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Under the Employers' Liability (Compulsory Insurance) Act 1969, any business that employs staff must hold employers' liability (EL) insurance with a limit of at least £5 million. That includes part-time and temporary staff, and often labour-only subcontractors who work under your direction. In England, Scotland and Wales, the Health and Safety Executive (HSE) enforces the rules and can fine a business up to £2,500 for every day it is uninsured. Northern Ireland has its own equivalent legislation with the same £5 million minimum, enforced by the Health and Safety Executive for Northern Ireland (HSENI).

There are limited exemptions. A sole trader with no employees doesn't need EL, and nor does a family business that only employs close relatives, unless it is a limited company. A limited company whose only employee owns 50% or more of the shares is also exempt.

Public liability insurance isn't a legal requirement, but in construction it is close to essential. Main contractors, local authorities, housing associations and commercial clients routinely make a minimum public liability limit, often £5 million or £10 million, a condition of contract or site access. Vans used for work also need commercial motor insurance by law.

The core covers for a construction or trades business are:

• Public liability: injury to third parties, or damage to their property, caused by your work.
• Employers' liability: compulsory if you have employees, covering injury or illness suffered by your staff.
• Contract works (contractors' all risks): damage to the project you're building before handover.
• Tools and plant: owned or hired equipment, on site, in storage or in vans.
• Professional indemnity: needed if you design, specify, survey or give advice.

Other covers worth considering, depending on your contracts, include goods in transit, hired-in plant, non-negligent liability (often requested under JCT contracts), legal expenses, and personal accident or income protection for sole traders.

The right mix depends on your trade, turnover, the size and type of projects you take on, and what your contracts actually require. A specialist construction insurance broker such as Radar reviews your contract terms so you're not over-insured on some risks and exposed on others.

To request a quote, tell Radar about your business, the work you undertake and the cover your contracts require. These details help us understand the risks to be insured and discuss suitable cover with insurers.

Typical construction examples include a passer-by injured by falling materials, a homeowner's flooring damaged during a kitchen fit, a water pipe pierced while drilling, or a neighbouring property damaged by groundworks.

A public liability policy pays the compensation you're legally liable for, plus legal defence costs, up to your limit of indemnity. Common limits are £1 million, £2 million, £5 million and £10 million. Most contractors' policies also include products liability, which covers injury or damage caused by something you've supplied or installed after the job is finished.

What public liability does not cover:

• Injury to your own employees (that's employers' liability).
• Damage to the works you're building (that's contract works).
• Your own tools and equipment.
• Financial loss from faulty advice or design (that's professional indemnity).
• The cost of putting right your own faulty workmanship.

Most policies also carry conditions, such as a heat work condition or limits on working height and depth. Breaching them can invalidate a claim, so they're worth checking before you start a job.

The simplest way to tell them apart is to ask what went wrong. If something physical happened, so someone was hurt or property was damaged, it's a public liability claim. If a client lost money because of a mistake in your professional work, it's a professional indemnity (PI) claim.

For example, if a ceiling you installed falls and injures someone, that's public liability. If a structural calculation you provided is wrong and the client pays to strengthen the building, that's professional indemnity.

The two policies also work differently. Public liability is usually written on a losses occurring basis, so the policy in force when the damage happened responds. PI is written on a claims made basis, so the policy in force when the claim is made responds. That's why PI needs to be kept in place, including after you retire or stop trading.

Design and build contractors, M&E contractors who design their own systems, and any trade that produces drawings or specifications often need both.

The Employers' Liability (Compulsory Insurance) Regulations 1998 set the minimum limit at £5 million for any one occurrence in Great Britain, and Northern Ireland's equivalent regulations set the same minimum. In practice, almost all UK policies are written with a £10 million limit, which is enough for the vast majority of businesses.

You may need more if a main contractor, client or framework agreement asks for it, or if you have large numbers of staff working together in high-risk environments, where a single incident could injure several people at once.

Your employers' liability certificate must be made available to employees, either displayed at your workplace or accessible electronically, and you must produce it if an HSE inspector (or HSENI in Northern Ireland) asks. Failing to do so can lead to a fine of up to £1,000.

When declaring employees to your insurer, include labour-only subcontractors and anyone working under your direction and control, as they're usually treated as employees for EL purposes.

Structural, civil, MEP and geotechnical engineers can be held liable for financial loss caused by errors in their designs, calculations, specifications or advice. Those claims can be large, and they can arrive years after a project is complete: in England, Wales and Northern Ireland, the limitation period for a claim under contract is six years, or twelve where the contract is signed as a deed. In Scotland, most contractual claims are subject to a five-year prescription period, with a 20-year long stop.

Most appointments and collateral warranties specify a minimum PI limit, often between £1 million and £10 million, and require cover to be maintained for a set period after completion. Professional bodies generally expect members in practice to hold appropriate cover.

Things to check on a PI policy:

• Whether the limit applies to each and every claim or in the aggregate.
• Exclusions for cladding, fire safety, asbestos or specific materials.
• Net contribution and fitness for purpose wording in your contracts, which can widen your liability beyond what the policy covers.
• Run-off cover, which protects you after you stop trading or retire.

Radar works with engineering consultancies to match PI cover to their appointment terms.

Contract works protects the value of the work you've done before the client takes it over. If a fire destroys a half-built extension, a storm brings down scaffolding onto new brickwork, or materials are stolen from site, the policy pays to reinstate the works so the project can continue.

A typical policy covers permanent and temporary works and materials on site, and can be extended to cover own or hired plant, site huts, employees' tools and the cost of removing debris. Cover usually runs until practical completion, often with a maintenance period afterwards.

Under JCT contracts, the insurance option chosen in the contract decides who insures the works. Under Option A, used for most new buildings, the contractor insures in the joint names of the contractor and employer. Under Options B and C, the employer insures, with Option C covering work to existing structures. In Scotland, the Scottish Building Contract Committee (SBCC) versions of the JCT contracts use the same insurance options.

Contract works policies commonly exclude the cost of putting right defective workmanship, materials or design, along with wear and tear and gradual deterioration, so it's important to check the wording against your contract.

Insurers split subcontractors into two groups.

Labour-only subcontractors work under your direction and control, usually using your tools, materials and equipment. Insurers normally treat them as your employees, so they need to be included in your employers' liability and public liability declarations.

Bona fide subcontractors run their own businesses, supply their own labour, tools and materials, and take responsibility for their own work. They should hold their own public liability insurance, typically at a limit matching or exceeding yours, and many policies require you to check this before they start.

Getting this wrong is one of the most common reasons construction claims are disputed. If a bona fide subcontractor causes damage and has no cover, or has let their policy lapse, the claim can fall back on you, and your insurer may decline it if you didn't verify their insurance as the policy required.

Radar Shield collects and tracks subcontractors' insurance certificates and flags expiring or inadequate cover, so you have evidence of your checks if a claim ever arises.

When you contact us, share your trade, the type of work you do, turnover, wage roll, claims history and the cover required by your contracts. Tell us when you need cover and whether a client requires particular documents or policy wording so we can discuss your requirements with insurers.