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What is Builder’s All Risk Insurance?

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Anyone that operates in the construction trade will need to be protected by insurance to shield against eventualities like accidents or losses. A comprehensive, all-risk builders insurance policy contains a number of different coverages that can be designed to fit the needs of the company and provide protection while a building project is underway.

Builders who perform construction work will need to think about insurance for themselves and things like tools or vehicle insurance. Performing work on a client’s property can sometimes result in unexpected accidents that builders may be held liable for and need adequate protection.

To shield personal assets and the business from hefty financial claims, builders will need to have the correct insurance in place to cover the cost of any legal fees or awarded settlements.

Some types of coverage are mandatory, required by law, while others are completely optional. However, with personal finances and property on the line, it can be prudent to invest in the appropriate insurance protection whether the law requires it or not.

What does a builder’s all-risk insurance cover?

Working on a construction site carries with it a large number of potential risks. Builder’s all risk insurance, sometimes known as construction insurance, can be purchased by builders and incorporates several different coverage types under one single policy.

Each policy may be designed around the needs of the building company to protect the business, employees, and clients from harm. Depending on individual circumstances, there may be coverage types that the builder does not require, and paying for them would be pointless.

Insurance that is not needed can be removed from the policy, leaving builders with only the protection that is relevant to their business, meaning that premiums are paid only for what is needed.

Coverage types that are commonly included with builders all risk insurance are:

Employers’ Liability

A mandatory insurance is required by any business that hires employees, even one-off or part-time. Claims brought by workers that suffer a work-related injury or illness will be covered under this insurance.

Public Liability 

Not required by law, but essential for builders performing work on a client’s property. Accidents or damage that impact the client personally, or their property, can result in expensive claims. Public liability insurance will protect against legal proceedings brought by a third party. Many clients will require this.

Product Liability 

Will protect the builder from financial liability if any work performed for a client causes injury or damage.

Personal Accident

Provides personal accident coverage and can replace financial losses caused by on the job injuries or critical illness.

Tools and Plant

Construction work frequently calls for specialised tools or expensive equipment to carry out the work. Tools and plat insurance protects the builder’s tools or any rented work equipment from accidental damage, loss, or theft.

Professional Indemnity

A professional indemnity policy can cover claims brought by unhappy clients for poor advice arising from negligence or even miscommunication. This insurance essentially holds the builder harmless for any claims of this nature.

Goods in Transit

Protects goods and materials from damage, theft, loss, and destruction while being transported between locations, from a company yard to a building site, for example.

Business Vehicle

Any vehicles that are used for business purposes will need to have the correct business or commercial use insurance in place. Companies that are used without a proper policy for business purposes will not be covered by standard vehicle insurance.

Contract Works 

This insurance protects work that is under construction until the time it is completed. Builders use this coverage to guard against issues like fire and vandalism. Insurance levels will need to be high enough to cover the cost of repair or redoing work.

What is not covered by the builder’s all-risk insurance?

While a builder’s all-risk insurance can protect from many occurrences associated with construction projects, not all things are included. As a result, there are still some instances where an all-risk policy does not offer any financial protection.

Exclusions may apply under a builder’s all-risk policy, and damage from weather or natural disasters typically will not be covered. Neither will issues arising from pollution, wear and tear, or insect infestation. In addition, most policies will add exclusions against war, government seizure, or nuclear hazards.

While an all-risk policy will usually cover builders against issues while work is in progress, it will not give any protection against problems that arise post-completion. For example, due to workmanship quality or material defects, there can often be problems attributed to the builder or company that carried out the work.

Suppose a client brings a claim after work has been completed. In that case, it will generally not be covered by a Builders All Risk policy (with the possible exception of claims related to professional indemnity). To protect against these types of claims, a Latent Damage Policy will be required.

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