Contractors Insurance in the UK: A Working Guide for General Contractors and Subcontractors

Reviewed by Matthew Bartlett, Director, Apex Insurance Brokers Limited · Last reviewed 2026-08-06

What insurance does a contractor actually need?

There's no single "contractors policy" defined in law. What exists is a fairly settled package that the industry has converged on, because it maps onto the ways contracting businesses actually get hurt financially. For most general contractors and subcontractors, the programme looks like this:

• Public liability — injury to third parties or damage to their property arising from your work. Not required by law, but almost universally required by contract before you're allowed on site.
• Employers' liability — injury or illness suffered by your employees. Legally required under the Employers' Liability (Compulsory Insurance) Act 1969 if you employ staff.
• Contract works — the partly built job itself: fire, storm, flood, theft of materials, malicious damage before handover.
• Own plant, hired-in plant and tools — the kit that earns you your living, whether you own it or hired it in.
• Commercial vehicles — motor insurance is required by the Road Traffic Act 1988 for vans and other vehicles used on the road, and it sits on a separate policy from the liability covers above.

Some contractors also need professional indemnity — typically where you take on design responsibility, even informally, under a design-and-build arrangement. If a client is asking you to sign a contract that mentions design liability, raise it with your broker before you sign, not after.

Is employers' liability insurance a legal requirement for contractors?

Yes — if you employ anyone. The Employers' Liability (Compulsory Insurance) Act 1969 requires employers carrying on business in Great Britain to insure against liability for bodily injury or disease sustained by their employees arising out of their employment. Your insurer must be authorised, and you should be able to produce your certificate of employers' liability insurance if asked.

The trap for contractors is that "employee" is judged on the reality of the working relationship, not on payroll status. Someone you pay through the Construction Industry Scheme, who invoices you and calls themselves self-employed, can still count as your employee for these purposes if they work under your direction using your materials. That's precisely where the labour-only subcontractor question comes in — and it's the single most common thing contractors get wrong when arranging cover.

One more point worth knowing: the legislation sets a minimum level of employers' liability cover of £5 million, and in practice most insurers issue policies with a £10 million limit as standard.

Labour-only vs bona-fide subcontractors — why does the difference matter so much?

Insurers split subcontractors into two camps, and the split determines which of your covers responds if one of them is injured, and how your premium is calculated.

Labour-only subcontractors (LOSC) supply exactly what the name says: labour. They typically work under your direction and supervision, use materials you supply and often your major plant, and are usually paid on a time basis. For insurance purposes they are generally treated as your employees. That means injuries to them fall under your employers' liability cover, and the payments you make to them are declared as part of your wageroll when the policy is rated. If you engage labour-only subbies and haven't declared them, you have a gap exactly where a serious injury claim is most likely to land.

Bona-fide subcontractors (BFSC) are genuinely independent businesses. They work to a specification but under their own direction, typically supply their own materials and tools, hold their own insurance, and are usually engaged on a fixed-price basis. They are not treated as your employees. Injuries they suffer, or damage they cause, should in the first instance be a matter for their own policies — but your public liability insurer will still want the payments you make to them declared, because you can be drawn into claims arising from work done in your name.

Two practical consequences follow. First, most contractors' policies include a condition requiring you to check that bona-fide subcontractors hold their own public liability insurance — many insurers expect the subcontractor's limit to be at least equal to your own, and expect you to obtain evidence rather than take it on trust. Get in the habit of collecting confirmation of cover before a subbie starts, and diarise the renewal date if they work for you regularly. Second, misclassification cuts both ways: treat a labour-only worker as bona-fide and you may find your employers' liability declaration was wrong when it matters most. If you're honestly unsure which side of the line someone falls, describe the working arrangement to your broker in plain terms and let the insurer confirm the treatment in writing.

Larger or more complex risk? Speak directly to a director — call 0117 325 0027 or email info@apexinsurancebrokers.co.uk.

What does public liability actually cover on site?

Public liability responds when your work injures someone who isn't your employee, or damages property that isn't yours. On a live site that population is larger than people assume: the client and their staff, other trades' operatives, delivery drivers, visitors, neighbours and passers-by all sit outside your employers' liability cover and inside your public liability exposure.

The claim patterns in contracting are well worn. Escape of water from first-fix plumbing that isn't discovered until the ceiling below comes down. Striking an underground cable or gas main during excavation. Something dropped from scaffolding onto a parked car or a person. Fire spreading from hot works — grinding, welding, torch-applied roofing — into the fabric of the building. Damage to the neighbouring property when you're working on a terrace or a party wall. None of these are exotic; they are the ordinary consequences of the trade, which is why main contractors and principals insist on seeing your cover before you set foot on site.

Read the conditions as carefully as the limit. Contractors' liability policies commonly carry conditions around hot works (permits, checks after work stops, fire extinguishers to hand), and around work at height or depth beyond stated limits. These aren't small print for decoration — failing to follow them can prejudice a claim. If your work regularly involves heat, demolition, deep excavation or high-level work, say so at quote stage so the policy is written to match what you actually do.

And to repeat the legal position plainly, because it's often blurred: public liability insurance is not a legal requirement in the UK. It is a contractual and practical one. Employers' liability, with staff, is the legal requirement.

What is contract works insurance, and do I need it?

Public liability protects other people's property. It does not protect the thing you are building. If a half-completed extension burns down the night before second fix, or materials stored on site are stolen over a bank holiday weekend, the loss falls on whoever was responsible for insuring the works — and unless something says otherwise, that's often you, with an obligation to rebuild at your own cost.

Contract works insurance covers the works themselves during construction — typically against fire, storm, flood, theft of unfixed materials and malicious damage — up to practical completion, often with a limited maintenance or defects period afterwards. Who must insure, and for what, is usually set out in the building contract: the standard forms used across the industry, such as the JCT family, allocate responsibility for insuring new works and existing structures between the parties. On a new build the contractor commonly insures the works; on an extension or refurbishment the position on the existing structure is different and needs checking contract by contract. If you sign contracts without reading the insurance clauses, you are agreeing to obligations you may not have cover for.

For contractors with a steady flow of jobs, an annual contract works policy is usually more sensible than insuring project by project. Set the sum insured at the full reinstatement cost of your largest typical contract — including materials on site, and with thought given to fees and debris removal — and tell your broker if you take on something materially bigger than usual mid-year.

What about plant, tools and hired-in equipment?

Owned plant — mixers, breakers, towers, excavators — can be insured against theft and damage, and given how often plant walks off unattended sites, security conditions (immobilisers, marked equipment, secure storage) are worth taking seriously.

Hired-in plant deserves particular attention. Plant hire agreements commonly make the hirer responsible for loss of or damage to the equipment while it's in their charge, and for continuing hire charges while the item is being repaired or replaced. That means a stolen hired excavator can cost you twice: the machine itself, and weeks of hire fees for kit you no longer have. Hired-in plant cover is designed for exactly this, and it's a cheap fix compared to the exposure. Own tools cover typically comes with conditions about overnight theft from vehicles — usually requiring vehicles to be locked, and often excluding or restricting cover for tools left in vans overnight unless specific security conditions are met. Check yours before you assume the van is a safe store.

What limit of public liability do contractors need?

Common limits offered are £1 million, £2 million and £5 million, and the honest answer to "which one?" is: read your contracts. Many principal contractors, local authorities and larger commercial clients specify a minimum public liability limit as a condition of tender or in the contract itself, and £5 million requirements are common on bigger jobs. Working for domestic clients on smaller works, a lower limit may be accepted — but consider what a bad day genuinely looks like in your trade. A fire claim involving a terrace of houses, or a serious injury to a member of the public, can exhaust a low limit quickly. The step up in premium between limits is often modest relative to the difference in protection; it's a conversation worth having rather than a box to tick. If you're unsure what your contracts demand, send us the details and we'll tell you what you're actually committing to.

How do insurers rate contractors' policies — and what should I have ready?

Contractors' combined policies are rated on the shape of your business, so a good quote starts with accurate numbers. Expect to be asked for your estimated annual wageroll split between employees and labour-only subcontractors; your annual payments to bona-fide subcontractors; your turnover; a breakdown of your activities by trade (groundworks, carpentry, roofing and so on carry different weightings); and the maximum heights and depths you work at, plus whether you use heat.

Guessing low on wageroll to trim the premium is a false economy: most policies are adjustable, meaning declarations are checked at renewal and the premium trued up — and an inaccurate presentation of your business risks far worse than an adjustment if it surfaces during a claim. Equally, tell your broker when things change mid-term: a new gang taken on, a move into a new trade, a first job over your usual contract size. Five minutes on the phone keeps the policy matching the business it's supposed to protect.

Why arrange contractors insurance through Apex?

Because the failure mode in this class isn't usually "no insurance" — it's the wrong insurance: labour-only subbies undeclared, a contract works obligation nobody read, a hot works condition nobody briefed the roofers on. As an independent, FCA-authorised broker based in Bristol, we work with contractors across the UK, and our job is to ask the awkward questions before an insurer's claims team does. We'll look at how your site actually runs — who's on the tools, who supplies what, what your contracts make you responsible for — and place cover that reflects it. And when something does go wrong, you deal with people who know your file, not a call centre reading a script.

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This article is general information, not advice on a specific policy.