Imagine a builder's apprentice drops a scaffold pole through your neighbour's greenhouse. Or a pipe is incorrectly installed, floods your kitchen six months later, and rots the floorboards. Or a scaffolding collapse injures a passer-by outside your property. In each scenario, the question of who is liable, and who pays, comes down to insurance.
Most homeowners never ask to see a builder's insurance documents. They accept a verbal assurance that "we're fully insured" and move on. This is one of the most significant risks you can take on a domestic build.
What Cover Your Builder Should Have
There are three main types of insurance relevant to domestic building work:
Public Liability Insurance covers the contractor for injury or damage to third parties (that includes you, your neighbours, and members of the public) caused by their work or their staff. For domestic work, you should expect a minimum of £1 million of cover, but £2 million or £5 million is more appropriate for any project with scaffolding, structural works or a team of subcontractors. This is the most important policy and the one most commonly found inadequate or, in worst cases, non-existent.
Employer's Liability Insurance is a legal requirement for any contractor who employs staff (as opposed to working entirely alone as a sole trader). It covers employees for injury or illness caused through their work. The statutory minimum is £5 million, though most reputable insurers require more. If your builder has any workers on site who are employees rather than self-employed subcontractors, this cover is not optional.
Contractors' All Risks Insurance (sometimes called contract works insurance) covers the works themselves, materials on site, and plant and equipment against damage during the build. If a fire damages the partially built extension or a storm destroys materials left on site, this policy is what pays for reinstatement. Without it, you might find yourself in a costly dispute over who bears the loss.
Professional Indemnity: A Note
If your builder is also acting as a designer or structural adviser (which some design-and-build contractors do), you should ask about professional indemnity insurance as well. This covers negligent professional advice rather than physical damage. It's more commonly relevant for architects and engineers, but worth asking about if your contractor has design responsibilities.
How to Verify the Cover
Asking "are you insured?" is not enough. Get the insurance certificates, not just a claim. The certificate should show the insurer, the policy number, the type of cover, the level of cover, the policy period and the name of the insured (which should match your contractor's company name or trading name). Check the expiry date: a policy that expires in three months is no use on a six-month build.
Contact the insurer directly if you have any doubt about a certificate's authenticity. Most major insurers will confirm whether a policy is active if you provide the policy number.
Practical step: Add a clause to your contract requiring the contractor to maintain and evidence adequate insurance for the duration of the works, and to notify you immediately if any policy lapses or changes. Ask for updated certificates at the start of each new policy year.
Your Own Home Insurance During the Build
Your existing home insurance policy almost certainly contains exclusions for building works. Most standard policies will not cover damage caused by, or discovered during, structural work. Some will not cover the property at all if it becomes unoccupied during a major renovation.
You need to tell your insurer what you're planning. They may extend your existing policy (sometimes with an additional premium), cancel it, or require you to take out specialist cover. Do not assume your home is covered during a build. The consequences of finding out otherwise after a fire or flood are devastating.
Specialist renovation insurance policies are available and typically cover the existing structure, the works in progress, materials on site, and public liability from your side of the arrangement. They're not cheap, but for any project over around £30,000 they're essential.
The Subcontractor Problem
Many main contractors use subcontractors: specialist tradespeople for plastering, electrics, plumbing, roofing and so on. The insurance picture here gets complicated.
The main contractor's public liability insurance should cover work carried out on their behalf by subcontractors, but only if those subcontractors are listed on or included within the policy. Some policies exclude subcontractor liability entirely. Others cover it only if the main contractor has proper employment or engagement arrangements in place.
Ask your main contractor explicitly: does your public liability insurance cover the work of your subcontractors? Get the answer in writing. Then check, ideally by contacting the insurer.
What Happens If There's No Insurance?
In the worst case, a contractor without public liability insurance causes serious damage or injury and then becomes insolvent or disappears. You, as the property owner, may find yourself facing claims from injured parties or neighbouring property owners whose property has been damaged. Your own insurer, if you have renovation cover, may pursue the contractor on your behalf, but that's a slow and uncertain process.
For injury to employees working on your site, if the contractor has no employer's liability cover, the injured worker could potentially pursue a claim against you as the person who controlled access to the site.
None of this is to say you're automatically liable for an uninsured contractor's mistakes. But the legal position is complex, costly to resolve and entirely avoidable. Checking insurance before you start costs you nothing. Not checking it could cost you enormously.