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Builders Liability Insurance

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What is a Builders Liability insurance policy?

Builders Liability

Builders liability insurance, commonly known as public liability insurance, is a protection for builders against claims made by third parties relating to property damage or injury.

Why Do Builders Need This Insurance?

Builders face a plethora of risks when constructing, renovating, or repairing structures. Therefore, it’s crucial for them to have a protective shield against potential financial damages. Here’s why:

Protection Against Financial Loss

Builders might be held accountable for mistakes or accidents that can result in substantial monetary damages. The right insurance can cover these potential costs.

Legal Requirements

Some regions or clients might have legal requirements for builders to hold liability insurance before undertaking any work.

Professionalism and Credibility

Having insurance can portray a builder as responsible and committed, thereby enhancing their reputation among clients.

What Does Builders Liability Insurance Cover?

Builders liability insurance typically provides coverage for:

  • Injury to Third Parties: If someone is injured due to the builder’s operations, this insurance can cover medical expenses or legal costs.

  • Property Damage: Damage to the property being worked on or neighbouring properties, caused unintentionally during construction activities, can be covered.

  • Defective Workmanship: If there’s damage or issues due to poor workmanship, the policy can handle the ensuing costs. This cover varies by insurance company is sometimes not included at all. It’s best to consult with a broker like Gerrards on on this. 

How Does This Insurance Work?

When an incident occurs that’s covered by the policy:

  • The builder contacts Gerrards, their broker, regarding the incident.

  • Gerrards then advocates on behalf of the builder, liaising with the insurance provider to ensure that the claim process runs smoothly.

  • The insurance company assesses the claim to determine its validity and the amount of compensation required.

  • If the claim is approved, the insurance provider will pay out the amount, either to the builder or directly to the third party, based on the policy’s specifics. Throughout the process, Gerrards supports the builder, ensuring they get the best possible outcome.

What are the advantages and disadvantages of builders liability insurance?

When deciding on builders liability insurance it’s essential to weigh the pros and cons:

  • Financial Safety Net: Provides builders with peace of mind knowing they won’t face unexpected financial burdens due to accidents.

  • Enhanced Reputation: Gives clients and partners more confidence in a builder’s professionalism.

  • Access to More Opportunities: Some clients require insurance before hiring, so having it can open up more job opportunities.

  • Cost: There’s an initial expense to purchase the insurance policy.

  • Policy Limitations: Not everything might be covered, requiring builders to read the fine print and potentially purchase additional coverage.

What are the common misconceptions about builders liability insurance?

  • “It Covers Every Risk”: Some builders assume that once they have this insurance, every risk is covered. However, policies have specific inclusions and exclusions.

  • “I’m Too Small to Need It”: No matter the scale, every builder faces risks. Small-scale operations can still face large claims.

  • “It’s Only for Physical Construction”: Even if you’re not directly handling the construction but are involved in the process, you might still be liable for certain damages or injuries.

How can you do it right? 

  • Tailored Coverage: Ensure that the policy is suited specifically to the needs of your construction business, taking into account the type and scale of projects you undertake.

  • Stay Updated: Regularly review and update your insurance coverage, especially as your business grows or takes on varied projects.

  • Maintain Safety Records: An impeccable safety record can sometimes lead to reduced premiums.

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