Contractor insurance is two products wearing one name, and buying the wrong one is common because the word does not distinguish them. A building contractor needs cover for the harm the work does to people and property. A professional contractor working through a limited company needs cover for the money a client loses when a project fails. The policies, the limits and the insurers are different, and the only thing they share is the word on the tin.
The site contractor: liability, works and tools
If you build, install, fit or repair, the core is public liability at the limit the site requires, employers' liability wherever anybody is employed or engaged labour only, contract works for the job in progress, and tools and plant for your own kit. Main contractors ask for a certificate before you start, and the limit they name is normally five million pounds. This is the policy that answers when a wall falls, a pipe leaks or a passer by is hurt.
The professional contractor: indemnity, and the client's contract
If you contract your expertise, through an agency or directly, the claim you face is that the client lost money. Professional indemnity is the policy, and the client's contract usually names the limit, commonly one, two or five million pounds. Public liability comes along because client sites require it, and employers' liability is asked for by agencies as a matter of routine even where a single director company is exempt from the duty.
Where the two overlap, and where they do not
An electrical contractor who also designs installations sits in both worlds and needs both policies. A software contractor on a building site needs the site's liability limit and the client's indemnity limit at the same time. What never happens is one policy covering both risks by default, and a broker who is told only the word contractor will pick whichever product their form defaults to.
The paperwork that travels with the policy
Agencies and main contractors both want the certificate in the name of the entity they contracted with, which is usually the limited company rather than the individual. Construction contractors also deal with the Construction Industry Scheme for tax, and off payroll working rules decide how the engagement is taxed; neither is an insurance question, and both arrive in the same envelope of onboarding paperwork, which is why they get confused with one.
Questions people ask about contractor insurance
What insurance does a contractor need in the UK?
A site contractor needs public liability at the limit the site requires, employers' liability where anybody is employed, and normally contract works and tools cover. A professional contractor needs professional indemnity at the limit the client contract names, usually with public liability for site access.
Is contractor insurance a legal requirement?
Only employers' liability, and only where there are employees. Everything else is required by contract, by the main contractor or by the agency, which in practice makes it unavoidable for anybody who wants the work.
Does a limited company contractor need employers' liability?
A company whose only employee is a director who owns at least half the issued share capital is generally exempt from the duty, but agencies frequently require the cover anyway as a condition of the contract. Check the exemption against your own shareholding and the contract's wording.
What limit should a contractor carry?
On site, five million pounds is the usual requirement for main contractor and public sector work, with one or two million for domestic. For professional contracting, the client contract names the figure and one, two or five million pounds are the common choices.