If you run a micro or small construction business—whether you’re a sole trader, a two-person team, or a growing limited company—insurance isn’t just a “nice to have”. It protects your cashflow, helps you win work, and keeps projects moving when something goes wrong.
Construction work combines higher physical risk (injury, property damage, theft) with contractual and legal obligations (client requirements, principal contractor rules, and UK health & safety duties). The good news: you don’t need “everything”. You need the right mix of covers for the way you actually work.
This guide breaks down the main types of construction insurance for small businesses, when each matters, what it usually covers, common exclusions to watch for, and how to keep premiums sensible without leaving dangerous gaps.
In practice, micro/small construction businesses often share a few traits:
Small headcount (often 1–10 people)
A mix of employees, labour-only subcontractors, and bona fide subcontractors
Work across multiple sites, sometimes with short job durations
Reliance on tools, plant, and vans
Tight margins and limited ability to absorb unexpected losses
Your insurance needs depend less on size and more on:
The type of work (general building, groundworks, roofing, electrical, joinery, refurb, fit-out)
The contract value and site conditions
Whether you design, advise, or specify (design risk)
Whether you use heat, height, or heavy plant
Whether you employ staff
What it is: Covers your legal liability if your business causes injury to a third party or damages third-party property.
Typical claims:
A member of the public trips over materials and is injured
You accidentally damage a client’s pipework, electrics, glazing, or finishes
Dust, vibration, or water damage affects neighbouring properties
Why it matters: Many clients and principal contractors require PL as a minimum. It’s also one of the most common claim types for small firms.
Key things to check:
Limit of indemnity (commonly £1m/£2m/£5m/£10m)
“Heat work” conditions (hot works like torch-on roofing, welding, grinding)
Height restrictions (e.g., working above 10m)
Depth restrictions (excavations)
Work away conditions (temporary works, scaffolding, work on rail/airside/water)
What it is: Covers your legal liability if an employee is injured or becomes ill due to their work.
Is it legally required? In most cases, yes—if you employ anyone. Even if you only use casual labour, you should get advice, because the line between “subcontractor” and “employee” can be blurred in construction.
Typical claims:
Falls from height
Manual handling injuries
Exposure to dusts (including silica), fumes, or chemicals
Key things to check:
EL limit (often £10m)
Who is treated as an “employee” under the policy (labour-only subcontractors, casuals, apprentices)
Any exclusions for certain trades or hazardous activities
What it is: Covers the works in progress (materials and the part-built project) against events like fire, flood, storm, vandalism, and accidental damage.
Why it matters: If a half-finished extension burns down or a storm damages roof works, the cost to redo the work can be business-ending for a small firm.
Key things to check:
Maximum contract value (the biggest job you do)
Maximum value of works at any one location
Cover for materials on site and in transit
Who is responsible under the contract (you, the client, or the principal contractor)
What it is: Covers your tools and portable equipment against theft, loss, and accidental damage. Plant cover can include owned and hired-in plant.
Typical claims:
Tools stolen from a van overnight
Break-in at a lock-up or site container
Accidental damage to a breaker, mixer, laser level, or specialist kit
Key things to check:
Theft conditions (e.g., “forcible and violent entry”, approved locks, alarms)
Single item limits (important for specialist tools)
Cover away from premises and on site
Hired-in plant cover (and whether it includes continuing hire charges)
What it is: Covers your vans and pickups for road risks, plus optional cover for tools in the vehicle.
Key things to check:
Business use and named drivers
Signwriting and racking modifications
Tools-in-vehicle limits and security requirements
Any restrictions on overnight parking
If you provide any design element—drawings, calculations, specifications, or professional advice—you may need PI. This is common for:
Design & build contractors
Small firms that “help” with structural changes or layout decisions
Specialists who specify systems (e.g., waterproofing, fire stopping)
PI typically covers: financial loss arising from negligence in professional services.
Watch-outs:
Retroactive date (covers past work)
“Fitness for purpose” contract clauses (can be difficult to insure)
Cladding, basements, structural works, and high-risk exclusions
Often included within PL, but confirm it’s present if you:
Supply or install products/materials that could cause injury or damage later
Manufacture or modify components
Can help with:
Contract disputes
Employment disputes
Tax investigations
Debt recovery
For small firms, legal costs can be as damaging as the claim itself.
Not a liability cover—this is about keeping you paid if you’re injured and can’t work. For sole traders and directors who are “the business”, it can be one of the most practical protections.
If a fire destroys your workshop or lock-up, BI can help cover lost profit and ongoing costs while you recover.
Even small construction firms handle data: client details, invoices, bank details, supplier accounts, and sometimes plans/specs. Cyber cover can help with:
Ransomware and business interruption
Funds transfer fraud
Data breach response nIt’s increasingly relevant if you rely on email for payments and supplier management.
Insurance is as much about conditions as it is about cover. Common problem areas include:
Hot works warranties: Requirements for permits, fire watches, extinguishers, and post-work checks
Work at height restrictions: Especially roofing, scaffolding, and fragile roofs
Basements and underpinning: Often excluded or tightly controlled
Asbestos: Usually excluded (including disturbance or removal)
Cladding and fire safety: May be restricted depending on materials and building type
Defective workmanship: Many policies cover resulting damage but not the cost of redoing poor work
Contractual liability: Some contracts push liability beyond what’s “reasonable” or insurable
Security conditions: For tools, plant, and materials—locks, alarms, storage rules
A quick rule: if your policy has a condition, treat it like a checklist for how you run sites.
There’s no one-size-fits-all, but here’s a practical starting point:
Public Liability: £2m for small domestic work; £5m+ often required for commercial contracts
Employers’ Liability: Typically £10m
Contract Works: Set to your maximum contract value (and realistic peak value on site)
Tools/Plant: Based on replacement cost, not what you paid second-hand
PI (if needed): Often £250k–£1m+ depending on contracts and risk
If you’re working for councils, housing associations, or larger contractors, expect higher limits and more documentation.
Insurers price construction risks based on exposure and claims likelihood. Key factors include:
Trade and activities (roofing, groundworks, demolition, structural work usually cost more)
Turnover and payroll
Number of employees and labour-only subcontractors
Claims history
Contract values and project types (domestic vs commercial)
Use of heat, work at height, depth of excavation
Risk management (RAMS, training, tool security, site controls)
Tighten your trade description (accurate, not overly broad)
Document your risk management (RAMS, training records, permits)
Improve tool/van security (approved locks, trackers, secure storage)
Choose sensible excesses you can actually afford
Keep contract values accurate (don’t overstate “just in case”)
Many small firms lose jobs because their paperwork doesn’t match requirements. A simple pack helps:
Insurance schedule(s) showing limits and policy dates
Employers’ Liability certificate (if applicable)
Method statements and risk assessments (RAMS)
Training evidence (CSCS, IPAF, PASMA, asbestos awareness, first aid)
Subcontractor vetting (their PL/EL, competence, and scope)
If you regularly work under a principal contractor, ask for their insurance requirements early—before you price the job.
Insurance and employment status can get messy fast.
Labour-only subcontractors (working under your direction, using your materials, representing you on site) may be treated like employees for liability purposes.
Bona fide subcontractors (working independently, providing their own materials, quoting for a job) should carry their own PL (and sometimes EL).
Get clear advice and keep records. A single injury claim involving a “subbie” can become a dispute between insurers if roles aren’t documented.
If there’s an incident:
Make the area safe and get medical help if needed
Record facts early (photos, witness details, site diary notes)
Notify your insurer/broker promptly (even if you’re not sure it’ll become a claim)
Don’t admit liability in writing
Keep copies of contracts, emails, and any RAMS relevant to the work
Fast, accurate reporting can be the difference between a smooth claim and a painful dispute.
Often, yes—especially if you use labour-only subcontractors. The safest approach is to get advice based on how you manage labour and who controls the work.
Not usually a legal requirement, but many clients and contractors require it, and it’s a practical necessity.
Typically it covers injury or property damage caused by your negligence. The cost to redo defective work is often excluded, though resulting damage may be covered depending on wording.
Contract Works covers the project/works in progress (your work and materials). Public Liability covers your legal liability to third parties.
Sometimes, but it depends on the policy and security conditions. Many policies require specific locks and evidence of forced entry.
If a loss would force you to redo work at your own cost (fire, flood, vandalism), Contract Works can be a smart protection even for domestic projects.
If you design, advise, or specify, PI is often essential. Many contracts require it.
To get accurate cover, be ready to share:
Your trade(s) and typical job types
Turnover and payroll
Largest contract value and typical contract value
Use of heat, height, depth, demolition, structural work
Number of employees and subcontractors (labour-only vs bona fide)
Tool/plant values and storage/security
Any previous claims or incidents nThe more precise you are, the fewer surprises you’ll face at claim time.
Construction insurance for micro and small businesses is about protecting your cashflow and reputation while meeting contract requirements. Start with the core covers—Public Liability, Employers’ Liability (if applicable), Contract Works, and Tools/Plant—then add the situational covers that match your risk.
If you’d like a quick review of your current cover or you’re quoting for a new type of job, speak to a specialist broker who understands construction trades, contract requirements, and the real-world risks on UK sites.
Need a quote or a cover check? Contact Insure24 to discuss your trade, contract values, and the cover limits your clients expect.
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