What Your Insurance Doesn't Cover: The Gaps That Catch You Out

‍‌‌‌‌‌‌‌​​​‌‌‌​‌‌‌​​​​‌​‌​‌‌‌‌​‌‍Your insurance is there to stop a disaster wiping you out -- but it will not quietly pick up the tab every time something goes wrong on a job. A lot of the nastiest "I thought I was covered" shocks are baked into the exclusions.

6.11.1 Public liability: faulty workmanship

Public liability is mainly there for injury or damage to other people's property -- not to fix your own shoddy work.

• Most policies exclude the cost of redoing defective workmanship or replacing the bit you got wrong.
• They often will cover resultant damage -- e.g. your badly-fitted pipe bursts and floods a new kitchen:
  • Re-doing the pipework = your problem.
  • Replacing the damaged kitchen units and floor = usually covered.
• Common wordings talk about "rectification of defective work" or "making good faulty workmanship" being excluded.

What to ask your broker

• "Show me the defective workmanship or property worked on exclusions and explain them in English."
• "If my work fails and causes damage, which bits are covered and which aren't?"

6.11.2 Pollution and contamination

Most standard PL policies exclude gradual pollution and environmental contamination.

• If your work causes a slow leak that contaminates a neighbour's garden, gets into groundwater, or reaches a watercourse, standard PL often won't cover it.
• Sudden and accidental pollution (e.g. you puncture a fuel line and diesel spills) is sometimes covered, but gradual contamination is almost always excluded.
• You need a specific pollution extension if your work involves anything that could contaminate -- including disturbing contaminated land, working near watercourses, or handling waste materials.
• This links directly to invasive species work (see guide 11.13) -- moving knotweed-contaminated soil is a pollution risk that standard PL won't touch.

What to ask your broker

• "Does my PL include any pollution cover, and is it sudden-and-accidental only?"
• "Do I need a pollution extension for the type of work I do?"

6.11.3 Asbestos exclusion

Almost all standard PL and EL policies exclude asbestos-related claims entirely.

• If you disturb asbestos during refurb or demolition and someone develops an asbestos-related illness, your standard insurance probably won't cover the claim.
• This catches a lot of refurb and demolition trades who assume their standard PL covers everything on site.
• Specific asbestos liability cover is available as an add-on -- usually for trades who work in buildings likely to contain asbestos (pre-2000 properties, commercial refurbs, schools, hospitals).
• Even with asbestos cover, the insurer will expect you to have followed proper asbestos procedures (survey, plan, licensed removal where required). If you just smashed through it without checking, they'll still refuse.

What to ask your broker

• "Does my policy exclude asbestos entirely, or do I have any cover?"
• "What asbestos liability extension is available for my trade?"

6.11.4 Tools insurance -- the unattended van trap

Tools cover is full of strings:

• Many policies say no cover if tools are stolen from a vehicle overnight unless it's in a locked building or approved compound.
• Even daytime thefts can be excluded if the van is "unattended" and not properly locked/alarmed or checked within a set time (e.g. 24-48 hours).
• Some exclude laptops, phones and other tech entirely, or anything you can't prove you owned (no receipts/photos/serials).

Typical wording: "no cover for theft from an unattended vehicle unless all doors/windows are locked, security devices in use, and the vehicle is in a locked building/compound or checked within X hours."

New-for-old vs market value

Check whether the policy pays to replace your tools at current new prices or only at second-hand market value. On a 5-year-old Makita set, the difference can be hundreds of pounds.

What to ask

• "Exactly when are my tools covered in the van, and when aren't they?"
• "What counts as overnight, and do I need an alarm or specific locks?"
• "Do you pay new-for-old or market value, and what proof do you want?"

6.11.5 Professional indemnity: what it doesn't touch

PI is for professional advice/design errors, not a blanket fix-everything cover.

Common gaps

• Known issues -- if you already know about a defect or a potential claim and don't tell the insurer when you take the policy or renew, they can refuse cover later under the Insurance Act 2015 duty of fair presentation.
• Deliberate/conscious acts -- PI is not there for work you knowingly bodged, or where you ignored clear regs/instructions.
• Pure workmanship claims -- if there's no design/spec error, just bad putting-together, it's usually a public-liability / contract issue, not PI.

What to ask

• "What exactly is classed as 'professional services' under this PI policy?"
• "What do I have to tell you at renewal under the duty of fair presentation?"

6.11.6 Employer's liability: labour-only vs bona fide subbies

Employer's liability (EL) is there for people who work under your control -- but policies and insurers draw lines:

• Labour-only subbies who use your tools, follow your hours, and are under your control are often treated as employees and should be covered by EL -- but only if they're declared correctly.
• Bona fide sub-contractors (turn up with own tools, insurance and method, price for the job) are usually expected to have their own EL/PL, and many policies only cover you for your share of liability, not theirs.
• If you mis-describe your workforce when you buy the policy (for example, tell the insurer you have no labour-only subbies when you do), you risk breaching the Insurance Act 2015 duty of fair presentation -- which gives insurers room to reduce or refuse a claim.

What to ask

• "Does this EL policy cover labour-only subbies? How do you define them?"
• "What about bona fide subbies -- what cover do I have for their mistakes?"
• "What wage split do you expect me to declare between direct staff and subbies?"

6.11.7 Contract works / works in progress

If you're building an extension and it collapses, gets damaged by fire/storm, or is vandalised before handover -- who insures the partially-built structure?

• On domestic jobs, often nobody unless you have contract works cover (sometimes called "all risks") or the client has arranged it under JCT.
• Standard PL covers injury and damage to other people's property, but the work you're building isn't "other people's property" until you hand it over.
• On bigger jobs, JCT contracts specify who arranges the insurance (usually the client for existing structures, contractor for new works) -- but on typical domestic jobs, nobody discusses it.

What to ask

• "Do I have contract works / all risks cover for work in progress?"
• "What happens if the extension I'm building gets damaged by storm or fire before handover?"

6.11.8 Hired-in plant

If you hire a digger, dumper or other plant and damage it, your PL may not cover hired-in plant -- you often need a separate hired-in plant extension.

• Hire companies offer their own damage waiver but it's expensive (often 10-15% of the hire cost per week).
• Your own hired-in plant cover is usually cheaper if you hire regularly.
• Check the hire company's T&Cs -- they'll hold you liable for damage, and "my insurance will sort it" only works if your insurance actually covers it.

What to ask

• "Does my policy cover hired-in plant, and up to what value?"

6.11.9 Vans: overloading, wrong use class, and conditions

Trade van policies are full of conditions that are easy to breach:

Overloading

• If your van is over its plated gross weight when you crash, the insurer can argue you've breached policy conditions and either refuse the claim or reduce it.
• Police can also issue immediate prohibition notices for overloaded vehicles, and your MOT/roadworthiness is at risk.
• If you crash while overloaded and someone is injured, the consequences are criminal as well as civil.

Wrong use class

• Personal policy used for business, or "SDP only" (social, domestic, pleasure) when you're hauling tools/site materials daily, can invalidate claims.
• Use outside territorial limits without telling them (e.g. regular European trips) is another common exclusion.

What to ask

• "What happens if the vehicle is found overweight -- do you walk away or just reduce the payout?"
• "Is my business use correctly described (carriage of own goods, haulage, etc.)?"

6.11.10 Excess / deductible -- the bit that eats small claims

Even when a claim is covered, you pay the first £X:

• PL excess: often £250-£500 for small firms.
• PI excess: often £500-£2,500+.
• Tools: often £100-£250.
• Van: often £250-£1,000+.

On small claims, the excess can eat up most of the payout. If your tools claim is £400 and your excess is £250, you're getting £150 back after all the hassle of claiming.

Know your excesses before you need them, and factor them into whether it's worth claiming at all (versus the premium increase that a claim triggers).

6.11.11 The legal backdrop: your duties and your backup plan

Insurance Act 2015

• Replaces "utmost good faith" with a duty of fair presentation for business policies: you must give the insurer a fair picture of your risk (what you do, turnover, claims, subbies, high-risk work).
• If you leave out important stuff, they can reduce or refuse claims depending on how serious the non-disclosure was.

Consumer Insurance (Disclosure and Representations) Act 2012

• Similar idea for personal policies (like private van insurance), but the onus is more on insurers to ask clear questions.

FCA ICOBS rules

• Say insurers and brokers must treat customers fairly, explain key exclusions clearly, and handle claims fairly.

Financial Ombudsman Service (FOS)

• If you've complained to the insurer and they won't budge, FOS can step in and sometimes overrule an insurer that's leaning too hard on a vague exclusion.

What to do next

Before you renew:

• Get your broker to walk you through:
  • Defective workmanship / property-worked-on exclusions.
  • Pollution and asbestos exclusions.
  • Tools-in-transit and unattended vehicle wording.
  • Contract works and hired-in plant cover.
  • Any special exclusions for height, depth, hot works, or particular trades.
• Be brutally honest about what you actually do (roof work, demos, underpinning, etc.) -- better to pay a bit more than have a claim kicked out later under fair presentation rules.
• Know your excesses for each section of cover.
• If a claim is rejected and it smells off:
  • Ask the insurer for the specific policy clause they're relying on.
  • If you still disagree, escalate a formal complaint; after their final response (or 8 weeks), you can go to the Financial Ombudsman Service for free.

Sources

• Insurance Act 2015 -- legislation.gov.uk/ukpga/2015/4/contents -- duty of fair presentation, remedies for non-disclosure, and warranties reform for business insurance.
• Consumer Insurance (Disclosure and Representations) Act 2012 -- legislation.gov.uk/ukpga/2012/6/contents -- consumer insurance duties (personal policies).
• Employers' Liability (Compulsory Insurance) Act 1969 -- legislation.gov.uk/ukpga/1969/57/contents -- requirement for EL insurance.
• Road Traffic Act 1988 -- legislation.gov.uk/ukpga/1988/52/contents -- requirement for motor insurance and conditions.
• FCA Insurance: Conduct of Business Sourcebook (ICOBS) -- FCA rules on fair treatment, disclosure of key exclusions, and claims handling.
• Financial Ombudsman Service -- published decisions on insurance disputes including construction trade claims.

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