What is Contractors All Risks Insurance?
Contractors all risks is a flexible insurance policy which allows policyholders in the construction industry to add the relevant insurance policies to their cover.
There are several different types of covers you can include with your contractors all risk insurance, we discuss these in more detail below.
Public & Employers’ Liability Insurance
The most common cover required by the majority of construction-based businesses is public liability and employers’ liability insurance.
During the course of your business, you may accidentally damage third party property or injure someone, you may also have a member of staff who injures themselves or becomes sick due to working with hazardous materials, these circumstances would be covered respectively by your public liability and employers’ liability insurance.
An example of a public liability claim could be a plumber fitting pipe work however a leak then causes damage to third party property, alternatively, a construction company may be excavating for ground works but cause damage to an unknown drainage pipe.
An employers’ liability example could be an employee falling whilst working from height or getting caught and seriously injuring themselves in machinery.
The cost of public liability and other business insurance policies continues to rise, at East Yorkshire Insurance Brokers we will review a variety of markets to ensure your policy is competitively priced and suitable for your needs. Unfortunately, one of the reason insurance continues to increase is due to fraudulent claims, in 2020, insurers identified over 14,000 fraudulent liability insurance claims which had a potential claim value of £412 million!
Contract Works Insurance
Another standard insurance cover to include on your contractors all risk insurance is contract works. Contract works insurance provides cover for damage caused to ongoing building works, e.g. you may be a builder, building an extension and during the course of the build a storm causes significant damage to the extension.
It’s important to note that contract works insurance does not cover damage caused to the main part of the building and a more comprehensive contract works policy may be required between the contractors and homeowner with a JCT Contract in place.
Own Plant & Hire in Plant
When working on certain contracts, you may require a specific tool or a large piece of plant equipment that you don’t own, a contractors all risks policy can extend to cover hired in plant and other items which are damaged or stolen. Typically, indemnity levels start at £25k and are covered based on the total value of items.
Instead of hiring in plant, you may already own the equipment and require cover for damage or theft of the items, this can also be added on to the policy and typically covers items that are larger than portable hand tools.
When cover is required for hired in plant over the total value of over £100k , often a stand-alone ‘Construction and Engineering’ insurance policy can be taken out. This can give more flexibility instead of adding it on to your public liability policy.
Optional Extras
In addition to the previous covers mentioned you can also add covers such as tools, group personal accident and legal expenses.
Tools cover will provide cover for portable hand tools owned by the business against damage or theft, however, it’s important to note that cover for tools left overnight in a vehicle are often excluded.
Group Personal accident cover provides the employees of a business a fixed monthly payment following an accident that resulted in the loss of a limb, hearing, or sight. It can also extend to cover a lump sum payment for accidental death.
The final option on a contractors all risks policy is legal expenses, typically legal expenses provides expert legal advice on a variety of legal issues including, contract disputes, tax protection and access to a legal helpline. It is important to note though that legal expenses does include a 51% chance of success clause, due to this, you may prefer to take out a management liability policy, we’ll talk about this more later in this article.
What other Policies should a contactor consider?
Motor Fleet Insurance
For contractors who have 3 or more commercial vehicles, you may wish to insure them on a motor fleet policy, this will then allow you to have all your vehicles on one policy, typically this will be on an any driver policy and will exclude drivers under a certain age. You may still be able to name young drivers on the policy.
You may also own certain items of plant that are used on the road, these vehicles will not be covered via your public liability insurance and instead you will need to insure them on your fleet policy as a ‘special type’ vehicle. Normally ‘special type’ vehicles are insured on a third party only basis, this then covers the road aspect use of the vehicle.
Cyber Insurance
You may question why a contractor requires cyber liability insurance, however for any business that holds client data they could be at risk if they suffered a data breach from a cyber-attack.
In 2021 it was reported that 4 in 10 business suffered from a cyber-attack, a cyber liability policy will provide cover to investigate a potential breach, cover PR costs, recover lost data, make business interruption payments and much more.
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Management Insurance
If your construction business is a limited company, action can be taken against the directors and officers of the business for a potential breach of their professional duties.
A management liability policy (MLP) will include directors’ and officers’ insurance as well as corporate liability to defend the above as well as paying third-party awards.
In addition to Directors & Officers insurance (D&O), an MLP policy can also extend to include employment practice liability, this protects the business against claims brought by employees, for example, unfair dismissal, discrimination, sexual harassment etc.
A management liability policy will also not include the 51% chance of success clause that a typical legal expenses policy includes.
Still Unsure? Get in touch!
If you have found this article useful and would like to contact us about your Contractors all risks insurance or any other small-to-medium sized business insurance, please get in touch.
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