Builders professional indemnity insurance is needed when the builder carries design responsibility, which modern procurement has made far more common. A builder working strictly to an architect's drawings usually does not need it. A builder taking design and build responsibility, or designing a single element, does.
When it becomes necessary
Design and build contracts, where the contractor takes responsibility for the design as well as the construction. Specialist elements designed by the trade that installs them. Any job where the builder advised on how something should be done rather than simply doing it. Each of those creates a design liability the contract works and public liability sections do not answer for.
What employers ask for
A stated limit, frequently in the aggregate rather than per claim, and often a requirement to maintain cover for a period after practical completion. Framework and public sector work add insurer criteria. The post completion requirement is the one builders most often miss, because it outlives the job and the invoice.
Where the line is drawn in a dispute
Between design failure and poor workmanship, and it is frequently the whole argument. A wall in the wrong place is a design question; a wall built badly is workmanship. Where both are alleged, the builder's professional indemnity and their public liability or contract works cover each answer part of it, which is why these disputes are slow.
Questions people ask about builders professional indemnity insurance
Does every builder need professional indemnity?
No. A builder working strictly to somebody else's drawings usually does not. A builder taking design and build responsibility does.
What does design and build change?
It moves design liability from the consultants to the contractor, which means the contractor needs cover for it at the employer's stated limit.
How long must cover run after completion?
Employers commonly require a stated period after practical completion, which is longer than most builders expect and outlives the final invoice.