Guide for UK Building Contractors: Rights and Responsibilities when Undertaking a Residential Construction Project


The purpose of this article is to provide a comprehensive guide for UK building contractors, detailing their rights and responsibilities when working on a construction project for a homeowner. It is crucial for contractors to understand these rights and responsibilities as they play a vital role in the successful execution of projects and the mitigation of any legal and / or financial risks.

Insurance for the Existing Structure

Where you are undertaking a renovation on, or extension to an existing building, there’s always the risk that the work you do may lead to damage to the existing structure or it’s contents. Insurance coverage for the homeowner’s existing structure is essential to protect against potential damage that may occur during the construction process. There are several types of insurance coverage available:

Building and Contents Insurance

This insurance covers the physical structure of the building and its contents, such as furniture and appliances. It’s worth advising the homeowner that they should also speak with their home insurance provider before any work is undertaken, so that they can advise on whether the work has any implications to their pre-existing property insurance.

Some JCT contract versions will instruct insurance for the existing structures to be in ‘joint names’ of contractor and client – sometimes this is not possible and there is guidance within the JCT contract suite and options to address this problem.

Public Liability Insurance

Public liability insurance offers coverage for any injuries or property damage sustained by third parties as a result of the contractor’s negligence. It could be that you accidentally damage a waterpipe while working on the extension, and cause damage to the property as a result.

Professional Indemnity Insurance

Professional indemnity insurance provides coverage for financial loss claims arising from professional negligence, such as incorrect design or errors and omissions. While the design professionals you are working alongside (typically the architect or engineer) will need to have their own professional indemnity cover in place, it’s also worth considering your own protection as the constructor, where you might be deemed the ‘expert on site’ and held responsible for your decisions in carrying out the work.

Insurance Cover for Works in Progress

It is equally important for contractors to have insurance coverage for ongoing construction projects to protect both themselves and the homeowner from potential risks. Insurance of the ‘works’ is often required under a JCT contract – and taken out by either the client or the contractor, again on a joint-names basis.

Contractors’ All-risk Insurance

Contractors’ all-risk insurance, sometimes referred to as contract works, offers ‘all-risk’ coverage for an ongoing construction project, from start to handover. For example, you may get a number of weeks into a project, only for an adverse weather event to cause damage to the work you’ve already carried out – leading to a re-build and delays that may also impact on this, plus your other projects. ‘Contractors All Risk’ or ‘Contract Works’ cover is designed to protect you from costs in just such a situation.

If there is a contract in place, the guidance for this cover will be that the contract sum to be insured need to cover the agreed contract value but also include debris removal costs and professional fees to rebuild – this can add up to 25-30% to the contract sum depending on the specific location or potential increases in the cost of materials to be sourced and used. The appropriate policy contract duration limits should also be considered especially as delays regularly occur – give yourself a bit of time for unexpected delays or weather, in our experience adding a few months to the project duration on the policy up front, is not as expensive as having to extend when you are near the end of the policy limits.

Most Contractors All Risk policies will automatically note where contracts request cover on a ‘joint names’ basis.

These policies also provide ‘all-risk’ cover for materials for use on the project stored on-site, or off-site or even in transit to the site. Tools and plant, both owner and hired-in can also be covered too.

It’s also worth noting that where cover on provided on any insurance policy is called ‘all-risk’, this does not mean that all risks will be covered – when an insurance policy is on an ‘all risk’ basis of cover, you should always look at what is listed as excluded within the policy wording – your broker should be able to help you understand what is and isn’t covered and help you determine what is the right insurance cover for you and the project as well as meet your contractual responsibilities.

It’s important to look at the particular project that you are undertaking. Recognising the value of the building, the cost implications where something does go wrong, as well as your liabilities to, for example, the client/homeowner, all contribute to calculating an appropriate levels of cover. Insurance policies will have limits of cover and indemnity which are the maximum amount that a policy will pay out in an insured event.

Employer’s Liability Insurance

Employer’s liability insurance is compulsory in the UK for all limited companies (unless exempt). It provides cover for employers from claims arising from injuries or illnesses sustained by employees in the course of their employment. It’s important to understand that here, the definition of an employee is as wide as it can be and not dependent on a person being on the payroll. Here, it can mean anyone working under your supervision or direction including casual labour or even subcontractors.

Design Liability (Professional Indemnity Insurance)

Design liability refers to the responsibility of design professionals for any errors, omissions, or defects in their work.  It’s a different term for Professional indemnity insurance and is essential for design professionals to guard against potential claims. As stated previously, as a contractor, you need to consider your potential exposure as the ‘expert on site’.

Design liability and responsibility can be allocated to a contractor under a contractors design portion (CDP) on a JCT contract, or more obviously, where the contract is on a ‘design and build’ contract form.

Tips for contractors dealing with design liability issues include:

  • Ensure that design professionals have adequate professional indemnity insurance.
  • Regularly review design documentation for accuracy and completeness.
  • Addressing any issues or concerns with the design promptly – and documenting any agreed variances.

JCT / Non-Negligence Insurance (Clause 6.5.1 or similar)

This type of insurance provides coverage for non-negligent damage to adjacent properties during a construction project. Typically, it protects the employer against third party claims arising from issues such as subsidence, vibration, or collapse. This insurance is taken out as part of a contractor’s contractual responsibility under a JCT contract. Here, the contractor takes out the insurance for the benefit of the employer/customer. This insurance is placed on a contract/project-specific basis where the architect identifies the need for it to protect the employer –  typically this is where there may be piling or other activities that can cause movement, vibration or weakening of support to surrounding or nearby buildings or structures.

Tips for contractors dealing with JCT / non-negligence insurance issues include:

  • Ensure your projects are properly insured with the appropriate JCT policy. Take professional advice because JCT contracts are typically quite complex.
  • Ask you broker for advice on how best to place this insurance – it can be placed on a standalone basis; or placed as an extension to your existing public liability insurance.
  • Policy excesses can be high – be aware of this when obtaining quote options.
  • Take all reasonable steps to minimise the risk of potential damage to adjacent properties.

Latent Defects / Structural Warranties / Insurance Backed Warranties

  1. Latent Defects

Latent defects are defined in English Law and are hidden flaws or faults in the construction work that may not become apparent until after the project’s completion. Latent defects insurance offers coverage for the cost of rectifying such issues. Advantages of obtaining latent defects insurance for contractors include:

  • Protection from potential claims arising from latent defects.
  • Improved reputation and increased client confidence.
  1. Structural Warranty

Structural warranties are essential in construction projects, as they can provide cover for defects in the structure of the building itself.

Tips for contractors when dealing with structural warranties include:

  • Ensure that appropriate level of warranty cover is in place for each project.
  • Following the required procedures and guidelines to validate warranty coverage.
  • Maintaining accurate records of construction materials and methods used in the project.

iii. Insurance Backed Warranty

Insurance backed warranties offer additional protection to homeowners by guaranteeing warranty coverage even in the event of the contractor’s insolvency or cessation of business.

Insurance Backed Warranties can be placed on specific parts of a structure such as a roofing or window system and can offer the client extra protection.

Benefits of insurance backed warranties for contractors include:

  • Increased client confidence and trust in the contractor’s work.
  • Providing an extra safeguard against potential claims.

When obtaining insurance backed warranties, it’s important to take advice from a specialist so that you have a full understanding of the warranty requirements and cover offered by a particular policy. It’s also important to make sure you have appropriate supporting documentation in order to validate the warranty.

Ensure the client fully understands the terms of any warranty placed.


In conclusion, it is vital for UK contractors to understand their responsibilities when undertaking a construction project for a homeowner, contractual or otherwise. Ensuring proper insurance coverage is in place and following contractual requirements means all parties are clear about who is responsible for insuring which element of a construction project. guidelines and best risk management and site safety practices can minimize risks and potential disputes. By staying well-informed and proactive, contractors can protect themselves and their clients, fostering successful project execution and optimal client satisfaction.