The Six Common Types of Construction Insurance

Construction insurance is the general term given to the various types of insurance policies that cover property damage, third-party injuries and damage claims. However, if you are new to building contractors insurance, or the construction industry as a whole, you may find all the types of insurance confusing.

As experienced specialists in construction insurance, Lansdowne Woodward are well placed to explain why you need construction insurance, the six common types of construction insurance and why you should trust us to sort your construction insurance.

Contact Lansdowne Woodward today to arrange your construction insurance policies.

Why is insurance needed on a construction project?

Put simply, insurance will provide you with third party protection against risks. As construction project risks can be very significant, construction insurance is commonplace nowadays because it protects both the insured and the party for whom the insured has a liability.

To illustrate this with an example – say an architect’s practice designed a building with a defect that would cost £2m to remedy. The practice may not have the £2m to remedy, but with the correct construction insurance (i.e. latent defects insurance), an insurance claim would allow the architect to pay the remedial cost.

Common Types of Construction Insurance

The six most common types of construction insurance are:

1 – Professional Indemnity Insurance

Professional indemnity insurance insures against a liability occurring from professional negligence. Examples include breaching a contractual obligation to exercise reasonable skill, care and diligence when carrying out design works.

Who needs Professional Indemnity Insurance?

Architects, engineers and other consultants and building contractors that have a design responsibility to its employer are usually required to hold this insurance.

2 – Product Liability Insurance

Product liability protects against being liable for injuries or damage to a property resulting from products supplied by a business. Suppliers of construction equipment (e.g. lifts and escalators) may be required to have such insurance, sometimes instead of professional indemnity insurance.

Who needs Product Liability Insurance?

Any suppliers, manufacturers or importers should consider this cover.

3 – Public Liability Insurance

This type of insurance covers liability occurring from death or personal injury to third parties other than the insured’s own employees. It also covers damage to the property belonging to third parties.

Who needs Public Liability Insurance?

Pretty much anyone in construction, as this is suited for those that work near other people and their property.

4 – Contractors All Risk Insurance

All risk insurance focuses on covering all physical damage to works and site materials. This can be taken out by either the contractor or the employer, with all responsibilities associated with the construction project attributed to the parties.

Who needs Contractors All Risk Insurance?

All contractors and employers working on construction projects, with both parties being responsible for maintaining it (regardless of who took out the cover).

5 – Latent Defects Insurance

Also referred to as decennial insurance, latent defects insurance usually lasts for ten years from when the original building was constructed.

This cover needs to be arranged in advance, and it protects the building owner against the cost of remedying the building structure as a result of a defect.

Who needs Latent Defects Insurance?

Anyone who is building or purchasing a new building.

6 – Plant and Equipment Insurance

This can be taken in the form of:

  • Hired-in plant and equipment insurance – cover for equipment that you lease and for which you are responsible if it’s lost or damaged
  • Owned plant and equipment insurance – cover for plant or equipment that you own that needs to be replaced following a loss within UK territory while in transit (other than by sea or air)

Who needs Plant and Equipment Insurance?

Essentially those who lease or own a plant or related equipment.

Trust Lansdowne Woodward to sort your construction insurance

For more information on how we can help with your construction insurance, or to learn about our wide array of business and personal insurance options, feel free to get in touch via our contact webpage or give our friendly team a call today on 01202 874989.