Starting Bigger Jobs in 2027? Check Your Public Liability Before You Sign

Taking on a bigger contract can be an important step for a small business.

It might mean a larger project, a new client or the chance to take on work you have not handled before.

But before you sign, there is more to check than the price, payment terms and scope of work.

The contract may also set out insurance requirements.

Some clients may ask you to have public liability insurance in place, specify a minimum limit of indemnity, or ask you to provide evidence of your insurance.

So, before you put pen to paper, take a few minutes to check what the contract says, and whether your current insurance arrangements reflect the work you’re taking on.

A bigger job can mean bigger responsibilities. Check the insurance requirements before you sign.

1. Check the contract for insurance requirements

Don’t assume that every client will have the same requirements.

Before signing a new contract, look for sections covering insurance, liability, indemnity or risk.

The contract may specify:

• A particular level of public liability insurance
• A minimum limit of indemnity
• The type of insurance the contractor must have
• How long the insurance must be maintained
• Whether you need to provide a certificate or other evidence
• Requirements relating to subcontractors
• Particular activities or risks that need to be insured

Public liability insurance is not generally a legal requirement for every business. However, a client or contract may require it as a condition of carrying out the work.

For more background, see FSB’s guide to public liability insurance.

The key question is simple: what insurance requirements does this particular contract place on your business?

2. Check the limit of indemnity

You may see a figure such as £2 million or £5 million in a contract.

This is the limit of indemnity, broadly, the maximum amount the policy will pay for covered claims, subject to the policy terms and how the limit operates.

The important point is that there is no single public liability limit that applies to every small business or every contract.

A client may specify the level they require.

The contract might also contain other conditions about how the limit applies.

If you’re unsure about terms such as “any one claim” or “in the aggregate”, our FSB Insurance Service guide to liability insurance explains some of the terminology.

Don’t just look at the number

If a new contract requires a particular limit, compare that requirement with the details of your insurance arrangements.

If there is a difference, don’t leave it until the work is due to start.

Speak to your broker or insurer so you can understand what changes, if any, may be needed.

3. Does the work match your insurance arrangements?

A bigger contract may involve more than simply doing the same work for a larger client.

You might be:

• Working on a different type of site
• Taking on larger or more complex projects
• Carrying out activities you haven’t previously undertaken
• Using different equipment
• Working in premises occupied by someone else
• Working alongside other contractors
• Taking on responsibility for additional parts of a project
• Increasing the number of people working on the job

These changes can be worth discussing with your insurance provider.

A higher limit of indemnity does not automatically mean that every new activity or responsibility is covered.

Insurance cover depends on the policy wording, terms, conditions and exclusions.

If you’re unsure whether your proposed work falls within your existing arrangements, ask before you start the job.

Our guide to Public Liability Insurance Explained for Small Businesses provides more information on the subject.

4. Are you bringing in subcontractors?

A bigger contract might mean you need extra help.

If you’re planning to use subcontractors, check what the contract says about them and whether you have any responsibilities for their insurance.

You may also want to establish what insurance arrangements the subcontractors have themselves, where appropriate.

This can be particularly important on construction and trades work, where several businesses may be involved in the same project.

Don’t assume that calling someone a “subcontractor” automatically determines how they are treated for insurance purposes.

If you’re unsure, discuss the arrangements with your broker or insurer before the work begins.

Check out our article on Contractors and liability.

5. What if you’re taking on employees?

There is another important distinction to make.

Public liability and employers’ liability are different types of insurance.

Public liability generally relates to claims involving third parties, such as members of the public or other businesses.

Employers’ liability relates to injury or illness suffered by employees as a result of negligence in their employment.

If taking on a bigger contract means employing people for the first time, or increasing your workforce, there may be additional insurance requirements to consider.

You can find more information in FSB’s guide to Employers’ Liability Insurance.

6. Check what evidence the client needs

Having insurance arrangements in place and proving them to a client are two different things.

Your contract may ask you to provide evidence such as a certificate of insurance.

Check:

• What document the client needs
• What limit needs to be shown
• When it needs to be provided
• Whether it needs to be renewed during the contract
• Whether the client needs to be notified of any changes

It’s much easier to sort this out before the project starts than when you’re ready to begin work.

A bigger job? Use this checklist before you sign

Before committing to a new contract, ask yourself:

• ☐ Does the contract specify public liability insurance?
• ☐ Does it specify a minimum limit of indemnity?
• ☐ Does that requirement match my current insurance arrangements?
• ☐ Does the work I’m taking on match the activities described in my insurance arrangements?
• ☐ Are there new sites, activities, equipment or responsibilities to consider?
• ☐ Will I be using subcontractors?
• ☐ Will I be employing anyone?
• ☐ Does the client need a certificate or other evidence of insurance?
• ☐ Have I raised any changes with my broker or insurer before starting the work?

Don’t make insurance an afterthought

Winning a bigger contract is something to be positive about.

But before you sign, take the time to understand what the contract expects from your business.

Check the insurance requirements. Check the limits. Check the work. And if something has changed, ask your broker or insurer about it before you start.

For more information, see FSB’s guide to setting up small business insurance.

FSB members: your insurance support is already included

As an FSB member, you already have access to insurance support from FSB Insurance Service.

There is nothing new to buy just to access the support. You’ve already got the key, you just need to unlock it.

If you have questions about your business insurance arrangements, you can speak to the team for general guidance.

Call 020 3883 7976

Register for free to unlock your included insurance support.

---

This article provides general information only and is not personal insurance advice. Insurance requirements and cover will vary according to the contract, business and policy terms. If you are unsure about your own circumstances, speak to your broker or insurer.