Running a construction business involves risk at almost every turn. Whether you're managing contractors, working at height, operating heavy machinery, or juggling subcontractors and deadlines, there’s a lot that can go wrong. Insurance should be your safety net — but all too often, construction firms either don’t have the right cover or misunderstand what they actually need. In this guide, we’ll explore the most common insurance mistakes made by construction companies in the UK, and how to avoid them.
Mistake 1: Relying on Basic or Generic Insurance Policies
Many construction firms make the mistake of buying off-the-shelf business insurance that isn’t tailored to the risks they face. Generic cover might tick a box, but it won’t give you the right protection for:
High-risk activities
Working on third-party sites
Hiring subcontractors
Using plant and equipment
Why It Matters:
If something goes wrong and your policy doesn’t cover it, you could face huge out-of-pocket costs or even legal action.
Mistake 2: Not Having the Right Liability Cover in Place
Every construction business should have:
Public Liability Insurance (for injury or damage to third parties)
Employers’ Liability Insurance (a legal requirement if you employ staff)
Contractors’ All Risks Insurance (to protect work in progress, tools, and materials)
Why It Matters:
Without this trio of core policies, you could be left paying for claims, injuries or damaged property out of your own pocket.
Mistake 3: Underinsuring Tools, Plant and Equipment
From power tools to hired-in excavators, equipment is the lifeblood of your business. But many firms underestimate the value of their kit or don’t update their policy when they buy or hire more.
Why It Matters:
If your tools are stolen or damaged and your cover is too low, you won’t be able to replace them properly — which could mean missed deadlines or cancelled jobs.
Mistake 4: Not Covering Subcontractors Properly
Construction companies often use labour-only or bona fide subcontractors. But if you’re not clear on the difference or haven’t declared them correctly, you could be left liable for accidents or damage they cause.
Why It Matters:
Incorrectly classifying subcontractors can invalidate your insurance or lead to rejected claims.
Mistake 5: Failing to Get an Annual Review of Your Cover
Construction businesses evolve quickly. You might take on bigger contracts, hire more people, buy new machinery or work in different locations. But if your insurance isn’t updated to reflect these changes, you might not be properly covered.
Why It Matters:
An outdated policy can lead to gaps in cover and denied claims just when you need support most.
Mistake 6: Overlooking Business Interruption Cover
If your site gets flooded or your equipment is stolen, the direct damage might be covered. But what about the days or weeks of lost income while you recover?
Why It Matters:
Without business interruption insurance, your business could lose thousands in unclaimed earnings and missed deadlines.
Mistake 7: Choosing Insurance Based on Price Alone
It’s tempting to go for the cheapest option, especially when budgets are tight. But price-focused policies often come with limited cover, big excesses, and hidden exclusions.
Why It Matters:
What looks like a saving now could cost you much more if a claim is rejected or the payout is too low.
Mistake 8: Not Reading the Fine Print
Insurance documents can be dull — but they’re vital. Many firms skip the terms and conditions, only to find out later they weren’t covered for certain tasks or needed extra documents.
Why It Matters:
Small print often includes key conditions you must meet for your cover to be valid.
Mistake 9: Going Without Expert Advice
DIY insurance or using online price comparison sites can seem convenient, but they rarely ask the right questions for complex, high-risk businesses like construction.
Why It Matters:
You might miss out on vital cover or not realise what's excluded. A specialist insurance broker understands your industry and can help you avoid costly oversights.
Conclusion: Protect Your Business the Right Way
Mistakes with your insurance can cost you more than just money — they can damage your reputation, delay your projects, and even put you out of business. But with the right advice and a tailored policy, you can focus on the job at hand, knowing you’re properly protected.
At H.I. Commercial, we work with construction firms across Hull, East Yorkshire and North Lincolnshire to make sure their cover is fit for purpose. We understand the risks, regulations and challenges you face — and our advice is honest, personal and tailored to you. With a strong local reputation and dozens of 5-star Google reviews, we’re known for our support and hands-on service.
Need a Review of Your Construction Insurance?
Contact H.I. Commercial today for a free, no-pressure insurance review. We’ll help you spot any gaps and give you clear guidance on the right cover for your company.
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