Construction and engineering projects are high-value, high-risk, and deadline-driven. A single incident—storm damage, theft of plant, design error, injury on site, or a dispute over defective work—can create costs that dwarf the profit on the job. That’s why construction engineering insurance (often referred to as construction & engineering insurance) exists: to protect contractors, developers, consultants, and specialist trades against the most common (and most expensive) project risks.
This guide gives a complete comparison of the key construction and engineering insurance policies used in the UK, what they cover, who needs them, and how to choose the right mix for your business.
Construction & engineering insurance isn’t one single policy. It’s an umbrella term for a group of covers that can be arranged:
Per project (specific contract works)
Annually (for ongoing contracting operations)
For a principal/owner (developer or employer)
For a contractor or subcontractor (main contractor or trade)
In practice, most businesses combine:
Contract Works / Contractors’ All Risks (CAR)
Public Liability
Employers’ Liability
Plant & Tools
Professional Indemnity (where design/specification/advice is involved)
Contractors’ Legal Expenses
Engineering inspection / statutory inspection (for certain equipment)
|
Cover type |
What it protects |
Typical buyer |
When it matters most |
|---|---|---|---|
|
Contract Works / CAR |
The works in progress, materials, sometimes temporary works |
Main contractor, subcontractor, developer |
Fire, flood, storm, theft, accidental damage on site |
|
Public Liability |
Injury/property damage to third parties |
Almost all contractors |
Claims from members of the public, clients, neighbouring properties |
|
Employers’ Liability |
Injury/illness claims from employees/labour-only subcontractors |
Any employer (legal requirement) |
Accidents, long-tail illness, manual handling, exposure |
|
Plant & Tools |
Owned/hired plant, tools, sometimes hired-in plant liability |
Trades, contractors, plant-heavy firms |
Theft, damage, breakdown, on-site and in transit |
|
Professional Indemnity |
Financial loss from design/advice/spec errors |
Engineers, design & build contractors |
Defective design, incorrect calculations, specification errors |
|
Contractors’ Legal Expenses |
Legal costs for contract disputes, tax, employment, debt recovery |
SMEs and growing contractors |
Disputes over variations, non-payment, contract terms |
|
Engineering Inspection |
Statutory inspections for lifting/pressure equipment |
Firms operating certain equipment |
Compliance, LOLER/PSSR inspections |
Contract Works (often packaged as Contractors’ All Risks) is designed to cover physical loss or damage to the works while they’re being built. Depending on the wording, it can include:
Works in progress (new build, refurbishment, extensions)
Materials on site (and sometimes in transit)
Temporary works (hoardings, scaffolding, formwork)
Existing structures (if you’re working on an existing building)
Debris removal
Professional fees (architects/engineers) following insured damage
Common exclusions include:
Defective workmanship/design (though resulting damage may be covered)
Wear and tear, gradual deterioration
Faulty materials (again, resulting damage may be covered)
Unattended theft without required security
Known defects or pre-existing damage
Main contractors (especially on fixed-price contracts)
Subcontractors (if contract requires you to insure your portion)
Property developers (owner-controlled insurance)
Specialist trades doing high-value works (roofing, cladding, M&E)
Annual vs single project
Sum insured (contract value + materials + escalation)
Cover for existing structures (vital for refurb)
Off-site storage and transit
Security conditions (locks, alarms, fenced compounds)
Public Liability covers your legal liability if your business activities cause:
Bodily injury to a third party
Property damage to third-party property
Examples:
A member of the public trips over poorly managed cables near a site entrance.
You damage a client’s underground services while excavating.
Dust or vibration causes damage to a neighbouring property.
Injury to employees (that’s Employers’ Liability)
Pure financial loss without property damage/injury (often PI territory)
Contractual liability beyond negligence (varies by wording)
Almost every contractor, including sole traders, because many clients and principal contractors will require evidence of PL before you start work.
Limit of indemnity (commonly £1m/£2m/£5m/£10m)
Depth of cover for vibration, weakening/removal of support, heat works
Work at height, depth, basements
Overseas work (if applicable)
Employers’ Liability covers claims from employees who suffer injury or illness arising out of their employment.
In the UK, EL is typically a legal requirement if you employ staff. Many policies also treat labour-only subcontractors as employees for insurance purposes.
Construction has higher incident rates, and EL claims can be expensive due to:
Serious injuries (falls, crush injuries)
Long-term conditions (respiratory issues, vibration exposure)
Multiple-party claims on complex sites
EL limit (often £10m)
Definition of employee (labour-only vs bona fide)
Territorial limits
Plant and tools insurance can cover:
Owned plant (excavators, dumpers, telehandlers)
Small tools (power tools, hand tools)
Hired-in plant (either damage cover or hired-in plant liability)
Plant in transit
Theft from site/vehicle (subject to security conditions)
Underinsuring tool values
Assuming hired-in plant is automatically covered
Not meeting vehicle security requirements
Specified vs unspecified tools
On-site, off-site, and transit cover
Hired-in plant: damage vs liability
Excess levels (theft excess can be higher)
Professional Indemnity covers claims for financial loss caused by professional negligence—errors in design, advice, specification, calculations, or project management.
This is crucial for:
Consulting engineers
Surveyors and project managers
Design & build contractors
Contractors offering design responsibility (even partial)
PL is about injury/property damage. PI is about financial loss from professional services, and claims can arise long after the project completes.
Claims-made basis (you must keep cover active)
Retroactive date (how far back you’re covered)
Limit and excess
Collateral warranties and contract terms
Engineering insurance can include:
Machinery breakdown (sudden and unforeseen damage)
Deterioration of stock (if breakdown affects temperature-controlled goods)
Business interruption following breakdown
For construction businesses, this is relevant if you rely on:
Compressors, generators, fixed workshop machinery
Specialist equipment where downtime is costly
Some equipment requires statutory inspection regimes, such as:
LOLER (lifting equipment)
PSSR (pressure systems)
Inspection cover can help you stay compliant and reduce the risk of enforcement action, accidents, and invalidated insurance due to missed inspections.
Construction disputes are common: variations, delays, defective work allegations, and non-payment. Legal expenses cover can support:
Contract disputes (subject to prospects of success)
Debt recovery
Employment disputes
Tax investigations
It’s not a replacement for good contracts—but it can reduce the financial shock of enforcing your position.
Typical package:
Public Liability + Employers’ Liability
Contract Works (annual)
Tools and plant
Legal expenses
Add-ons to consider:
Hot works extension
Work at height cover
Cover for existing structures (refurb)
Higher-risk exposures:
Underground services
Collapse/weakening/removal of support
Vibration damage
Insurance focus:
Strong PL wording for underground works
Contract works with clear site security
Plant-heavy cover and transit
Core focus:
Professional Indemnity (primary)
Public Liability (secondary but still important)
Cyber (if handling sensitive client data)
Key comparison point:
Contractual liability and collateral warranties
You often need both:
Contract Works / CAR
Public Liability
Employers’ Liability
Professional Indemnity (design responsibility)
This is where gaps happen—if you only buy PL, design claims can be uninsured.
Assuming the principal contractor’s insurance covers you: always confirm in writing.
No cover for existing structures on refurb projects.
Hired-in plant not covered or wrong basis (damage vs liability).
Design responsibility not declared: PI missing or inadequate.
Security conditions not met: theft claims declined.
Wrong contract value: underinsurance and average can apply.
Use this simple checklist:
What do you do? (trade, contracting, design, consultancy)
Where do you work? (domestic, commercial, public sector, high-risk sites)
What’s the biggest loss scenario? (fire, flood, injury, design defect, theft)
What does the contract require? (limits, endorsements, warranties)
Do you use subcontractors or labour-only? (EL implications)
What plant/tools do you own or hire? (values and transit)
Do you work on existing structures? (refurb extensions)
They’re closely related. Contract Works is commonly the “works” section, while Contractors’ All Risks may bundle contract works, PL, tools/plant, and more under one package.
If you take on any design responsibility—drawings, calculations, specifications, or “design and build”—PI is strongly recommended. PL may not respond to pure financial loss claims.
It depends on contract requirements and risk. Many commercial contracts require £5m or £10m. Smaller jobs may accept £1m or £2m, but always check the contract.
Most policies exclude the cost of redoing defective work itself. However, resulting damage caused by the defect may be covered, depending on the wording.
Often yes, but only if strict security conditions are met (approved locks, alarm, tools not left visible, sometimes overnight garaging requirements).
If you use labour-only subcontractors, many insurers treat them as employees, meaning EL is required. Bona fide subcontractors usually carry their own insurance.
Construction & engineering insurance is about building the right combination of covers—so you’re protected against physical damage to the works, liability claims, equipment losses, and professional exposures.
If you want, tell me:
Your trade (and whether you do any design)
Typical contract values
Whether you work on refurbishments or new builds
Any plant/tools you own or hire
…and I’ll outline a recommended insurance stack and the most important wording points to ask for when you get quotes.
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