Building work puts heavy things, open excavations and other people's homes in the same place at the same time, and public liability is the policy that answers when those combine badly. For a builder the cover is both a real protection and an entry ticket: the claims are large when they come, and the certificate is asked for before anybody is allowed to start.
The claims a builder's liability policy actually sees
Damage to the neighbouring property is the classic: a party wall, a boundary fence, a drive cracked by a delivery, a roof left open before a storm. Injury claims follow from falls, falling materials and members of the public walking past an inadequately protected site. Both are third party losses and both sit squarely in public liability, which pays compensation and the cost of defending the claim up to the limit.
Five million pounds, and why the number keeps repeating
Main contractors, housing associations and local authorities require it, and their own contracts oblige them to. The requirement flows down the chain to every subcontractor and every labour only trade on the site. A builder who wants that work buys the limit once rather than losing a contract and rebuying, and the premium difference between two and five million pounds is small relative to the work it opens up.
Contract works is the section builders most often lack
Public liability answers for other people. The building under construction, the materials stacked on site and the plant in the compound are the builder's own risk until handover, and contract works or contractors' all risks is the section that answers for them. A fire or a flood on a part built extension is an ordinary event, and a policy without that section leaves it entirely with the builder.
Subcontractors change the shape of the policy
Insurers ask whether subcontractors are used, whether they are labour only or bona fide, and whether they carry their own cover. Labour only subcontractors are generally treated as your employees for employers' liability purposes, which is compulsory; bona fide subcontractors are expected to insure themselves, and most builders now collect certificates as a matter of routine because their own insurer expects it.
Questions people ask about builders public liability insurance
How much public liability insurance do builders need?
Two million pounds covers domestic work for many builders; five million is the normal requirement on managed sites and for main contractor, housing association and local authority work. The contract names the figure, so read it before quoting the job.
Is contractors' all risks included in public liability?
No. Public liability answers for third party injury and damage; contractors' all risks answers for the works themselves and materials on site. They are separate sections and builders generally need both.
Do I need employers' liability for labour only subcontractors?
Usually yes. Labour only subcontractors working under your direction are generally treated as employees for the purposes of the 1969 Act, which makes employers' liability compulsory. Bona fide subcontractors carry their own cover, and you should hold their certificates.
Does the policy cover damage to the neighbour's property?
That is exactly what it is for, where you are legally liable for the damage. What it will not do is pay to correct your own defective work, and it will not answer for damage to the works you are building, which belongs to contract works cover.