value Materials
For particularly valuable materials—expensive tiles, custom joinery, specialised equipment—check whether your contract works policy has sublimits that might leave you underinsured. You may need to specify high-value items separately or increase your policy limits.
Security requirements often apply to materials coverage. Materials left unsecured on open sites may not be covered for theft. Many policies require materials to be stored in locked compounds or containers when the site is unattended.
Keep detailed records of materials on site, including delivery dockets, photographs, and values. If you need to claim for stolen or damaged materials, this documentation will be essential for proving your loss and processing your claim efficiently.
What About Subcontractors and Their Coverage?
Most building projects involve subcontractors, and there’s often confusion about whose insurance covers what when subcontractors are working on site. This is a complex area that deserves careful attention in your contracts and insurance arrangements.
Generally, your public liability insurance covers you for claims arising from your own work and the work of subcontractors you engage. If a subcontractor causes damage or injury, claims might initially be directed at you as the head contractor, and your insurance would typically respond.
However, your contract works insurance usually only covers work you’re directly performing, not work subcontracted out. If a subcontractor damages the works they’re performing, their own insurance should respond. This is why it’s essential to require subcontractors to maintain adequate insurance and provide you with certificates of currency.
Managing Subcontractor Insurance Requirements
Your contracts with subcontractors should explicitly require them to maintain adequate public liability, contract works (for their portion of works), and workers’ compensation insurance. Specify minimum coverage amounts that reflect the risks involved in their work.
Obtain and verify certificates of currency before subcontractors start work, and check that these remain current throughout the project. If a subcontractor’s insurance lapses and an incident occurs, you could find yourself bearing responsibility for claims that should have been covered by their policy.
Consider whether your own insurance includes contingent coverage—protection that responds if a subcontractor’s insurance proves inadequate or non-existent. This acts as backup protection for gaps in subcontractor coverage, though it’s not a substitute for properly insuring subcontractors.
Some policies include automatic coverage for labour-only subcontractors under your public liability policy. However, this typically doesn’t extend to subcontractors providing materials or operating as independent businesses with their own tools and equipment.
Common Coverage Gaps Builders Should Address
Even with comprehensive builders insurance, certain coverage gaps commonly catch builders off guard. Being aware of these potential gaps allows you to address them proactively rather than discovering them when making a claim.
Cover for defects liability periods—the time after practical completion when you’re still responsible for rectifying defects—often isn’t clearly understood. Once practical completion occurs, contract works insurance typically stops, but your liability for defects continues. Ensure you have appropriate coverage for this period.
Pollution and contamination cover is often excluded or severely limited in standard policies. If your work involves excavation, demolition, or work on older buildings where asbestos or other contaminants might be present, explore specific pollution liability coverage.
Cyber risks are increasingly relevant even for builders. If you store client information digitally, use cloud-based project management systems, or rely on computer systems for your business operations, consider whether you need cyber insurance to cover data breaches or system failures.
Cover during maintenance periods or warranty work after completion may not be clearly addressed in standard policies. If you’re required to perform maintenance or warranty work months or years after project completion, ensure you have appropriate insurance in place for these activities.
Making Sure You’re Properly Protected
Understanding what your insurance covers is only valuable if you actually have appropriate coverage in place. Many builders operate with policies that don’t match their actual activities, leaving dangerous gaps in protection.
Start by reviewing your current insurance policies thoroughly. Read the policy wording, not just the certificate of currency. Understand what’s covered, what’s excluded, coverage limits, excesses, and any conditions you must meet for coverage to apply.
Compare your policy coverage against the actual work you do. If you provide design advice but don’t have professional indemnity, or if you regularly have high-value materials on site but your contract works policy has low sublimits, you’ve identified gaps that need addressing.
Work with an insurance broker or adviser who specialises in construction insurance. The building industry has unique risks that generic insurance brokers may not fully understand. Specialist advisers can identify exposures you might miss and recommend appropriate coverage.
Review your insurance annually and whenever your business activities change. As you take on different types of projects, expand your services, or grow your business, your insurance needs evolve. What was adequate last year may be insufficient now.
Keep detailed records of your projects, materials, equipment, and any incidents that occur on site. Good documentation makes insurance claims smoother and helps ensure you receive the full benefit of your coverage when you need it.
Remember, insurance is there to protect your business and livelihood. Whilst it represents a cost, the financial exposure from being underinsured or uninsured for a significant claim can be business-ending. Investing in proper coverage and truly understanding what it protects is one of the smartest decisions any builder can make.
Frequently Asked Questions
Does my builders insurance cover work I subcontract to other trades?
Your public liability insurance typically covers claims arising from subcontracted work, but your contract works insurance usually only covers work you perform directly. Subcontractors should maintain their own contract works insurance for the specific works they’re performing. Always require subcontractors to provide proof of adequate insurance including public liability, contract works, and workers’ compensation cover before they start work on your projects. Include these insurance requirements in your subcontractor agreements and verify certificates of currency remain current throughout the project.
What’s the difference between contract works insurance and public liability for builders?
Public liability insurance covers damage to other people’s property and injuries to third parties caused by your building activities. Contract works insurance covers damage to the actual building project you’re constructing. For example, if you accidentally damage a client’s existing fence whilst building their extension, public liability responds. If a storm damages the extension you’re building before it’s complete, contract works insurance responds. Most builders need both types of coverage as they protect against different risks on the same job site.
Are my tools covered if they’re stolen from my vehicle overnight?
Coverage for tools stolen from vehicles depends on your specific policy wording and whether you’ve met security requirements. Most tools insurance policies require vehicles to be locked and alarmed when left unattended, and some exclude overnight theft from vehicles entirely unless parked in secure, locked compounds. Higher-value tools may need to be removed from vehicles overnight or stored in locked tool boxes within the vehicle. Check your policy’s specific security requirements and consider whether you need enhanced coverage for tools regularly left in vehicles.
Does builders insurance cover me for design work and providing building advice?
Standard builders insurance (public liability and contract works) doesn’t cover financial losses arising from design work, specifications, or building advice—you need professional indemnity insurance for this exposure. If you provide any form of design input, recommend construction methods, suggest material alternatives, or prepare drawings or specifications, professional indemnity coverage is essential. Many modern building projects involve builders providing advisory services beyond just following plans, making professional indemnity increasingly important for builders who want comprehensive protection.
What happens to insurance coverage after I complete a building project?
Contract works insurance typically ceases at practical completion when you hand the project over to the client. However, your liability for defects and warranty obligations continues beyond this point. You need appropriate insurance coverage that extends through defects liability periods and covers warranty work you perform after completion. Professional indemnity insurance becomes particularly important during this period as claims often arise months or years after project completion when issues with workmanship, materials, or design decisions become apparent. Ensure your coverage includes adequate run-off protection for completed works.
