The King’s Speech 2026 confirmed the biggest shake-up to UK construction regulation in over a decade. From a ban on retention payments to tighter product liability rules and faster cladding remediation, the legislative pipeline now reshapes how contractors price risk, manage cashflow, and structure their cover.
For SMEs already dealing with a tough market, knowing what changes and when matters more than ever. Generalist brokers often miss the detail. Specialist construction brokers do not.
This article breaks down the announcements from the King’s Speech 2026 that affect your insurance directly. We cover the retention ban, the Remediation Bill, the Construction Products Reform White Paper, and the 60-day payment cap, and we set out what to review now before the rules take effect. The goal is practical, not political. You should finish this guide knowing which policies to check, which gaps to close, and which conversations to have with your broker.
What the King’s Speech 2026 Actually Announced
The King’s Speech sets out the government’s legislative programme for the coming session. It does not pass laws on the day. Each Bill must move through Parliament and receive Royal Assent before becoming binding. That said, contracts, insurers, and underwriters are already reacting to what is coming.
For construction, the King’s Speech 2026 confirmed seven measures that matter:
- The Remediation Bill, placing legal duties on building owners to fix unsafe cladding
- The Construction Products Reform White Paper, extending regulation to roughly two-thirds of products currently outside the regime
- A Single Construction Regulator, consolidating safety oversight under one body
- A 60-day payment cap for large firms paying smaller suppliers
- A ban on cash retentions in construction contracts
- Reforms to the Construction Industry Scheme (CIS)
- Implementation of the Building Safety Levy
Each of these reshapes risk. And where risk shifts, insurance must shift with it.
The Retention Ban, Defect Risk and Your Contract Works Cover
The retention ban is the most immediate operational change for SMEs. It removes the long-standing practice of withholding a percentage of payment, typically 3 to 5 percent, as a safety net for clients against defects.
Subcontractors have campaigned for this for years. In a 2023 industry survey, 82 percent of subcontractors reported retentions on more than half of their projects. Cashflow tied up in retention has been a chronic strain on the supply chain.
What Changes Day to Day
The ban applies alongside the new 60-day payment cap and statutory interest set at 8 percent above the Bank of England base rate. Contracts will need rewriting. Standard forms like JCT will be revised. Most importantly, the contractual relationship around defects fundamentally shifts.
Employers and main contractors lose the retention safety net. Many are turning to alternatives like performance bonds, parent company guarantees, and project bank accounts. SMEs may find some of these harder to access than larger firms.
Insurance Implications
Your contract works cover needs reviewing against the new defects regime. Without retention as a financial buffer, clients will lean more heavily on contractual indemnities and insurance to cover defect rectification.
Key areas to check:
- Defects liability periods in your policy, which may need to extend
- Latent defects and structural warranty cover for post-completion claims
- Public liability wordings for the scope of post-completion defect claims
- Performance bond facilities, often arranged through a broker
Example: A subcontractor that previously had 5 percent retention held back now faces direct contractual claims for defect rectification, with no withheld pot to draw from. Their CAR and public liability policies need checking for the trigger and scope of cover after practical completion.
The Remediation Bill and Professional Indemnity Pressure
The Remediation Bill turns cladding remediation from a campaign into a legal duty. Building owners must identify, assess and remediate unsafe cladding within fixed timeframes. Sanctions include criminal prosecution. Developers and contractors who have already remediated cladding gain stronger routes to claim damages from product manufacturers.
For contractors and consultants caught in the middle, the King’s Speech 2026 does not invent new exposure. It builds on the framework already established under the Building Safety Act 2022. But it widens the practical reach.
Why PI Is Still the Pressure Point
The Building Safety Act 2022 extended the limitation period for defective premises claims to 30 years retrospectively. That dramatically widens the claims tail relevant to professional indemnity cover. Building Liability Orders can pierce the corporate veil, creating exposure even where no negligence has been alleged.
The PI market for construction hardened sharply after Grenfell. For some firms, cladding-related cover became unavailable or unaffordable. The market has eased recently for SMEs with good claims records, but cladding and fire safety exclusions remain common.
What to Review Now
If you carry PI cover, particularly on any work touching fire safety, facades, or HRBs, three things matter:
- Disclosure under the Insurance Act 2015 has become critical. Underwriters expect detailed information on past projects
- Contingent PI for specific projects can fill gaps where standard cover excludes
- Run-off cover matters if you are winding down or exiting cladding work, because claims can arrive years later
Example: A design and build contractor that completed an HRB project five years ago could face a claim under the extended limitation period. They need to confirm whether their current PI responds, whether run-off applies, and what their notification obligations look like.
Construction Products Reform and the Supply Chain Liability Shift
The Construction Products Reform White Paper proposes that all construction products fall under a risk-based General Safety Requirement. Around two-thirds of products currently sit outside any regulation. That gap closes.
For contractors and installers, this is bigger than it first appears. Liability is no longer just a manufacturer’s problem.
Why Contractors Carry the Risk Too
The reforms extend accountability across the supply chain. Installers, contractors, designers, and developers all carry responsibility for product use and selection. Documentation and traceability requirements tighten. Penalties for non-compliance include financial and potentially criminal sanctions.
Product substitution on site, swapping a specified compliant product for something cheaper or more readily available, becomes a serious risk. So does missing or expired supplier documentation.
Insurance Implications
Most contractors carry public liability but not product liability specifically. The two are not the same. Public liability policies often exclude product replacement and product recall costs.
What to check:
- Whether your existing public liability wording responds to product-related claims
- Whether you need standalone product liability cover
- Whether subcontractor indemnities back up the supplier chain at procurement, not at claim stage
- Whether your CAR policy covers the cost of removing and replacing non-compliant products discovered mid-project
This is also a good moment to revisit your employers’ liability cover, as compliance documentation now affects how insurers underwrite the whole programme.
The 60-Day Payment Cap, Cashflow and Project Cover
The 60-day payment cap is part of the same reform package as the retention ban. Large firms paying smaller suppliers must do so within 60 days. Statutory interest at 8 percent above base rate kicks in on late payments. The Small Business Commissioner gains powers to investigate and fine persistent offenders.
The reforms have been called the toughest crackdown on late payments in over 25 years.
The government estimates late payments cost the UK economy £11 billion every year.
How Cashflow Connects to Insurance
This is where the King’s Speech 2026 affects insurance in less obvious ways. Payment delays cause project delays. Project delays cause insurance problems.
Common gaps:
- CAR and contract works policies often have fixed project durations. Overrunning projects need extensions, which insurers may price or restrict
- Wage roll declarations on employers’ liability policies need adjusting mid-policy if work slows or stops
- Plant and equipment exposure changes on stalled sites, where theft risk often rises
- Renovation project cover and similar policies may need careful handling when timelines slip
Example: A subcontractor whose payments are delayed past contract milestones finds their project running months past the original completion date. Without a policy extension, their CAR cover lapses while the work is still incomplete. The insurance gap is on them, not the late-paying client.
For developers and self-builders, the same logic applies. Self-build insurance and project cover should always be reviewed for duration alignment when reforms shift the cashflow picture.
The Single Construction Regulator and Compliance Risk
The Single Construction Regulator consolidates safety oversight under one body. The intent is to remove the fragmentation that contributed to the failures exposed by Grenfell. The practical effect is a stricter, more joined-up compliance regime.
For contractors, this means:
- Audit and documentation expectations rise
- Competence records for principal designer and principal contractor roles become more important
- Insurers underwrite more heavily on compliance evidence
If you cannot produce the paperwork, you may find cover restricted or claims contested. Brokers play a central role in helping clients understand exactly what underwriters now want to see.
What SMEs Should Do Before the Laws Land
The King’s Speech 2026 measures are not yet law. But contract forms, insurer wordings, and underwriting questions are already shifting in anticipation. Waiting until each Bill receives Royal Assent puts you on the back foot.
Practical steps:
- Book a proper review of your PI cover, particularly notification requirements and cladding clauses
- Confirm your CAR and contract works policies cover extended defects liability periods
- Discuss product liability exposure if you install regulated products
- Check policy duration limits against realistic project timelines
- Update wage roll declarations and review mid-policy adjustments rather than waiting for renewal
- Ask your broker about performance bonds if you expect them to feature in your next contracts
A broker-led conversation matters far more than a price-led renewal. The questions you should be asking change with every Bill that moves through Parliament.
Why Specialist Broker Support Matters Now More Than Ever
Specialist construction insurance is not a generic product. It is a programme that fits how you actually work, the trades you employ, the contracts you sign, and the projects you take on. Generalist brokers struggle with shifting PI markets, cladding exclusions, and product liability nuance because they do not see enough construction risk to spot the patterns.
At Construction Insure, we have spent over 30 years arranging cover for builders, contractors, subcontractors, developers, and tradespeople. That includes contractors’ all risks, public liability, employers’ liability, professional indemnity, plant and tools cover, contract works, structural warranty, self-build, and renovation project insurance. The detail matters. So does knowing which insurers respond well to which trades.
If the King’s Speech 2026 announcements have you wondering whether your current cover still fits, you can get a quote or talk to our team about a programme review. More background on the firm is available on our about us page.
Frequently Asked Questions
Does the King’s Speech 2026 become law straight away?
No. The Speech sets out the government’s legislative intentions. Each Bill must pass both Houses of Parliament and receive Royal Assent before becoming law. Implementation periods usually follow.
Will the retention ban change my contract works insurance?
It changes the contractual environment around defects, so policies should be reviewed. Defects liability periods, latent defects cover, and performance bond requirements all need attention.
Do I need product liability insurance if I only install rather than manufacture?
Increasingly, yes. The Construction Products Reform extends accountability to installers and contractors. Most public liability policies have product-related exclusions you need to understand before relying on existing cover.
Will my PI premiums go up because of the Remediation Bill?
Not automatically. The PI market for construction has actually been softening for SMEs with good claims records. Cladding and fire safety exposures still attract stricter terms. A broker review at your next renewal is sensible.
Should I wait until the laws pass before reviewing my insurance?
No. Contract forms, insurer wordings, and underwriting questions are already shifting. Reviewing now positions you better than waiting for the legislation to land.