Subcontractor insurance

A straightforward safety net for UK subcontractors

Subcontractor insurance is an umbrella term for a bundle of policies designed to protect trades and professionals who work under contract for a main contractor or client. It typically centres on public liability, employers’ liability if you hire anyone, and professional indemnity if you offer advice, design, or certification. You can also add tools, plant, contract works, business interruption, and cyber cover. The right mix reduces the impact of accidents, errors, delays, or insolvency events that can disrupt your income.

In 2025 the UK commercial insurance market is buyer friendly, with falling professional indemnity rates thanks to increased insurer capacity and new MGAs. Liability pricing is broadly stable but selective on higher risk work such as high-rise projects, cladding, or complex fire and water exposures. This means many subcontractors can achieve better terms, but you still need to present your risk clearly and avoid gaps.

Underinsurance remains common among UK SMEs, with many firms either lacking cover or holding limits that are too low. Inflation, supply chain delays, and wage pressures have pushed up reinstatement and delay costs, which can leave policies short. Business interruption and cyber cover are often overlooked, even as digital risks and project stoppages rise.

Think of this guide as practical, regulated-style guidance. We will explain what typical policies cover, where exclusions apply, and how claims usually work. We will also help you prepare for insurer questions so you can compare quotes fairly and choose limits that fit your real-world exposure.

Insurance can only protect you properly if the sums insured and policy terms match the work you actually do.

What is covered and how claims play out

Public liability covers injury to third parties or damage to their property arising from your work. If a member of the public trips over your cable or a water leak damages a customer’s flooring, this policy addresses legal costs and compensation up to the selected limit. Employers’ liability is a legal requirement if you employ anyone in the UK, including temporary or casual workers. It responds to employee injury or illness linked to work.

Professional indemnity protects you against claims arising from professional services such as design, specification, measurement, or certification. In 2025, broader cover and fewer exclusions are available for many trades, particularly in the mid-market, though high-risk cladding and façade work may still attract stricter terms.

Tools and plant insurance can cover theft or accidental damage to owned or hired equipment. Contract works insurance protects materials and work in progress on site until practical completion, subject to agreed limits and any height or depth restrictions. Business interruption can replace lost gross profit or revenue following an insured event such as a fire at your premises or a major site incident, but it will not normally cover late payments, market downturns, or purely contractual disputes.

Cyber insurance addresses data breaches, system attacks, and fraud events that increasingly affect construction supply chains. Claims typically involve notifying your insurer as soon as you become aware of an incident, cooperating with appointed loss adjusters, and evidencing costs, contracts, method statements, and site records. Exclusions often include deliberate acts, known defects, purely contractual liabilities, and workmanship guarantees. Clear documentation and accurate declarations at inception are essential to avoid declined claims.

Who benefits - and who may not

Subcontractor insurance is most useful for trades and professionals whose work could cause injury, property damage, or financial loss if something goes wrong. Electricians, plumbers, groundworkers, carpenters, HVAC specialists, scaffolders, engineers, designers, and fit-out teams all face distinct risks that can be transferred to insurance. Firms employing staff must hold employers’ liability. Those providing advice or designs should strongly consider professional indemnity, especially where contracts require it.

If your work is low risk, you operate part-time, and you never interact with clients or the public, you may decide on lower limits. However, many sites and main contractors specify minimum cover before you can step on site. Where strong contractual protections, robust QA, and modern methods of construction reduce your risk, you may secure lower premiums, but eliminating cover entirely can be risky given rising insolvencies and project delays.

Choosing your cover levels

1. Core Liability Package

   • Public Liability: Common limits of £1m, £2m, or £5m. Protects third-party injury and property damage on or off site.
   • Employers’ Liability: Usually £10m as standard. A legal requirement if you employ anyone in the UK.

2. Professional Services Protection

   • Professional Indemnity: Limits often from £250k to £5m. Responds to errors in design, specification, or advice. Check retroactive dates and any cladding or fire safety exclusions.
   • Collateral Warranties: Ensure your PI covers obligations under warranties and novation agreements.

3. Operational Assets and Works

   • Tools and Plant: Choose per-item and total limits. Include hired-in plant liability if you rent equipment.
   • Contract Works: Set an adequate maximum contract value and any single item limits. Confirm height, depth, and security conditions.

4. Income and Digital Resilience

   • Business Interruption: Select an appropriate indemnity period, often 12-24 months. Consider supply chain extensions and increased cost of working.
   • Cyber Insurance: Covers incident response, data recovery, and fraud losses. Valuable as BIM, MMC, and digital project management expand.

5. Optional Add-ons

   • Personal Accident for key persons, Legal Expenses, Goods in Transit, Directors and Officers for incorporated businesses, and JCT-compliant non-negligence cover where contracts require it.

What it costs and why - at a glance

Typical pricing varies by trade, turnover, claims history, project profile, and cover levels. In 2025, professional indemnity rates are generally lower for many mid-market subcontractors, while liability pricing remains steady but careful on higher risk activities. Use the ranges as orientation only.

Indicative annual ranges: public liability from low hundreds for micro trades to several thousand for higher risk contractors; professional indemnity from a few hundred for low limits to mid-thousands for complex work; package policies can offer savings when bundling covers. Always compare on wording, not price alone.

Eligibility and what insurers look for

Most UK subcontractors can apply, including sole traders, partnerships, and limited companies. Insurers will ask for your trade activities, turnover and payroll, number of employees, health and safety procedures, use of subcontractors, and details of the projects you undertake. Expect questions on cladding, fire safety, water damage controls, and hot works permits. Design responsibility and use of MMC or BIM should be disclosed, as these can improve underwriting confidence.

You will usually need method statements, risk assessments, training records, and contract terms, especially for higher risk or higher value projects. Common reasons for decline include undisclosed high-rise façade work, poor claims history, unpaid CCJs, or inaccurate statements about design responsibility. Being open about insolvency exposures in your supply chain and how you manage them will help secure appropriate terms.

From quote to claim - step by step

1. Gather contracts, turnover, payroll, and details of activities and high-risk work.
2. Request multiple quotes with identical limits and excesses for fair comparisons.
3. Confirm exclusions, endorsements, and retroactive dates for professional indemnity.
4. Choose cover levels aligned to site requirements and realistic loss scenarios.
5. Bind cover, set up monthly payments, and diarise renewal and review dates.
6. Maintain records, incident logs, and photos to support potential claims quickly.
7. Report incidents promptly, follow insurer guidance, and provide requested evidence.

Weighing it up - pros, cons, considerations

Before you buy - key checks

Check sums insured for tools, plant, and contract works against current replacement values, not last year’s prices. Confirm public liability and professional indemnity limits match contractual requirements and realistic worst-case scenarios. Review exclusions for cladding, combustible materials, hot works, depth and height limits, and water damage controls. Understand excesses on each section and whether higher deductibles materially reduce premiums. For business interruption, choose an indemnity period long enough to recover given today’s supply chain and labour challenges. Verify retroactive dates and run-off arrangements for professional indemnity. Finally, keep copies of method statements, training records, and warranties, as these documents often determine how smoothly claims proceed.

Alternatives and related protection

1. Owners’ or main contractor project insurance - appropriate when a principal arranges wrap-up cover that includes subcontractors.
2. Personal accident and income protection - helps individuals manage personal income shocks outside business policies.
3. Trade association schemes - sometimes offer tailored wordings or collective purchasing benefits for niche trades.
4. Surety bonds and performance guarantees - required for some contracts to protect principals against non-performance.
5. Equipment leasing cover and extended warranties - may suit businesses with minimal site risk but significant kit value.

FAQs

Q: Do I need employers’ liability if I only use labour-only subcontractors? A: Usually yes. If you control their work or supply materials or equipment, they are often treated as employees for insurance purposes. Confirm with your broker to avoid legal non-compliance.

Q: Why is my professional indemnity retroactive date important? A: It sets how far back in time your policy will respond to claims. If it is recent, past work might be uninsured. Maintaining continuous cover protects completed projects and warranty obligations.

Q: Are high-rise projects still harder to insure in 2025? A: Yes, insurers remain selective on high-rise, cladding, and major fire and water damage exposures. Expect more scrutiny, minimum premiums, and specific endorsements or exclusions for these risks.

Q: How can modern methods of construction affect my premium? A: Demonstrating BIM usage, factory-controlled processes, and strong QA can lower risk and support better terms. Provide evidence in proposals, including accreditation and documented procedures.

Q: I have no cyber insurance. Is that risky for a small trade? A: Many SMEs lack cyber cover, yet construction median losses can be significant. If you use email, cloud plans, or online banking, a basic cyber policy can meaningfully reduce exposure.

What to do now

Review your contracts, site requirements, and current policy limits. Gather documents, then compare like-for-like quotes from multiple UK insurers. Prioritise wording quality, realistic sums insured, and evidence of your risk controls. Take your time, ask questions, and choose cover that genuinely matches your work and budget.

Important disclaimer

This guide provides general information, not personal advice. Policy terms, exclusions, and pricing vary by insurer and by risk. Always read the full wording, check limits and endorsements, and seek professional guidance before buying.