What Is Builders Insurance and Why Do You Need It

Builders Looking At Clipboard While Standing Onsite With Other Builders In The Background

If you are a contractor, then you know the importance of having insurance. There are many different types of insurance that contractors can purchase, but one of the most important is builders insurance. This type of insurance is designed specifically for contractors, and it provides coverage for a wide range of risks. In this article, we will discuss what builders insurance is and why you need it!

What Is Builders insurance?

Builders insurance is a type of policy that provides coverage for contractors. This type of insurance helps protect contractors from liability, damage to property, and medical expenses in the event of an accident. It may also include coverage for any tools or equipment used by the contractor while on the job. Typically, builders insurance policies provide coverage up to certain limits and have deductibles associated with them.

Types Of Builders Insurance

There are several types of builders insurance that can be purchased to provide coverage for contractors. These include:

Public Liability Insurance – This type of policy covers any third party injury or damage to property that is caused by the contractor. It also provides coverage for legal costs and damages if a claim is brought against the contractor.

Professional Indemnity Insurance – Professional indemnity insurance provides protection from financial losses resulting from professional negligence or mistakes made during their work.

Portable Tools and Equipment Insurance – Tools and equipment insurance covers theft, breakdowns and accidental damage to tools used on site.

What Does Builders Insurance Cover?

Builders insurance provides coverage for financial loss and legal costs arising from a contractor’s work, whether it is due to an accident, negligence or other circumstances. This includes coverage for property damage, personal injury, theft and breakdowns.

While this type of insurance may not be mandatory in every state or jurisdiction, it is highly recommended that contractors protect themselves with some form of builders insurance as even the most diligent workers can face unexpected issues on the job site.

In addition to providing protection from financial losses resulting from accidents and errors made on the job site, any associated legal fees incurred can be claimed. With this type of coverage in place, contractors can rest assured they are covered in the event of any legal proceedings.

It can also provide contractors with peace of mind if they are ever held responsible for damages caused by a third party on their job site. For example, if a third party is injured while working on the job, and the contractor is found liable for those injuries, their policy can help to cover the costs of any associated legal fees.

Who Needs Builders Insurance?

Builders insurance is essential for all contractors, regardless of the size or scope of their work. Contractors who work on residential and commercial buildings need builders insurance to protect themselves in case anything goes wrong during a job. 

Contractors who use subcontractors or hire temporary employees also need to have suitable cover in place. Furthermore, any contractor who works with hazardous materials or on high-rise buildings should carry more comprehensive coverage.

How To Find The Right Policy

When deciding on an insurance policy for your business, it’s important to carefully consider the types of coverage and limits that are needed for each project. Different projects will have different risks associated with them and require different levels of protection. 

Basic coverage should include public liability insurance, and portable tools insurance. Public liability protects against any financial losses if a contractor is sued by a third party, while portable tools insurance protects against costs associated with replacing damaged, lost or stolen tools. 

In addition to these basic coverages, contractors may need additional coverage such as professional indemnity cover to protect against claims relating to negligence or errors made during the project. Contractors should always check the details of a policy before taking it out to make sure that it meets their specific needs. It is important for contractors to consider any potential risks when deciding what type of insurance coverage they need, as this will determine which policies are best suited to them. 

By ensuring that all bases are covered, contractors can ensure that both themselves and those involved in their projects remain protected from any financial losses if something goes wrong.

How to Make a Claim

The procedure for making a claim on builders’ insurance varies depending on the type of policy held and the details of the incident. Contractors must inform their insurer as soon as possible after becoming aware of an incident requiring a claim.

The insurer will then discuss the details of the claim before approving it and making any necessary payments. It is crucial for contractors to be clear and truthful when providing information to their insurers as this enables them to make informed decisions quickly and accurately.

In some instances, contractors may need to provide evidence, such as receipts or photographs of damaged property, to make a successful claim. After submitting all relevant information, the contractor’s insurer will review it and decide whether to provide coverage. If the claim is approved, the insurer will process any payments to the contractor promptly.

Contractors must keep all paperwork, including insurance policies and contracts, to make successful claims. Having this information on hand can speed up the process and ensure they receive the required support quickly and efficiently. In some cases, the insurer may request additional evidence or documents from the contractor.

Finally, contractors must understand their rights when making claims. This includes comprehending the type of cover that applies and the amount of compensation available if an incident occurs. Understanding these details ensures contractors’ claims are successful and their projects remain on track.


Builders insurance is an essential type of insurance for contractors and builders. It provides coverage for a wide range of risks, helping to protect your business and employees from financial losses in the event of an accident or injury. By understanding what builders insurance covers and why you need it, you can make sure that your business is properly protected. Looking to save on your policy? Get in touch with the Insurance For Tradies team today for a free comparison.

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