Contractor Insurance: What You Need for £5m vs £10m Liability Cover

Introduction

If you’re a contractor, liability insurance is one of those “must-have” protections that can make the difference between a manageable claim and a business-ending bill. But one question comes up constantly: Is £5m liability cover enough, or do I need £10m?

In the UK, many contractors start with £5m Public Liability because it’s common, affordable, and often meets basic client requirements. However, larger sites, higher-risk trades, public-facing work, and certain principal contractors will insist on £10m (or more). The right answer depends on your contract requirements, the type of work you do, where you do it, and the realistic worst-case scenario if something goes wrong.

This guide breaks down what £5m vs £10m liability cover typically means for contractors, what it does (and doesn’t) cover, and how to decide the right limit without overpaying.

What “liability cover” means for contractors

When people say “contractor insurance with £5m/£10m cover,” they usually mean Public Liability Insurance (PL). Depending on your business, you may also need:

• Employers’ Liability Insurance (EL) (a legal requirement in most cases if you employ staff, including labour-only subcontractors)

• Professional Indemnity Insurance (PI) (if you design, specify, advise, or provide consultancy)

• Contract Works / Contractors’ All Risks (CAR) (to cover the works in progress and materials)

• Tools, plant and hired-in equipment cover

• Product Liability (often included within PL for contractors who supply/fit products)

Your “£5m vs £10m” decision is most often about Public Liability, but it can influence the overall structure of your policy and what clients will accept.

Public Liability: what it covers (in plain English)

Public Liability Insurance is designed to cover your legal liability if your business activities cause:

• Injury to a third party (e.g., a member of the public, a client, another contractor)

• Damage to third-party property (e.g., a customer’s building, neighbouring premises, site owner’s property)

It typically includes:

• Compensation/damages you are legally liable to pay

• Legal defence costs (often a major cost driver in larger claims)

It typically does not cover:

• Poor workmanship that only needs redoing (unless it causes damage/injury)

• Contractual penalties (unless insurable and covered)

• Damage to the part you’re working on in some scenarios (depends on policy wording)

• Employee injuries (that’s Employers’ Liability)

What does £5m cover actually mean?

A £5m Public Liability limit means the insurer will pay up to £5,000,000 for a covered claim (subject to policy terms, conditions, and any excess).

Key point: the limit is often stated as “any one occurrence” (each claim) or “in the aggregate” (total for the policy year). Many contractor PL policies are “any one occurrence,” but always check.

Who typically chooses £5m?

£5m is common for:

• Sole traders and small teams

• Lower-risk trades (depending on the insurer’s view)

• Domestic work and small commercial jobs

• Contractors with limited public exposure

• Businesses working under clients who don’t specify higher limits

When £5m can be enough

£5m may be reasonable if:

• Your clients accept it in writing

• You’re not working on high-footfall public sites

• You’re not doing work that could impact structural integrity, fire safety, or critical systems

• You have limited subcontractor exposure

What does £10m cover actually mean?

A £10m Public Liability limit doubles the maximum payout to £10,000,000 (again subject to terms).

This isn’t just “more cover.” In practice, it can be the difference between meeting tender requirements and being excluded, especially for:

• Principal contractor supply chains

• Local authority work

• Large commercial sites

• Work in public spaces (retail parks, schools, hospitals)

Who typically needs £10m?

£10m is commonly required for:

• Contractors on larger construction sites

• Higher-risk trades (e.g., roofing, structural work, demolition, scaffolding)

• Contractors working in busy public environments

• Businesses working for councils, housing associations, or public sector bodies

• Contractors with significant subcontractor exposure

£5m vs £10m: what changes in real life?

Here’s what usually changes when you move from £5m to £10m:

1) Client and contract acceptance

Many contracts specify a minimum PL limit. If the contract says £10m and you have £5m, you may:

• Fail pre-qualification

• Breach contract terms

• Be forced to upgrade mid-project (often more expensive)

2) Risk appetite and underwriting

Higher limits can trigger:

• More underwriting questions

• Tighter policy conditions

• Greater scrutiny of your work type, turnover, and claims history

3) Premium (cost)

The premium increase from £5m to £10m is often less dramatic than people expect, but it depends on:

• Trade and risk level

• Turnover and wage roll

• Claims history

• Use of heat, height work, structural alterations

• Work at airports, rail, petrochemical, offshore, etc.

4) Excess and policy wording

Sometimes the limit increase comes with:

• Different excess levels

• Different insurer/policy wording

• Different endorsements (e.g., height limits, heat work conditions)

So it’s not just the number—it’s the overall policy terms.

Realistic claim scenarios: when £5m might not be enough

A £5m limit sounds huge—until you consider how quickly costs can stack up.

Scenario A: injury in a public area

You’re working in a retail unit or public walkway. A member of the public is injured due to an unsecured area, trailing cable, or falling object.

Costs can include:

• Serious injury compensation

• Loss of earnings

• Long-term care

• Legal costs

Severe injury claims can run into multi-millions. If multiple parties are injured, the total can climb further.

Scenario B: major property damage and business interruption

A mistake causes a fire, flood, or collapse that damages:

• The client’s premises

• Neighbouring properties

• Stock/equipment

Add business interruption claims and legal costs, and the numbers can escalate quickly.

Scenario C: you’re working as part of a larger project

On bigger sites, claims can become complex. Multiple contractors may be involved, and legal costs can rise even where liability is disputed.

When £10m is strongly recommended

Even if a client doesn’t explicitly demand it, £10m is often worth considering if you:

• Work on commercial sites with public access

• Operate in higher-risk trades

• Use heat (welding, torch-on roofing) or do hot works

• Work at height or use scaffolding

• Work on structural elements

• Work in healthcare, education, or care settings

• Regularly subcontract work

• Want to bid for larger contracts in the next 12 months

Don’t forget Employers’ Liability (often the bigger compliance issue)

If you employ anyone, Employers’ Liability is typically a legal requirement in the UK, and the standard limit is often £10m.

Common misunderstandings:

• “They’re self-employed so I don’t need EL.” Not always.

• “They’re a subcontractor so I’m covered.” Only if they have their own EL/PL and the working arrangement supports it.

If you have labour-only subcontractors, you can still be treated as the employer for insurance purposes.

What about Professional Indemnity (PI) for contractors?

If you do any of the following, PI may be relevant:

• Design and build

• Provide drawings/specifications

• Advise on materials or methods

• Sign off work or provide certification

PI deals with financial loss caused by negligence in professional services. It’s different from PL, and many contractor disputes are actually PI-type claims.

How to choose the right limit: a practical checklist

Use this to decide between £5m and £10m.

1) What do your contracts require?

If your client, principal contractor, or framework requires £10m, that’s the decision made.

2) Where do you work?

• Domestic-only work: £5m may be acceptable

• Public-facing sites: £10m is often safer

• High-value premises: consider higher limits

3) What’s the worst-case scenario?

Ask: If something went seriously wrong, what’s the maximum damage and injury exposure?

4) Do you subcontract?

Subcontracting can increase your exposure. You may still be held responsible for site control, supervision, or selection.

5) Are you planning to grow?

If you want to win bigger contracts, £10m can remove friction at tender stage.

Tips to keep premiums sensible (without cutting corners)

If you’re upgrading to £10m and want to control cost, focus on risk management and presentation:

• Keep a clear health & safety policy and RAMS where appropriate

• Document training (working at height, hot works, equipment use)

• Maintain good housekeeping on site

• Use proper signage and barriers

• Keep subcontractor checks on file (their PL/EL, method statements)

• Be accurate about turnover and trade description

Insurers price uncertainty. Clear information often helps.

Common exclusions and pitfalls to watch

Regardless of limit, contractors should pay attention to:

• Heat/hot works conditions (warranty requirements)

• Height limits (e.g., work above a certain number of metres)

• Depth limits (excavation)

• Asbestos exclusions

• Pollution exclusions (sometimes limited “sudden and accidental” only)

• Defective workmanship wording

• Contractual liability (agreeing to liabilities beyond common law)

A £10m limit won’t help if the claim falls outside cover.

£5m vs £10m: quick comparison table

FAQs

Is £5m Public Liability enough for a contractor?

It can be, if your clients accept it and your work has limited public exposure. But for larger commercial sites or higher-risk trades, £10m is often more appropriate.

Why do some clients insist on £10m?

Because their own risk management and contractual obligations require supply chain contractors to carry higher limits—especially where public injury or major property damage is possible.

Does £10m cover include Employers’ Liability?

Not automatically. Employers’ Liability is a separate cover, usually with its own limit (often £10m). You may need both.

Will £10m always cost a lot more than £5m?

Not always. The difference can be relatively modest depending on your trade, turnover, and claims history. The bigger factor is often the risk profile and policy wording.

If I only do domestic work, do I need £10m?

Not usually, unless a specific client requires it or your work involves higher-risk activities (hot works, structural changes, high-value properties).

What if I have multiple claims in one year?

This depends on whether your policy limit is “any one occurrence” or “aggregate.” Always check your schedule and wording.

Does Public Liability cover damage to my own work?

Usually not. PL is for third-party injury/property damage. For damage to the works in progress, you may need Contract Works/Contractors’ All Risks.

Conclusion: which should you choose?

If you’re deciding purely on risk and future-proofing, £10m Public Liability is often the safer choice for contractors who work on commercial sites, in public areas, or in higher-risk trades. If your work is smaller-scale and your clients accept it, £5m can be a sensible, cost-effective starting point.

The key is to match your limit to your contracts and your real-world exposure—and to make sure the policy wording fits what you actually do.

If you’d like, tell me your trade, typical contract size, and where you work (domestic vs commercial), and I’ll suggest a sensible “minimum cover stack” (PL/EL/PI/CAR) to match.