Public liability insurance

Construction contracts will typically include a clause requiring the contractor to carry insurance to cover expense, loss, liability, claim or proceedings for personal injury or death arising from the carrying out of the construction works, or loss or damage to property other than the works.

Personal injuries of employees will be covered by the contractor’s employers’ liability insurance, which is compulsory for all employers under the Employers’ Liability (Compulsory Insurance) Act. All firms who employ staff are legally required to hold Employers Liability Insurance.

Personal injury or death, or loss or damage to property of third parties is covered by public liability insurance. Common law claims for personal injury or death, or loss or damage to property can be very significant and are unlimited. The cover provided does not limit the contractor’s liability.

Public liability insurance might cover against claims by:

• Members of the public visiting the business of the insured.
• Customers.
• Clients.
• People taking part in events or activities organised by the insured.
• People watching events or activities organised by the insured.
• Independent sub-contractors.

That is, anyone that the insured interacts with as part of their business, but not employees, temporary staff, students or people on work placements (who should be covered by employers’ liability insurance).

Typically, cover will be between £1 million and £5 million and will insure business premises and activities whist making visits or working on a construction site. Insurance will normally cover:

• Damage to property and possessions.
• Personal injury.
• Legal costs, including the claimants' legal costs incurred by the insured if they are found to be at fault.
• Consequential losses such as loss of earnings (including future loss of earnings).

Public liability insurance and employers’ liability insurance are sometimes offered in a single policy which may also cover office contents and buildings insurance requirements.

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