The construction market is sending a fairly clear warning to contractors across Essex, Kent and London. Between 1 and 3 October 2026, The London Gazette recorded insolvency activity involving 72 construction companies, including 59 liquidations and 39 winding-up orders. The notice categories can overlap, but the underlying message is difficult to ignore: financial failure is moving quickly through the supply chain.
The names being discussed include AK Build Services, Groundform RC Frames and Kingston Roofing. At the same time, the BBC has reported that South Coast Construction (Sussex) Ltd is under police investigation following allegations that customers paid almost £500,000 in deposits for building work that was not completed. The company’s director denies intentionally defrauding customers, and the allegations remain under investigation.
This is happening while construction professionals expect further increases in materials and labour costs. The BCIS construction outlook survey found that 88% of respondents expected materials costs to rise over the following year, while 62% expected labour costs to increase. Energy costs are also prompting contractors to reconsider whether owning heavy equipment is still sensible, particularly where plant is not being used consistently.
There is still opportunity in the sector, including the reported ÂŁ5 billion YPO/Pagabo major works framework, but opportunity does not remove counterparty risk. Before taking on the next client, main contractor or subcontractor, these are the five insurance questions I think every construction business should ask.
1. What happens to contract works if the client or main contractor becomes insolvent?
A client’s insolvency does not automatically mean that your contract works insurance has stopped. However, it can change the risk very quickly.
If work is suspended, the site may be left incomplete, unsecured or exposed to theft, vandalism, escape of water, storm damage and deterioration. Materials may be stored in places that were not originally declared to insurers. Temporary works may remain in place for longer than expected, and machinery or tools may be left on site.
Contract works cover is generally intended to respond to physical loss or damage to the works, materials and sometimes temporary works. It is not normally designed to pay for a client’s failure to pay, the loss of expected profit or the cost of simply completing an abandoned project.
The key issue is what happens after the site stops operating. Many policies contain conditions relating to unoccupied or unattended premises, site security, inspections, fire protection and notification of material changes. If a site is suddenly mothballed, your insurer may need to know immediately.
A contractor should record the position carefully. Photograph the site, secure materials, check temporary works, arrange regular inspections and confirm who is responsible for security, utilities and essential maintenance. Do not assume that the original project arrangements continue automatically after an insolvency event.
This is also where underinsurance becomes a serious concern. Materials, labour and reinstatement costs have continued to rise, so the sum insured agreed months earlier may no longer reflect the cost of replacing or completing damaged works. Our guide to underinsurance mistakes and General Contractor Liability Insurance explains why the original contract value is not always the same as the amount needed for a proper insurance settlement.
2. Do employers’ liability and public liability still apply when workers are laid off or a site is mothballed?
Employers’ liability insurance is not only relevant when a full workforce is active. If employees remain employed, attend site to secure equipment, inspect the works, remove materials or carry out limited maintenance, the employer’s liability exposure continues.
Equally, laying workers off does not automatically remove every responsibility. You still need to consider employees who are retained, workers attending meetings or inspections, and anyone carrying out work during the wind-down period. Changes to employee numbers, wage roll, duties and the use of subcontractors should be discussed with your broker and, where necessary, notified to insurers.
Employers’ liability will not usually pay redundancy costs, unpaid wages or amounts owed under an employment contract. It is there to respond to liability for injury or illness arising from employment, subject to the policy terms.
Public liability is also still relevant when a site is quiet. A member of the public could be injured by unsecured hoarding, falling materials, an open excavation, damaged paving or poorly maintained access. Another contractor could suffer damage because plant, scaffolding or temporary works have been left in an unsafe condition.
One point that is often missed is control. After a main contractor or client becomes insolvent, there can be confusion about who controls the premises and who has responsibility for making the site safe. That uncertainty should not be allowed to continue. Your contract, appointment documents and insurance policy should be checked together so that the party responsible for site safety is clear.
Public liability cover is not a substitute for proper site management, and a policy condition may require reasonable precautions. A mothballed site still needs inspections, security and maintenance.
3. If the client disappears, will professional indemnity cover future design or latent defect claims?
Design-and-build contractors can remain exposed long after the client’s company has entered liquidation or been dissolved. The disappearance of the client does not necessarily remove liability for negligent design, specification or workmanship.
Professional indemnity insurance is usually written on a claims-made basis. This means the timing of the claim and the policy in force when it is notified are important. If a contractor receives a complaint, a request for information, a defect allegation or any circumstance that might reasonably lead to a claim, early notification matters.
A common mistake is to assume that a claim can wait until a defect becomes serious. If the policy requires notification of circumstances, delaying until the client has formally issued proceedings could create an avoidable coverage problem.
There is also an important distinction between professional indemnity and latent defects insurance. Professional indemnity may respond to a negligent design or professional service, subject to the wording, exclusions, excess and retroactive date. It is not a guarantee that every defective building element will be repaired. Separate latent defects insurance may be relevant for certain developments, but the availability and scope of that cover depends on the project and policy.
If your client is struggling financially, ask your broker whether you should notify insurers of circumstances now, review your retroactive date and consider run-off cover. If your business later ceases trading, professional indemnity protection may still be needed for historic work.
4. Is plant, equipment and hired-in plant insured for the way it is actually being used?
The recent rise in energy costs is making many contractors question whether to own equipment, hire it only when needed or use leasing arrangements. Each choice creates a different insurance exposure.
Owned plant should be insured for its current value and location, including equipment that has been moved from an active site to a storage yard. Hired-in plant needs careful attention to the hire agreement. The contractor may be responsible for loss or damage from the moment the equipment is collected until it is returned, even where the machine is not being used.
A standard construction policy may include a hired-in plant extension, but limits, excesses and exclusions vary. Some equipment may need to be specifically noted, particularly higher-value plant, lifting equipment or items subject to finance or hire conditions.
You should also check whether the policy covers theft from an unattended site, malicious damage, breakdown, recovery costs and continuing hire charges. A machine damaged during a project can create two losses: the physical repair or replacement cost and the contractual cost of continuing to pay the owner while the machine is unavailable.
If a client or main contractor becomes insolvent, plant may be trapped on site or access may be restricted. Establish who owns it, who hired it, who is responsible for returning it and whether you have the right to remove it. Insurance cannot resolve an unclear ownership or possession dispute, so the hire contract is just as important as the policy schedule.
5. What protection is available for unpaid invoices, retention and an insolvent supply chain?
Construction insurance does not normally guarantee payment simply because a client or main contractor has failed. Unpaid applications, retention money, disputed variations and deposits are primarily contractual and credit risks.
Trade credit insurance may be worth considering where a contractor has significant exposure to a small number of customers. It can sometimes protect against non-payment following insolvency, but eligibility, credit limits, notification requirements and exclusions need to be understood before work starts.
Your contracts should also deal clearly with payment timing, suspension rights, retention, ownership of materials and the consequences of insolvency. Retention of title may help in some circumstances, but it must be drafted correctly and may be difficult to enforce once materials have been incorporated into a building.
Performance bonds, advance payment bonds and parent company guarantees can also provide additional protection on the right projects. They are not interchangeable, and they do not remove the need for suitable Construction Contractor Insurance.
The first practical step is due diligence. Check Companies House filings, recent accounts, County Court Judgments, payment history, existing charges and the financial standing of the business behind the contract. The Government’s company financial trouble guidance is a useful starting point, although it cannot replace proper commercial advice.
What contractors should do now
When a counterparty shows signs of financial difficulty, do not wait for a formal winding-up order before speaking to your broker. Notify insurers early where the policy requires it, especially for professional indemnity, contract works and circumstances that may lead to a claim.
Review which projects are open, which sites are unattended, what plant is on hire and how much money is tied up in applications or retention. Confirm that sums insured, turnover, wage roll, subcontractor arrangements and declared activities remain accurate.
Contractors in Essex, Kent and London also need to remember that a local relationship does not remove the need for proper financial checks. Good clients can fail quickly when margins are squeezed by labour, materials and energy costs, and a well-known main contractor can still create a substantial exposure if your business is carrying the unpaid costs.
At Moyak Insurance Services, we take an individual approach because the right cover depends on how your business actually operates, not simply on the trade description shown on a proposal form. We work with leading master insurance brokers to help businesses find suitable cover for their budget, property and contractual responsibilities. You can learn more about our approach to Business Insurance in London or visit Moyak Insurance Services.
The practical lesson is straightforward: check the counterparty before signing, write sensible insolvency protections into the contract, understand what your insurance does and does not cover, and contact your broker as soon as the commercial position changes. Early advice will not prevent every contractor failure, but it can make the difference between managing the damage and absorbing the whole loss.