- What is contractors all risk insurance?
- What are the health & safety risks in construction?
- What does contractors all risk insurance cover?
- > Contract works insurance
- > Public and product liability insurance
- > Employers liability insurance
- > Own plant and equipment
- > Hired-in plant and equipment
- > Employee tools
- > Non-negligence (JCT) insurance
- > Business interruption insurance
- > Personal accident insurance
- > Terrorism insurance
- > Legal expenses insurance
- Who needs contractors all risk insurance?
- Do we require non-negligence insurance?
- Do we require design and construct professional indemnity insurance?
- How do insurers calculate your contractors all risk insurance cost?
- Annual contract works insurance or project specific?
- How to compare contractor all risk coverage?
Ensuring you have the right construction insurance
can seem difficult, especially when you understand the complexities and different coverage options available. Below we take a closer look at contractors all risk insurance
and provide some background to the key decisions you'll need to make.
However, before we consider what protection contractors all risk insurance can offer, it’s worth considering your firm’s needs. Each construction business is different and will require different contractors all risk coverage to protect your interests.
What is contractors all risk insurance?
Contractors all risk insurance is a package policy designed to meet the requirements of construction companies. Cover can be tailored to meet your company's individual requirements under a single policy.
Each insurers contractors all risk policy can vary, and the terminology may alter, however the covers are comparable under the below sections:
Although contractors all risk provides for covers tailored to the construction industry, it is common to purchase in conjunction with a number of additional policies such as: management liability insurance, cyber insurance and fleet insurance.
To obtain your no-obligation contractors all risk insurance quotes, please complete our online application
What are the health & safety risks in construction?
According to Health and Safety Executive (HSE)
, there were 82,000 construction workers in the UK who suffered from work-related ill health and 38 fatal injuries in 2017/18.
We have offered some guidance on employers liability insurance
and public liability insurance
to identify the potential costs of personal injury claims should the worst happen.
It is worth noting the largest cause of accidents and ill health on a construction site typically arise from:
> Falls from height
> Collapse of structures
> Collapse of excavations
> Electric shocks
> Exposure to asbestos
> Exposure to building dust
What does contractors all risk insurance cover?
Contractors all risk insurance offers a diverse range of covers under one comprehensive product to protect your business from a wide range of risks.
Contractors all risk insurance definitions do vary and it's worth considering the terms and features to consider what cover best meets your requirements.
> Contract works insurance
Contract works insurance will protect the work in progress on a construction site in the event of damage before responsibility has been handed to the principal. Note if you are working on an existing structure, the existing structure will not be covered and should be insured by the property owner. The insurance will cover any loss or damage to the property and materials.
> Public and product liability insurance
Public liability insurance
and product liability insurance
will protect against claims arising from injury or property damage of persons other than your employees (i.e. customers, suppliers, contractors or third persons) in the course of your business.
> Employers liability insurance
Employers liability insurance
will protect against claims arising from injury or illness of your employees. All companies have a legal duty to protect the safety of their employees at work. It is one of the few types of insurance compulsory under UK law.
> Own plant and equipment
Own plant and equipment insurance will protect against damage to own plant and equipment whilst in your custody or control or hired out under a defined agreement. Can include: scaffolding, temporary buildings, site office contents and site welfare facilities.
> Hired-in plant and equipment
Hired-in plant and equipment insurance will protect your legal liability under the terms of your hiring agreement to pay compensation for damage to hired-in plant, whilst in your custody or control.
Employee tools insurance will protect against damage to personal tools and effects belonging to an employee, whilst on the construction sites.
> Non-negligence (JCT) insurance
, otherwise known as JCT 21.2.1 / 6.5.1, will protect against claims should there be damage to a neighbouring property due to the works carried out arising from collapse, subsidence, heave, vibration, weakening or removal of support, or lowering of groundwater, which is not the result of negligence.
> Business interruption insurance
Business interruption insurance will protect against the loss of income from being unable to trade as a result of an insured event (i.e. property damage). The insurance will cover the consequential loss of the interruption to trade by indemnifying the policyholder for the loss of income as a result of the insured peril.
> Personal accident insurance
Personal accident insurance will in the event of an accidental bodily injury to any insured person, provide financial support as defined in the policy schedule. Benefits will be payable for death or disablement and related medical expenses.
> Terrorism insurance
Terrorism insurance will protect against loss from damage to property and potentially consequential loss resulting from acts of persons which carry out activities directed towards the overthrowing or influencing, by force or violence, of any government.
> Legal expenses insurance
Legal expenses insurance
will assist your business with expert legal advice through a telephone legal advice service. In the event of a claim, the insurance will cover legal representation or unforeseen legal costs in a range of circumstances, typically relating to your property, employment, or contract disputes.
Who needs contractors all risk insurance?
Anyone undertaking work on a construction site should consider contractors all risk insurance
. Which covers you decide to purchase will depend on a number of factors including your responsibilities, contractual requirements, size and risk appetite. We have produced a construction insurance
UK guide to offer further guidance.
Your contracts with property owners will typically set out the responsibilities of each party, including who is contractually obliged to insure the various elements of the build. JCT contracts are the mostly commonly used in the UK, however other forms are available.
Contract works insurance will typically include an extension that automatically notes interested parties or provides an 'Indemnity to Principles' clause. However, if you require your principle to be noted on the policy, please let us know.
The Health and Safety Executive (HSE) offers guidance on defining responsibilities under the Construction (Design and Management) Regulations 2015.
Any contractor must have the skills, knowledge, experience and, where relevant, the capability to carry out the work safely and without risk to health.
Guidance on what a contractor needs to do to carry out their duties under CDM 2015 is available on the HSE roles and responsibilities of a contractor page.
Do we require non-negligence insurance?
Consideration should be made to whether your contractors all risk insurance should provide cover for non-negligence insurance.
Dependent on the type of contract you agree with the property owner, or if you undertake excavation, piling, underpinning or basement works in built-up area. You may need to arrange non-negligence insurance to protect the property owners legal liability for damage to a neighboring property.
Public liability insurance
will only indemnify the contractor against claims arising from injury or property damage to a third party which has resulted from their negligence.
However, if the contractors negligence cannot be proven and there is no available insurance to respond, the property owner can be held liable for the damage or injury. This can potentially embroil yourself in a legal battle with the property owner in an attempt to prove your negligence or breach of contract.
A number of JCT clauses (i.e. 21.2.1 or 6.5.1) require non-negligence insurance to protect the property owners legal liability. Other forms of contract may have similar provisions, either as part of the standard form or as an amendment.
Non-negligence Insurance provides cover for claims should there be damage to a neighbouring property due to the works carried out, which are not the result of negligence. Typically arranged in the joint names of the contractor and the property owner.
The risks named within the JCT Contract are:
> Weakening or removal of support
> Lowering of ground water
The cover can potentially also include additional hazards such as explosion, flood, backing up of drains and bodily injury to third parties. Zurich Insurance overs some further guidance with respect to neglecting non-negligence cover
Do we require design and construct professional indemnity insurance?
Where advice, professional, or technical services are offered to a client, consideration should be made to purchasing professional indemnity insurance.
Professional Indemnity is not covered under a contractors all risk policy because not all contractors carry out or take responsibility for design or offer advice.
It is worth considering that if a main contractor subcontracts design work and there is an error with the design, the main contractor can be held vicariously liable.
Professional indemnity insurance
is therefore commonly purchased by construction and project managers to protect themselves from the risk posed by subcontractors. In addition to professionals such as architects, engineers, surveyors and any other specialists that provide advice, professional, or technical services.
We have produced a further guide to design and construction insurance. If you would like to discuss your specific requirements, please contact us and we'll be happy to investigate further.
How do insurers calculate your contractors all risk insurance cost?
At get indemnity we have the capacity to compare quotes from the wholesale insurance market with our online application. Your contractors all risk insurance premium calculation will consider:
- The allocation of turnover & wages between different construction activities and the perceived exposure attaching to each.
- The turnover generated and allocation between 1) new build and existing works; 2) residential, commercial and industrial works.
- The nature and size of your largest projects, this will indicate the level of exposure posed, large scale construction projects typically carry increased risk.
- Details with respect to work at a height of more than 5 meters above floor level, working with heat, making excavations or using industrial machinery.
- Frequency and severity of claims with a lack of remedial action, can indicate a lack of risk management and systemic issues.
Annual contract works insurance or project specific?
Contract works insurance will typically be purchased on an annual basis by the respective parties, for their own requirements.
An annual contract works policy will cover all work undertaken in that year, up to a maximum contract value per project. This is usually the most cost-effective solution for contractors who typically undertake multiple projects each year.
Larger projects may prefer to arrange their contract works insurance for all parties on a project specific basis. However, issues can arise if there are delays in construction and this extends past the agreed policy period.
It is also worth considering that business insurance such as PI insurance
and employers liability insurance
will most likely need to be arranged an annual basis.
Lower risk contractor activities
Air Conditioning, Acoustic Engineer, Bricklayers, Carpenters, Cavity Wall Insulators, Ceiling Contractors, Chimney Sweeps & Repairs, Conservatory Erection, Construction Site Logistics, Damp Proofing, Electrical Contractors, Flooring Contractors, General Builders, Glass Contractors, Groundworkers, Haulage Contractors, Heating & Ventilation Contractors, Installation Contractors, Insulation Contractors, Landscape Gardeners, Loft Conversion Contractors, Paving Contractors, Pipe Fitters, Plant Hire, Plastering & Drylining, Plumbers, Road Surfacing, Shop & Office Fitters, Site Clearance Contractors, Stonemasons, Tilers, Utility Contractor
Medium to high-risk contractor activities
Aerial Erectors, Basement Contractors, CCTV & Alarm Installers, Cladding Contractors, Concrete Finishers, Concrete Pumps, Curtain Walling, Diamond Drillers, Formwork & Shuttering, Guttering, Lift Engineers, Reinforced Concrete Contractors, Roofers (incidental), Soft Strip Contractors, Solar Panel, Telegraph Pole & Street Light Installers, Tree Felling & Lopping, Underpinning, Water Treatment Contractors
Very high-risk contractor activities
Asbestos Removal, Demolition, Forestry Contractors, Red Zone Rail Works, Roofers, Scaffolders, Steel Erection, Steel Fabrication, Steeplejacks, Piling, Tunnelling, Work involving Bridges & Viaducts
How to compare contractor all risk coverage?
Please complete our online application to compare contractor all risk coverage. Quotes from the wholesale insurance market are typically offered within 48 hours.
Competition within the market remains high and cover offered by insurers continues to expand with extensions available. At get indemnity we continue to see soft market conditions and reduction in contractors all risk insurance cost.
If you operate within a high hazard exposure or you have recent claims activity, please engage with your contractors all risk insurance broker early to ensure a satisfactory renewal.
At get indemnity
we maintain the knowledge and expertise to identify a wide range of business insurances
solutions to meet your needs.
This guide is for information purposes and based on sources which we believe are reliable, the general risk management and insurance information is not intended to be taken as advice with respect to any individual circumstance and cannot be relied upon as such.