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What will happen if my builder isn’t insured and something goes wrong?

Rhino Trade Insurance 06 February 2023

When you have building work done on your home, there is always a possibility that damage or injury can be caused. Trade insurers like Rhino Trade Insurance know about this and regularly share content encouraging tradespeople to have the right cover before stepping foot on-site. 

If something does, in fact, go wrong during your build, it saves a lot of time and stress if your builder's liability cover is sufficient and protects against any damage caused. 

Let's talk about the ways in which you can find out if a tradesperson is underinsured and how it could impact you. 

What is Underinsurance?

Underinsurance is a phrase that rarely escapes the insurance world. It simply means that a policy held by a tradesperson doesn't have enough protection in place if they suffer a loss. 

Underinsurance will open a trade business to significant financial expense if something monumental happens. Say damage is caused that totals £1.5 million, and the builder is covered up to £1 million. 

To add insult to injury, if the policyholder is deemed to have deliberately misled the insurance company to reduce their premiums, then their policy can be voided altogether. 

If a tradesperson's insurance doesn't cover the total amount owed, they would still be liable, and the next step would involve them covering any excess loss through their own business finances. The main issue with this route is that it then totally relies on the health and well-being of that business. This could end with the customer having to brunt the costs.  

What impact will Underinsurance have on the tradesman?

Whether or not being underinsured is a mistake or an intentional act, the effect of Underinsurance can be far-reaching and damaging. For a tradesman or women, it can and likely will cause major financial unrest to your business. It will also inflict negative damage to your local reputation. Which in turn will make it extremely difficult to get future business, rebrand yourself or get back on your feet. 

Being in the position of having an underinsured policy doesn't simply mean the difference between the claim value and policy value. Contract stipulations for insurance policies generally include clauses that can impact the sum being paid (especially if they have been misled). Let's consider, is it worth it to:

  1. A) Risk your customer’s home by taking out an insufficient insurance policy.
  2. B) Avoid paying a slightly higher premium, in turn risking your entire business’ livelihood.

What are the customer's options?

As mentioned, if a claim is made, the underinsured party would need to finance the loss themselves. If the builder or tradesperson cannot fulfil this, their business will be under severe threat, and the client could face a disastrous financial shock. 

In a situation like this, you may wish to contact the Citizens Advice line or seek advice from a professional lawyer or solicitor. These bodies will be able to provide you with the most up-to-date advice that will hopefully help to recover any loss you have incurred. 

How can this situation be prevented?

When searching for people to work in your home or property, it makes perfect sense to explore the background of any tradesperson you are considering. Having more information will allow you to make an informed decision on the risk you expose yourself to, and you can even see if they are underinsured for the project. 

When in the negotiation phase, ask questions. Get their insurance documents, get in writing the project and all work that will be undertaken and be sure to protect all of your assets in case anything goes wrong. 

When getting quotes, the very minimum a dependable tradesman or woman should be able to provide is an acceptable insurance policy. 

Where can you find advice? 

For help and advice, the government website has plenty of information to assist you, including your rights and legal support. It also offers assistance with legal aid, consumer advice, work, discrimination, disputes and more. 

Citizens Advice 

Citizens Advice is there for any help you need. Get free online help and advice to help guide you through a difficult situation. Consumers can also call them on their advice line: 0800 144 8848.

Why choose Rhino Trade Insurance?

The team at Rhino Trade Insurance is dedicated to offering the best insurance for tradespeople. Not only that, but we want to share insightful content that allows you to make an informed decision when deciding how to proceed with your next project. 

We care about the trade industry and want to ensure everyone has the right level of coverage. Not only does it protect our customers (the trade business), but it also protects their customers (you). 

If you or anybody you know needs insurance for their business, consider exploring what we have to offer. We focus entirely on the trades and tailor every policy for the job at hand. Ring our team now on 0116 243 7904 or visit our website for speedy quotes. 

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