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The warning comes as contractors across the UK continue to face rising material costs, increased labour pressures, subcontractor exposure, tool theft and growing liability risks across construction and trades sectors.
According to Insure24, many contractors arranged cover years ago and may not have reviewed policy limits, contract requirements or operational risks as their businesses expanded.
The broker says this can create significant exposure where businesses are undertaking larger projects, employing more staff, using subcontractors or handling higher-value equipment and materials than originally declared.
“We are seeing increasing pressure across the contractor sector from inflation, higher rebuild costs, rising liability awards and more demanding contract requirements.
Many contractors arranged cover some time ago and may not realise that project values, turnover, staffing or working practices have changed significantly since then.
Even relatively small gaps in cover can create major financial exposure if a serious claim occurs.”
Salvatore Scarpato, Director at Insure24
Common underinsurance risks for contractors
Insure24 says some of the most common issues affecting contractors include:
- Insufficient public liability limits
- Outdated plant and tools valuations
- Uninsured subcontractor exposure
- Inadequate contract works cover
- Lack of business interruption protection
- Policy limits that no longer match turnover, staffing or project values
The broker also notes that more principal contractors and commercial clients are demanding higher levels of cover and stricter evidence of insurance compliance before awarding contracts.
In addition to traditional construction risks, contractors are increasingly facing cyber, contractual and supply chain exposures which many smaller firms may not have considered previously.
Tool theft continues to remain a major issue across the UK construction sector, with rising replacement costs placing additional pressure on smaller businesses already dealing with tight project margins.
Annual reviews recommended
Insure24 believes many SMEs would benefit from reviewing insurance arrangements annually to ensure policies continue to reflect current business activities, turnover, staffing levels and contract obligations.
The company has also launched additional online guidance to help contractors better understand key areas of exposure including public liability, employers’ liability, contract works, tools and plant insurance.
Further information can be found at Contractor Insurance.
About Insure24: Insure24 is a UK commercial insurance broker providing insurance solutions for contractors, manufacturers, logistics businesses, retailers and SMEs across a wide range of industries.