In 2023/24, 51 workers died in construction-related accidents, which is more than one third of all workplace deaths in the UK, making construction insurance vital for business survival. However, what does this insurance entail and how can you keep costs low? Find out below.
In the 2022 HSE report, Construction was found to be in the top three most dangerous industries to work for within the UK. Therefore, as a business it is key that you have the correct coverage to support this.
What is Construction Insurance?
Construction insurance provides the insured business or person with financial protection in the event where a claim is placed. Essentially, if a claim takes place the insurer will cover the cost of the loss, up to the limits dictated within your policy.
There are various insurance policies available and you will need to select the cover type that is relevant to the policy you require. Businesses are expected to assess their project and answer questions that allow them to understand the risk of the construction site.
These questions help insurers understand the risk and work out the type of cover required to support your construction site correctly. Lengths of policies can cover 3, 6 and 12 month periods and this can be extended in most instances where required.
You must respond to any questions asked with honesty and transparency otherwise you could be left covering your own accidents due to having the incorrect insurance policy for the claim you placed.
It is a businesses’ worst nightmare to find out their claim is rejected as compensation and other costs can be expensive.
Why is Insurance Important for Construction Sites?
Due to being one of the most dangerous industries to work within, accidents like slips, trips and falls are more common than other professions. This places both workers and companies at high risk, making construction insurance central to all involved.
Steps should be taken to protect employees whilst working at your construction site, however, accidents can happen and as a business you need to remain protected also.
Compensation for construction site injury can range between £18,000 to £300,000, if not more, covering issues such as scarring, severe back injuries and injuries affecting the head, vision or hearing.
Covering this without any financial support could be catastrophic to your business, and accidents are not the only concern for construction sites. Issues such as environmental damage, arson, theft, property damage and vandalism all come at a cost to you.
Due to the number of risks posed to construction sites, it is important to have this type of support as a business as in most cases the financial implications will lie with you. Insurance is there to provide the business financial security and establish liability where required, removing the burden from you regarding claims management.
The Different Types of Construction Insurance
Every construction site is unique and any insurance policies you sign into need to cover the specific requirements linked to it.
There are multiple insurance types within the construction field due to the individuality to the risks they are presented with.
It is recommended you take the time to research into the various types and establish which policies you will require with your construction site. However, generally there tends to be four main insurance types most construction sites will require to cover them from the major risks of the trade:
Professional Indemnity Insurance
Professional indemnity insurance protects you if as an individual or business makes an error that could cost your clients money. It covers legal fees and compensation costs for incidents such as:
- Defamation
- Breach of copyright
- Loss of documents
- Professional negligence
- Breach of confidence
Errors may seem unlikely, but they do happen and your construction site needs to remain protected from this.
Public Liability Insurance
Public liability insurance is a type of business insurance that covers incidents where members of the public are injured, or property of theirs is damaged due to your business activities which in this case would be construction work.
Although not legally required, it does help to protect you from unexpected and expensive costs that can be encountered this way.
Within this policy, the following coverage is often provided:
- Legal expenses
- Compensation, repair costs and medical fees to third parties
- Death and injury claims
- Product liability insurance
- Accidental damage and repair costs to third party property
Employers’ Liability Insurance
Employers’ liability insurance protects employers from the financial loss of any event where employees face injury or illness during work-related activities.
In most instances, businesses are legally required to hold this type of insurance, however, there are some exemptions. For construction sites, it will be likely that this is necessary.
This insurance focuses on cover financial implications created from employee claims and tends to covers the following costs:
- Legal fees
- Medical bills
- Loss of income
- £10m of coverage costs
- Compensation
Tools Insurance
Within construction sites, there will be numerous tools and equipment which are expensive, making them perfect targets for thieves.
Tools insurance works to keep that investment safe by covering any loss or damage that occurs to them. This policy type will often come with overnight cover meaning that you have coverage 24/7, wherever you are.
The general coverage of this policy is as follows:
- Toolbox
- Accidental damage
- Intentional vandalism or burglary
- Natural disasters
- Tools in vans
- Theft or loss
There will be some exclusion, so make yourself aware of these to ensure you know where your coverage stops regarding your tools.
How to Lower Your Construction Insurance
Types of construction insurance can vary, meaning that how you can lower it will differ depending on the type of insurance you are looking to try to reduce costs on.
Overall, there are some general rules that aim to help with all construction insurances, however the below advice may not apply to all types.
Compare Insurance Rates
Like with any other insurance, you need to shop around.
Insurers can be competitive with their offerings, even where policies are extremely similar, there can be price differences between various companies.
Do not just settle on the first construction insurance policy that appears in your search and instead head to a comparison site where they will do all the work for you to find the best insurance price based on your requirements.
However, keep in mind that quality and protection is of utmost importance, therefore read through any policy carefully before signing and if you find one more suited to you that costs more, it is always better to select the policy with the most appropriate cover for you.
Raise Your Deductibles
A deductible is the amount of money that the insured business or person must cover before their insurance policy starts paying for covered expenses.
You can adjust the deductible amount that you are willing to cover in order to decrease your premium. This means that monthly or annually you would be paying less, however, if an accident were to occur, you would need to cover the full deductible amount in that instance.
Before committing to a higher deductible, consider the various factors on your construction site that could lead to accidents. If it is a high-risk construction, having a high deductible may not be appropriate, even for the cost-effectiveness benefits.
Increase On-site Security
Yes, increasing your security can help your construction site save on its insurance premium.
By implementing a mobile surveillance system at your construction site it can help lower risks, reduce claims and provide real-time monitoring, all of which show insurers a proactive approach to manage risks.
There are multiple benefits of using CCTV systems on your construction site, however, helping reduce your insurance premium is not very well-known. Although it is an expense to implement such equipment, it can help decrease costs and gather evidence that can be used if any claims arise.
You will need to consider the type of CCTV carefully as a traditional, hardwired system is not the best fit for construction sites.
At WCCTV, we offer rental CCTV Towers that allow you to align your security with the duration of the construction project. This helps to reduce costs whilst maintaining high-quality construction site security.
Review Insurance Coverage Regularly
There are two main reasons for reviewing your insurance policy, the first being to check that the coverage still manages the requirements you have and the second being to find out if you are in renewal with your policy and can explore other options.
Construction can change and your insurance policy needs to align with this. Most will be concerned that their site is under-insured, however, it can also be over-insured and if it is you could be paying more money than you should be doing on your premium.
Therefore by checking your policy every three months or so you can establish if there are elements you could change on your policy to reduce costs whilst maintaining the construction site safety you require.
Also when your policy is due for renewal, this provides the opportunity to shop around and find better deals or find a better priced one with your current insurer.
Improve Your Response to Claims
Any of your construction site’s claims, injury and construction risk management can have a direct impact on certain types of insurance held by you as a business, meaning how you respond to claims can minimise that impact and reduce the related costs.
Consider taking steps to hire a safety manager or utilise third party support if you cannot employ an individual full-time.
By doing this, not only will they help prevent accidents but it will help with your insurance premium most likely by showing insurers you are taking steps to manage risk.
The Claims Process for Construction Insurance
The claims process for each insurer will differ, therefore it is recommended that you take the time to understand the process of your provider. This ensures that any claims can be implemented quickly and processed smoothly.
Generally, you will find the most common process is as follows:
- Contact your insurer and notify them of your claim
- Fill out a claims form to explain what took place
- Damage evaluation will then be completed
- Claims decision will be made if it is accepted or reject
- Claims amount will be provided based on what the insurer is willing to pay out
WCCTV: Market-Leading Security for Construction Sites
Hoping that an accident will not happen on your construction site and insurance costs will just reduce on their own is not the best method of defence. With some of the highest fatality rates in the UK, you have to be proactive with your construction site safety.
Upgrading your construction site security could be the missing piece to securing a better price on your insurance premium and protecting your workers. Get in touch with us today and discuss your requirements.
