The insurance broker's guide to protecting your Builders Merchants as you grow

In this guide, you’ll learn everything you need to know about the risks your Builders Merchants may you may be exposed to as your business grows.
insurance broker's guide to builders merchants ebook cover

The insurance broker's guide to protecting your Builders Merchants as you grow

December 01, 2022

In January 2022, the BMBI reported builders merchants value sales were up by 24.1%, and this year was set to be the strongest year of growth. A significant contribution to this was inflation.

Matched with the change in the market due to COVID-19 which pushed people to shop online rather than in store and increased demand from builders and tradespersons for materials to be remotely sourced and delivered directly to site. Because of this, the builders merchants and suppliers industry has seen a significant change in the way they sell to customers, resulting in 30% more sales in 2021.

With face time low and core material costs rising, builders merchants are well positioned to grow exponentially over the next five years. But, to grow successfully, it’s key that a builders merchant has the appropriate level of insurance cover and risk management processes in place to protect you against all eventualities.

In this guide, you’ll learn everything you need to know about the risks you may be exposed to as your business grows, including:



What insurance should I consider for my builders merchants?

As a result of supplying a wide variety of products, storing large levels of stock on site (including flammable materials), and using expensive, specialist machinery, builders merchants require specialist insurance solutions.

However, choosing the appropriate insurance programme for your business can be a challenging task. This is because it takes time and a deep understanding of the covers required to make an informed decision.

Typical covers for builders merchants and suppliers include:

  • Employers' Liability – You are legally obligated to have Employers’ Liability insurance. This covers employees if they become injured or sick as a result of the work they do and sue you for compensation – it also covers any legal fees you are ordered to pay.

  • Public Liability – There are many risks with members of the public visiting your site(s) that could lead to injury, or property damage. Public Liability insurance provides indemnity for costs and awards in respect to allegations of injury to third parties or damage to their property.

  • Product Liability – If you’re a producer, distributor, retailer, or you repair products, Product Liability cover is often contractually required. If not contractually required, this cover is strongly advised to ensure your business is protected against any allegation that a product that you sell my cause any accidental injury or damage.

  • Building Insurance - If you own the building that your business operates from or are responsible for insuring the buildings under lease then purchasing Buildings insurance is vital. Buildings insurance protects your premises should it be damaged by fire, flood, burst pipes, storms or other means.

  • Contents and Stock - With the cost of materials increasing, stock that was once worth £10,000 may now be worth significantly more. While you may currently have Contents and Stock insurance, you should consider whether you are still covered at an appropriate level for the value of stock you currently have on site.

  • Business Interruption - If your business suffers any material damage there will inevitably be an interruption of some description, Business Interruption covers the loss of income or profit and any costs incurred necessary to keep the business operating had the incident not happened.

  • Machinery and Plant - It’s crucial to ensure essential equipment is protected against theft, damage, and fire to keep your business running and growing. This can include cherry pickers, cranes, forklifts, generators and loading shovels.

  • Goods in Transit – As your business’s online presence grows, you may offer a delivery service. Goods in Transit insurance covers the cost of replacing lost, damaged, or stolen items whilst they are being transported by one of your vehicles.

  • Motor Fleet – Whether used for customer deliveries, collecting stock, or getting to and from your site daily, quality Motor Fleet cover can give you peace of mind while your team are on the road. Furthermore, working with a specialist broker can mean getting your vehicles back on the road without delay.   

  • Cyber and Crime – Builders merchants may not consider themselves digital businesses, but with online accounting platforms, payroll management, stock ordering systems, websites, email, and CRM systems it is undoubtedly true that merchants are digitally dependent. This data can be targeted by hackers and threat actors and the greatest risk to merchants is that of falling victim to an online or telephone scam. Cyber and Crime insurance can provide not only indemnity for any costs incurred or money lost, but also access to a suite of paid for experts to help the business recover from any breach/hack/fraud.

To deal with inflation costs, you need to ensure all goods items left either on site, in a vehicle, or in storage are protected. It is therefore worth checking with your insurance broker that you have the appropriate level of cover in place to ensure your stock is not underinsured. 

Having the right insurance in place will allow you to grow your business in confidence that should the need to make a claim arise, you will not be liable for significant costs that could be detrimental to your business.


Find out more about protecting your builders merchant and the types of cover you will need on the button below.

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Five ways your insurance broker can support your growth


1. Access to markets

There are 900 commercial insurance companies in the UK, many of which will only work with an insurance broker. You should therefore look for an insurance broker who has good relationships within the insurance market as they will be able to negotiate terms and policy conditions on behalf of your business.


2. Lower premiums

A good insurance broker will work with you all year round to provide risk management guidance to mitigate the risks your business is exposed to, making it more appealing to underwriters. A good risk rating will allow your insurance broker to negotiate more competitive terms for your business. 

3. Policies tailored to specific business needs

Every business is unique, and therefore, your business's insurance programme will need to be tailored around the distinct risks you are exposed to.

Whilst it can be tempting to purchase standard insurance cover, many of these will not cover builders merchants and suppliers against the diverse risks faced by these businesses. This can leave your business exposed to potential losses in the unfortunate event of a claim, determining the importance of working with a specialist insurance broker who understands your industry and the risks your business is exposed to.

4. Meeting The Insurance Act requirements

The Insurance Act is legislation that came into effect in 2016. Under the Act, you owe a duty of disclosure to the insurer, which includes a responsibility to:

  • Make a fair presentation of risk within your company and on site
  • Disclose all information to known senior management
  • Provide all relevant data to the person responsible for the insurance

The Act increases the obligations on an insurer and places a significant burden on the person responsible for arranging the insurance. A good insurance broker will explain the rules and requirements under the Act and share their information gathering and risk presentation process.

5. Invaluable advice and support

Ideally, you will want to know that your insurance broker is on-hand all year round whenever you need their advice, not just in the lead up to your insurance renewal. When choosing an insurance broker, look for one with an in-house claims team because should you need to make a claim, it can be a stressful experience.

Throughout the claims process, your insurance broker should be working on your side to provide invaluable advice and support. Their claims team will manage the claim on your behalf, allowing you to focus on what is important – growing your business.


Get in touch with our specialists to find out how we can support your business’s growth with our market-leading insurance solutions for builders merchants and suppliers.

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Common challenges encountered when not using a specialist broker

Before you put your trust into an insurance broker, there are three questions you should ask yourself to ensure you’re dealing with the right company:

1. Do they have an FCA number?

Every regulated broker will have a FCA company number. For example, ours is 06368755 and we operate under Specialist Risk Insurance Solutions Limited. 

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This information should be readily available to you and provided by your broker.

2. Do they have any accreditations?

As well as checking whether a firm is regulated, look on their website to see if they have won any awards or have any accreditations. An important one for insurance brokers is whether they are Chartered Insurance Brokers, a prestigious award by the Chartered Insurance Institute. This yearly audit demonstrates a firm’s commitment to:

    • Ethical behaviour tailored to your needs
    • Competent and knowledgeable advice
    • The highest level of technical and professional qualifications
    • High quality support and advice

3. How are they contacting you?

A good insurance broker will not call you unsolicited. They also won’t provide you with too-good-to-be-true offers as negotiation tactics.

Never trust unsolicited calls, no matter how legitimate the person sounds. Before committing to a deal or sending anyone any money, you must always follow up and do your research. 

Even if you see a name that you think you can trust, meticulously check the website, their contact information, and ask them questions. Like other scams, fraudsters will often clone websites to look like big broking or insurers websites, so make sure you feel comfortable and know exactly who you’re talking to and what you will receive before making any form of payment.

What makes a good insurance broker?

So, you know how to spot a bad insurance broker, but how will you know when you’ve found a good one?


As previously mentioned, trust and respect is an important element of the relationship between a broker and the insurer. A relationship built on trust will help to give you the confidence you need to grow your business, knowing you have a reliable insurance broker to support you when needed.

A good insurance broker will be more than happy to provide you with the information mentioned above, such as FCA number, the name of their brokerage firm, and the underwriters they deal with, but will also go the extra mile to ensure that you feel comfortable. By putting the client first, they will ensure that you feel heard, and will do everything in their power to make sure you clearly understand the terms and conditions being set and will answer any further questions about your contract.

Another great sign of a broker is that they’ll make sure you have the right insurance for your business and go the extra mile to ensure you’re not underinsured. This will guarantee that, should an incident arise, your business will not be exposed to significant losses as a result of a claim.

With your limits of indemnity likely to change as your business grows, your policy will need to be reviewed and amended each year. Your insurance broker should therefore update, what and how much you’re protected against each year.

At Specialist Risk Insurance Solutions, we take a proactive approach when working with builders merchants and suppliers, helping you to mitigate any risks your business is exposed to through tailored insurance solutions and robust risk management advice.

If you’d like to find out more about how to protect your business as it grows, or want to talk to one of our specialists about how we can help you, request a call back today.

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We see ourselves as your trusted advisor for all your insurance and risk management needs, allowing you to focus on the day to day running of your business, knowing you are in safe hands.

To find out more about our services and how we can protect your builders merchants from serious loss, request a call back from one of our team today.

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