What Insurance Should My Builder Have?

At Towerstone, we provide specialist property accountancy services for homeowners, landlords, and property investors. We have written this article to explain required builder insurance, helping you make informed decisions.

This is a question every homeowner and property investor should ask before any work begins. It does not matter whether you are planning a small bathroom refit or a full scale extension. If the builder does not have the right insurance in place you could be exposing yourself to serious financial and legal risk.

I am often contacted after something has gone wrong. A worker is injured, a neighbour’s property is damaged, or a project is abandoned halfway through. In many of these cases the problem is not just the quality of the work. It is that the builder did not have the correct insurance and the homeowner assumed it would all be fine.

In this article I will explain clearly what insurance your builder should have in the UK, which types are legally required, which are strongly recommended, and how to check that the cover is genuine and adequate. I will also explain what risks you could face if a builder is uninsured and how this interacts with your own home insurance.

Why Builder Insurance Matters

When building work starts on your property several risks arise immediately.

These include:

Injury to the builder or their workers

Damage to your home

Damage to neighbouring properties

Defective work discovered later

Theft of tools or materials

Abandoned projects

Insurance exists to protect against these risks. Without it the financial responsibility can fall on you even if the problem was not your fault.

Insurance is not about expecting things to go wrong. It is about being protected if they do.

The Legal Minimum Insurance a Builder Must Have

In the UK there is one type of insurance that is legally required in most situations.

That is Employers’ Liability Insurance.

Employers’ Liability Insurance

If a builder employs anyone even on a casual or temporary basis they are legally required to have Employers’ Liability Insurance.

This insurance covers:

Injury to employees while working

Illness caused by work activities

Legal costs associated with claims

The legal minimum cover is £5 million although most policies provide £10 million as standard.

This requirement applies whether the worker is:

Full time

Part time

Temporary

An apprentice

If a builder has employees and does not have Employers’ Liability Insurance they are breaking the law.

How This Affects You as a Homeowner

If a worker is injured on your property and the builder does not have Employers’ Liability Insurance there is a risk the injured party could try to pursue you as the property owner.

This is not common but it does happen particularly where there is no other route to compensation.

Always ask to see proof of Employers’ Liability Insurance if the builder has anyone working for them.

Public Liability Insurance

Public Liability Insurance is not legally required but it is essential and I would never recommend using a builder without it.

Public Liability Insurance covers damage or injury caused to third parties.

This includes:

Damage to your property

Damage to a neighbour’s property

Injury to you or visitors

Injury to members of the public

This is the insurance that protects you most directly as the homeowner.

Typical Examples Where Public Liability Applies

To make this practical here are common scenarios.

A ladder falls and damages a neighbour’s car

A pipe is drilled into causing water damage

A wall collapse damages an adjoining property

A visitor trips over building materials

Without Public Liability Insurance the builder may not have the funds to pay for the damage and you could end up in a dispute with no easy resolution.

How Much Public Liability Cover Should a Builder Have?

For domestic building work most reputable builders carry at least £1 million of Public Liability Insurance.

Many carry £2 million or £5 million especially if they work on larger projects.

As a general guide:

Small domestic jobs £1 million minimum

Extensions and structural work £2 million or more

Large projects £5 million

If a builder refuses to disclose their cover level that is a red flag.

Contractors’ All Risks Insurance

This is one of the most misunderstood types of builder insurance.

Contractors’ All Risks Insurance covers the building work itself while it is in progress.

This includes:

Damage to the works

Fire flood or storm damage

Vandalism

Theft of materials on site

Without this insurance there can be disputes about who pays if something happens during the build.

Who Is Responsible for Contractors’ All Risks Insurance?

This depends on the contract.

In some cases the builder carries it. In others the homeowner is expected to arrange it often as part of a specialist home renovation policy.

Never assume it is covered. Always clarify in writing.

If the builder says it is included ask to see the policy and confirm:

The site address is covered

The value of the works is sufficient

The policy is active for the duration of the project

Professional Indemnity Insurance

Professional Indemnity Insurance is relevant where the builder provides design advice or technical input.

This includes situations where the builder:

Designs structural elements

Advises on load bearing changes

Specifies materials or methods

Provides drawings or plans

Professional Indemnity Insurance covers:

Design errors

Faulty advice

Professional negligence

If a design flaw later causes structural issues this insurance is what pays for rectification.

When Professional Indemnity Is Essential

If your builder is following plans prepared by an architect or structural engineer they may not need this cover.

However if the builder is designing elements themselves then Professional Indemnity Insurance is essential.

Always clarify who is responsible for design decisions.

Contractors’ Plant and Tools Insurance

This insurance covers the builder’s tools equipment and machinery.

It is not essential for your protection but it does matter indirectly.

If tools are stolen and the builder cannot afford replacements your project may be delayed or abandoned.

This insurance covers:

Theft of tools

Damage to equipment

Loss during transit

A builder without this cover may be financially fragile.

Personal Accident Insurance

Personal Accident Insurance covers the builder themselves if they are injured and cannot work.

This is particularly relevant for sole traders.

Without this cover an injured builder may be unable to complete the work and unable to refund any money paid.

This insurance pays a weekly benefit or lump sum.

While not mandatory it is a sign of a well prepared professional.

Insurance for Subcontractors

Many builders use subcontractors such as electricians plumbers and plasterers.

Each subcontractor should have their own:

Public Liability Insurance

Employers’ Liability Insurance if applicable

Do not assume the main contractor’s insurance covers subcontractors.

Ask how subcontractors are insured and whether they provide their own cover.

What Insurance Does Not Replace

Builder insurance does not replace everything.

It does not usually cover:

Poor workmanship discovered later

Contractual disputes

Delays unless damage is involved

For workmanship issues warranties and contracts matter more.

This is why insurance should sit alongside clear contracts and staged payments.

How to Check a Builder’s Insurance Is Genuine

Never accept verbal assurances.

You should always ask for:

A copy of the insurance certificate

The insurer’s name

Policy number

Cover dates

Cover limits

Check that the policy is:

In the builder’s correct legal name

In date

Appropriate for the type of work

If in doubt you can contact the insurer to verify the policy.

Reputable builders will not hesitate to provide this information.

Red Flags to Watch For

In my experience certain behaviours are warning signs.

Be cautious if a builder:

Avoids questions about insurance

Says they have never needed it

Claims your home insurance will cover everything

Offers a discount if you do not ask questions

Provides expired or unclear documents

Insurance is a basic professional requirement. Resistance is not a good sign.

How Builder Insurance Interacts With Your Home Insurance

Many homeowners assume their home insurance covers building work. This is often not true.

Standard home insurance policies may:

Exclude major building works

Require notification of renovations

Increase premiums during work

Always inform your insurer before work begins.

You may need:

A renovation policy

Additional cover for the works

Confirmation that liability is extended

Failing to notify your insurer can invalidate your cover.

Who Is Liable if Something Goes Wrong?

This is where insurance becomes critical.

If the builder is insured:

Claims are handled by insurers

Liability is clearer

Disputes are easier to resolve

If the builder is uninsured:

Claims may be pursued personally

Builders may not have funds

You may face legal action

Insurance protects everyone involved.

What About Health and Safety Responsibilities?

Builders have legal health and safety obligations under UK law enforced by Health and Safety Executive.

Insurance does not remove these obligations but it supports compliance.

If a serious accident occurs investigations can follow. Insurance ensures legal costs and compensation are covered.

Insurance for Larger or Structural Projects

For major works such as:

Extensions

Loft conversions

Structural alterations

Insurance becomes even more important.

These projects involve higher risks and higher potential losses.

In these cases you should expect:

Higher Public Liability limits

Contractors’ All Risks Insurance

Clear documentation

Do not proceed without full clarity.

Should Insurance Be Written Into the Contract?

Yes absolutely.

Any written contract should specify:

Which insurance the builder must hold

Minimum cover levels

That insurance must remain in place

That certificates must be provided

This protects you if disputes arise later.

What If the Builder Is a Sole Trader?

Sole traders still need insurance.

If they work alone with no employees they may not need Employers’ Liability Insurance but they still need:

Public Liability Insurance

Ideally Personal Accident Insurance

Do not assume sole trader means lower risk.

Common Myths About Builder Insurance

There are a few myths that regularly cause problems.

Common misconceptions include:

Small jobs do not need insurance

Friends or family builders do not need cover

Cash payments remove liability

Verbal agreements are enough

None of these are true.

Insurance requirements do not change because the job is small or informal.

Practical Checklist Before Work Starts

Before agreeing to any work I usually advise homeowners to confirm the following.

Ask for proof of:

Public Liability Insurance

Employers’ Liability Insurance if applicable

Contractors’ All Risks Insurance

Professional Indemnity Insurance if design advice is given

Confirm:

Cover limits are appropriate

Policies are in date

The work type is covered

This takes minutes and can save thousands.

What Happens if a Builder’s Insurance Lapses Mid Project?

This can happen particularly on longer jobs.

You should ensure that:

Insurance is maintained for the full duration

You receive updated certificates if policies renew

This is another reason to include insurance obligations in the contract.

Should I Walk Away if a Builder Is Uninsured?

In almost all cases yes.

There are very few scenarios where using an uninsured builder is sensible.

The risks far outweigh any savings.

A professional builder understands the importance of insurance and will already have it in place.

So What Insurance Should My Builder Have?

At a minimum your builder should have:

Public Liability Insurance

Employers’ Liability Insurance if they employ anyone

For most projects they should also have:

Contractors’ All Risks Insurance

Professional Indemnity Insurance where advice or design is involved

Insurance is not paperwork for the sake of it. It is protection for you your home and everyone involved in the work.

If a builder cannot provide clear evidence of appropriate insurance that is not a technical issue. It is a decision point.

Asking the right questions at the start sets the tone for a professional project and significantly reduces the risk of problems later.

If you would like to explore related property guidance, you may find how many houses in england and how long do enquiries take when buying a house useful. For broader property guidance, visit our property hub.