Insurance You Actually Need: Not What They Try to Sell You

‍‌‌​‌​​‌​‌‌‌‌​​​‌‌‌‌‌​​​‌​‌‌​‌‌‌‍# S15. Insurance you actually need vs insurance you're being sold

A claim can wipe you out faster than a bad payer. But you don't need every shiny policy a broker waves at you. Some cover is law, some is industry standard, some is just nice‑to‑have if you can afford it.

1. THE SHORT VERSION

If you employ anyone, you must have Employers' Liability insurance by law. No debate.

If you work for the public or on other people's property, Public Liability is the one policy that stands between you and financial ruin. It's not law, but it's effectively compulsory on real jobs.

After that, it's about what risk you're happy to carry: tools, your own income, design/PI, contract works.

2. THE ONE YOU LEGALLY MUST HAVE: EMPLOYERS' LIABILITY

If you're any kind of employer, the Employers' Liability (Compulsory Insurance) Act 1969 bites.

You must have Employers' Liability insurance if:

• You employ staff, labourers, apprentices or anyone who works under your control, PAYE or not, in most normal cases.
• You could be fined up to £2,500 per day for not having it.

What it covers:

• Injury or illness claims from employees caused by their work for you – broken backs, serious falls, occupational disease, etc.

Exemptions do exist (some public bodies, certain very small family companies), but most construction outfits with staff will not be exempt.

Bottom line: if you have people working for you, not just alongside you, budget for Employers' Liability. It's non‑negotiable.

3. THE ONE THAT WILL SAVE YOUR SKIN: PUBLIC LIABILITY

Public Liability is not technically required by law, but it might as well be.

What it covers:

• Injury or property damage caused to clients, visitors, neighbours, members of the public because of your work: falling tools, damaged cars, busted pipes, fires, etc.

Why it's essential:

• Claims easily run into tens or hundreds of thousands once you add legal costs and compensation.
• Many clients and main contractors make it an entry ticket – they won't let you on site without proof and a minimum cover level (often £1m–£5m, higher for big jobs).

Typical limits:

• Small jobs: £1m–£2m.
• Normal builder/tradie: often £5m. Some policies default to £10m for bigger risk work.

If you're working on or near the public, you want this in place before you pick up a tool.

4. OTHER COVER THAT IS OFTEN WORTH IT (BUT NOT LAW)

These are the main extras to look at, in rough order of priority for a construction worker.

Tools insurance

• Covers your tools if they're stolen or damaged – from your van, site lock‑up or home, depending on policy.
• Can keep you working if everything goes missing overnight.
• Check: where they're covered (van overnight rules are strict), limits per item, and any security requirements.

Contract Works / "All risks"

• Covers the work in progress and materials on a job (e.g. extension half built, timber on site) if there's a fire, flood, theft or similar before hand‑over.
• Often needed on bigger jobs, extensions, structural work – sometimes required by contract, especially if your client's home policy excludes building work.
• Useful if you're the one responsible to put right a half‑built job when disaster hits.

Professional Indemnity (PI)

• Covers financial losses caused by your designs, specs, advice or professional negligence – wrong calculations, bad layouts, faulty specifications.
• Important if you design or specify anything (loft conversions, structural openings, M&E design), or sign off designs, even if you don't call yourself a designer.
• If you only build exactly what another professional has fully specified, risk is lower; once you start changing or creating the design, PI matters.

Income protection / accident and sickness

• Pays you a monthly income if you can't work because of illness or injury (not just on site accidents).
• Not law, but construction has high risk of physical wear, accidents and patchy SSP – this is a "nice to have" if you've got dependants and no savings.
• Only worth it if you can afford the premiums and trust yourself not to let it lapse.

5. STUFF YOU'RE OFTEN SOLD THAT YOU MAY NOT NEED YET

Brokers will offer a basket of products. Some might be over‑kill if you're small and just starting.

Potential "not yet" items:

• High‑limit PI when you do no design and simply follow fully detailed drawings.
• Very high Contract Works cover on tiny jobs where the main risk is already carried elsewhere (e.g. your client's main contractor or a tiny repair).
• Multiple overlapping "legal expenses" add‑ons that quietly duplicate cover you already have in your main policies or union membership.

The question isn't "is this a nice policy". It's "what happens to me if this risk hits and I don't have it" – and "how big is that risk for the kind of jobs I'm doing".

6. HOW THIS DIFFERS BY SETUP: SOLE TRADER vs LTD vs EMPLOYER

Sole trader with no staff No legal Employers' Liability requirement, but you should strongly consider Public Liability, tools, and maybe income protection if you've got no safety net.

Ltd company with no staff Same insurance needs as above plus director‑level thinking about contract sizes and PI/Contract Works if you're taking on bigger risk.

Any setup with staff / labourers / apprentices Must have Employers' Liability by law. Public Liability is effectively a must. Many policies bundle the two.

Status doesn't change the basic risks – it just changes who holds them and how they're insured.

7. QUICK CHECKLIST - INSURANCE YOU ACTUALLY NEED vs NICE‑TO‑HAVE

For a typical small construction business or self‑employed tradie:

Absolute must (for most real work):

• Public Liability – you work on other people's property / around the public? Get this.
• Employers' Liability – if you have any employees or labourers. It's law.

Often very sensible:

• Tools insurance – if losing your kit would stop you earning.
• Contract Works – if you're main contractor on bigger or structural jobs, especially extensions/refurbs.
• Professional Indemnity – if you design, specify or sign off more than just basic work.

Nice‑to‑have if you can afford it:

• Income protection / accident and sickness – especially if you've got family and no savings.

COMMON "OH SHIT" MOMENTS vs COVER

WHAT TO DO NEXT

• If you employ anyone at all, get Employers' Liability insurance sorted today - it is a legal requirement.
• Get Public Liability insurance before you start any job on someone else's property or near the public.
• Check what level of cover your clients or main contractors require before you quote for work.
• Review your tools insurance - does it cover theft from your van overnight?
• Compare a few quotes from specialist construction insurance brokers, not just a generic comparison site.

SOURCES

• Employers' Liability (Compulsory Insurance) Act 1969. https://www.legislation.gov.uk/ukpga/1969/57
• Health and Safety at Work etc. Act 1974. https://www.legislation.gov.uk/ukpga/1974/37
• HSE - Employers' Liability insurance guidance. https://www.hse.gov.uk/pubns/hse40.htm

How this site is funded →

Spotted something wrong or out of date? Email us at hello@kilnguides.co.uk.

In crisis? Samaritans 116 123 · Mental health support

How this site is funded →