Residential construction is high-stakes. Whether you’re building a new home from the ground up or renovating a lived-in property, you’re dealing with multiple trades, expensive materials, tight timelines, and a working environment that changes daily. One accident, one burst pipe, or one allegation of poor workmanship can quickly turn into a five-figure problem.
That’s why “construction insurance” isn’t one policy. It’s a package of covers that work together to protect contractors, developers, and sometimes homeowners, depending on who is responsible for the works.
In this guide, we’ll break down the main types of residential construction insurance in the UK, what they cover, who should arrange them, and what to watch out for on house builds and renovations.
Residential construction insurance is a broad term for the insurance policies commonly used on:
New build houses
Self-build projects
Extensions and loft conversions
Full refurbishments
Kitchen/bathroom renovations
Structural alterations (knock-throughs, steel installation)
Basement conversions
Roofing works
External works (driveways, landscaping, drainage)
The right cover depends on the project scope, contract terms, and your role (main contractor, subcontractor, developer, or homeowner).
Residential sites often carry risks that are less common on commercial builds:
Occupied properties (clients living in the home during works)
Neighbour disputes (party wall issues, vibration, noise, damage)
Higher likelihood of accidental damage to existing structures
Fire risk from hot works in confined spaces
Theft risk for tools and materials left on site
Public exposure (children, visitors, deliveries)
Tight access and manual handling hazards
Insurers will often ask more questions for residential renovations than for a simple new build shell.
Public liability covers injury to third parties or damage to third-party property arising from your business activities.
For residential construction, this can include:
A visitor trips over materials and is injured
You damage a neighbour’s fence, car, or garden
Dust or debris causes damage to a client’s belongings
Water damage spreads into an adjoining property
Typical limits: £1m, £2m, £5m, sometimes £10m for larger developers.
Key watch-outs:
Heat work restrictions (roofing, welding, blowtorches)
Work at height conditions
Exclusions for “damage to the part being worked on” (varies)
Bona fide subcontractor clauses (you may need proof of subcontractors’ insurance)
If you employ anyone (including labour-only staff in many cases), employers’ liability is typically required by law in the UK.
It covers claims from employees who suffer injury or illness due to their work.
Typical limit: £10m (standard).
Common residential scenarios:
Falls from scaffolding
Manual handling injuries
Exposure to dust (e.g., silica)
Tool-related injuries
Even small builders can be caught out here—if you have people working under your direction and control, you may need this cover.
Often the most important policy on a build, contract works (sometimes called Contractors’ All Risks, or CAR) covers the works in progress, materials, and sometimes temporary works.
It can cover:
Fire, flood, storm damage to the build
Theft of materials stored on site
Accidental damage during construction
Vandalism
On renovations, it can be especially valuable because a single incident can damage both new works and existing parts of the property.
Key watch-outs:
Sum insured must reflect the full contract value (including materials)
Security requirements (locks, alarms, fencing, CCTV)
Unoccupied property conditions (if the home is empty during works)
Exclusions for defective workmanship/design (often covered under separate policies)
Tools and plant cover protects:
Hand tools
Power tools
Small plant (e.g., breakers, mixers)
Larger plant (e.g., mini diggers, dumpers) depending on the policy
It can cover theft, accidental damage, and sometimes hired-in plant.
Key watch-outs:
Overnight storage conditions (locked van, locked compound)
Evidence requirements (proof of ownership, serial numbers)
Single item limits and unattended vehicle exclusions
If you provide design, specification, structural advice, or project management, you may need professional indemnity.
PI covers claims that your professional services caused financial loss, for example:
Incorrect calculations leading to structural issues
Wrong specification causing water ingress or failure
Design errors that require rework
This is especially relevant for:
Design & build contractors
Architects and architectural technologists
Structural engineers
Surveyors
Project managers
Key watch-outs:
PI is usually “claims-made” (you must have cover in force when the claim is made)
Retroactive dates and continuous cover matter
Contractual liability clauses can create gaps
Often included with public liability, product liability covers claims arising from products you supply.
Residential examples:
A supplied fixture fails and causes injury
A fitted product causes water damage
If you supply materials or install systems (e.g., boilers, electrics, insulation), this cover can be important.
Legal expenses can help with:
Contract disputes
Debt recovery
Employment disputes
HMRC investigations (depending on cover)
On residential projects, disputes can escalate quickly, particularly around delays, snagging, and alleged defects.
Renovations typically carry higher risk because you’re working with an existing structure and often an occupied home.
Extra considerations:
Accidental damage to existing property (some policies exclude this unless added)
Escape of water and fire risk
Party wall exposures and neighbour claims
Higher likelihood of “non-negligent” damage claims (see below)
New builds can be more straightforward to insure, but insurers still focus on:
Site security
Fire precautions
Weather exposure
Theft of materials
Contract value and duration
If you’re a developer building multiple units, insurers may want a portfolio approach.
Some contracts require cover for “non-negligent liability” (often referred to under JCT clause 6.5.1).
This relates to damage to surrounding property caused by certain activities (like vibration or weakening of support) even if you weren’t negligent.
It’s common on projects near neighbouring structures, including:
Basement conversions
Structural alterations
Party wall works
Not all contractors carry this automatically, so check your contract requirements.
It depends on the contract and the project type.
Common approaches:
Main contractor arranges public liability, employers’ liability, tools/plant, and often contract works.
Developer arranges contract works for the entire development, plus public liability for the site.
Homeowner/self-builder arranges a specialist self-build policy that covers the structure, public liability, and sometimes personal accident.
A key point: the party with “insurable interest” and contractual responsibility should arrange the cover. If it’s unclear, you can end up with gaps or disputes at claim time.
Homeowners often assume their standard buildings insurance will cover renovation works. Sometimes it will, but many policies:
Exclude major building works
Require notification of structural alterations
Apply stricter conditions for unoccupied properties
If the home is being extended, re-roofed, or structurally altered, the homeowner should tell their insurer. In some cases, a specialist renovation policy is needed.
Construction insurance can fail you when you need it most if you don’t meet conditions. Common issues include:
Hot works: requirements for permits, fire extinguishers, and post-work fire watches
Work at height: scaffolding standards and fall protection
Basements and underpinning: often excluded or requires specialist underwriting
Asbestos: usually excluded unless managed under strict controls
Defective workmanship: resulting damage may be covered, but rectifying the defect often isn’t
Wear and tear: not covered
Unattended vehicles: tool theft from vans can be excluded unless specific security is used
Always read the endorsements—residential claims are frequently declined due to conditions, not because the event “isn’t covered.”
Premiums are typically influenced by:
Trade and activities (general builder vs roofing vs groundworks)
Turnover and contract values
Claims history
Use of subcontractors and how they’re controlled
Work at height, hot works, basements
Security measures and site location
Experience and qualifications
If you do a mix of work (e.g., extensions plus roofing), disclose it clearly. Misdescription is a common reason for claim disputes.
Insurers like evidence of good controls. Practical steps include:
Written method statements and risk assessments
Hot works permits and documented fire watch procedures
Photo logs before/during/after works
Clear change order process and written client approvals
Subcontractor vetting (insurance checks, qualifications)
Site security: lighting, locked storage, tool marking
Water controls: stopcocks labelled, leak detection, end-of-day checks
These steps also help if a client alleges damage or poor workmanship.
If you’re a contractor, you typically still need public liability at minimum, even for small jobs. Tools cover and contract works may also be sensible depending on the value of materials and exposure to accidental damage.
Usually not. Public liability covers third-party injury/property damage, but it doesn’t automatically cover the works in progress. For a new build, contract works insurance is often essential.
In most cases, yes. Bona fide subcontractor arrangements usually require subcontractors to carry their own public liability (and employers’ liability if they employ staff). The main contractor should keep records.
Tell your insurer. Occupied renovations can increase risk, and some policies apply conditions or require specific endorsements.
Most policies won’t pay to redo defective work itself. However, they may cover resulting damage caused by the defect (depending on wording). Professional indemnity is the more relevant cover for design/specification errors.
A specialist self-build policy is often suitable. It can combine public liability, contract works, and sometimes personal accident, plus cover for materials stored on site.
Residential construction insurance should match the reality of your work—new builds, renovations, structural alterations, subcontractor use, and the contract terms you sign.
If you want a quote, it helps to have:
Your turnover and estimated annual contract values
Typical project types (extensions, refurbishments, new builds)
Max height worked at and any hot works
Claims history (last 3–5 years)
Details of subcontractors and how you manage them
A well-structured insurance package can protect your cashflow, your reputation, and your ability to win better projects.
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