Warning for homeowners over builders’ insurance

Homeowners improving their properties have been warned to check credentials after it was revealed up to half of the UK’s building contractors may be underinsured.

Experts at Construction Insure claim that around half of all UK contracting firms, including builders, plumbers, roofers and electricians do not have adequate insurance in place to cover their works.

The company say the use of price comparison websites for insurance services has led to an epidemic of under insurance across the construction sector.

Construction Insure said that even many large contracting firms with multimillion-pound turnovers don’t realise their insurance is unfit for purpose, warning that the use of insurance comparison websites often led to the purchase of an inadequate policy. Inadequate cover puts homeowners at risk of liability if things go wrong on the project. In some cases, this could lead to the homeowner losing all their investment.

Mark Herbert of Construction Insure commented:

“Homeowners need to inspect insurance documents from prospect builders before agreeing to quotes and going ahead with works. Failure to do so could have disastrous consequences. From our enquiries we estimate around 50 per cent of all UK contractors do not have adequate insurance in place.”

He went on to explain how there is a legal requirement for contractors to make sure they are insured by giving their insurance company full disclosure on the nature of the work they’re undertaking. He also advised homeowners to check builders’ insurance policies and check the small print to make sure all aspects are covered.

Explaining how much information insurers need, he said:

“The insurer needs to know everything about each project – from all planned work to the staff employed to carry it out. They need to know about all work sub-contracted out to companies or if labour only sub-contractors are used. General builders with standard cover for internal renovation works and public and employer’s liability cover may think they’re covered for everything but often this leaves things like lofts, new builds and extensions uninsured.”

He advised that what’s needed is a contractor’s combined insurance policy.

“Contractors need to consider protecting themselves against other traders that are part of a client’s build. It’s worth looking into a contractor’s combined insurance to keep all parties covered.”